New Century International

Three-year-old Laurus Energy had been quietly working on getting the capital to build a business around underground coal gasification (UCG) technology licensed from Ergo Exergy Technologies. Laurus made headlines early December 2008 with the announcement that it raised $8.5 million from Mohr Davidow Ventures. Underground coal degasification is a cheaper and cleaner process than the current coal gasification techniques. Since it is a proven technology, it is even more appealing than other techniques still being tested. This underground coal gasification it has been being used in South America, India, and Australia.

Ergo’s proprietary process addresses the following:

• Start up
• Management
• Project completion

The UCG process injects air into underground seams before igniting it. The coal burns and produces syngas. With technologies already in existence, the carbon dioxide can then be sequestered from the gas. Hydrogen, methane and hydrocarbons remains during the process and they burn cleanly in power plants

The UCG process leaves many of the contaminants from typical mining operations underground, protecting the atmosphere from their harmful affects. There is some controversy regarding the effects to the environment that this will have, but they won’t be in gas form. New and deeper coal supplies that were previously not accessible, are opened up with this process according to Straser, a general partner at Mohr Davidow Ventures and board member at Laurus Energy. He couldn’t quantify the gains in the region’s accessible coal supply but said coal could be accessed at 1,500 meters (current technology can access coal up to about 200 meters).

It is expected that coal will continue in demand. “This could satisfy hundreds of thousands of years of coal demand,” Straser said. “Think of the U.S. as the Saudi Arabia of coal. This makes it the super-Saudi Arabia of coal.” The sequestered carbon can be used for enhanced oil recovery. The syngas can be used to drive turbines for power generation, or even to make chemicals, fuels, and semiconductors.

Straser said that the gas that is produced is a cheap power source with environmental benefits over current technology with a cost that is about half the current price for natural gas.

Laurus is preparing several UCG projects in Alberta and Nova Scotia to fuel 1,000 megawatts of coal and natural gas power plants. In Canada the company is also preparing UCG plants to produce chemicals and liquid fuels. The cost, according to Straser, for such a UCG project would likely cost in the tens of millions of dollars. The standard ground-level coal gasification plants would cost $1 billion to $3 billion.

The technology is just arriving in the North American market because demand only materialized recently in the last decade due to natural gas prices increasing. So during the time that natural gas was economically preferred in the United States, underground coal gasification was being used elsewhere. Ergo’s UCG process has been used in a facility in Uzbekistan for nearly 40 years. Laurus Energy’s founders Simon Maev and Michael Blinderman operated the facility years ago (Blinderman also founded Ergo).

Some statistical information about coal use in the United States:

• Coal is used to produce about half of U.S. electricity production
• Coal provides about a quarter of the United State’s energy
• More than 60 percent of coal mined in the U.S. is dug from the surface.

Some of the negative image that coal mining has is because of the impact that surface mining can have on the environment. Coal is highly criticized for its environmental impact. One of the concerns is the belief that gas will be sitting under the surface causing unknown damage to the environment or it will be released into the atmosphere causing the damage that has been documented. This appears to be no longer a concern with the technology that will be introduced to the US with the technology licensed from Ergo Exergy Technologies by Laurus Energy.

Surface coal gasification projects by companies such as GreatPoint Energy are a cleaner alternative but still draw criticism for high costs and emissions. There is a single-stage catalytic gasification process to create natural gas that is 99.5 percent pure methane and can be transported using the existing natural gas pipeline infrastructure that GreatPoint is developing.

Though the ability to burn clean coal is available, the gasses that were contained were still a problem. The solution proved not to be economical until the natural gas prices rose in the US with that happening, underground coal gasification is being introduced to the US as an economic alternative to natural gas. There are big changes for coal on the horizon with this technology becoming available to North America.