SOURCE: Zeus Development Corporation

Zeus Development Corporation

October 18, 2011 12:02 ET

Underground Coal Gasification Poised to Grow Fivefold, Zeus Report Finds

HOUSTON, TX--(Marketwire - Oct 18, 2011) - The potential energy supply from underground coal gasification (UCG) is so vast that the technology could rival the shale gas revolution, a Zeus Development Corp. study finds. Because UCG developers can target coals that are deep, of low grade and in seams too thin for economical mining, the technology could increase recoverable reserves threefold, a Lawrence Livermore National Lab report found in 2008.

"Underground coal gasification could solve a lot of the developing world's energy supply challenges, provided developers can manage environmental risks," Zeus Analyst Chris Cothran, a coauthor of the study, said. "We believe it will be applied most extensively in countries such as India, China, Pakistan and Bangladesh, where governments have unmineable reserves and are keen to improve standards of living without having to compete for high-priced oil."

UCG involves pumping air or oxygen underground to gasify coal in situ into synthesis gas, which is then pumped to the surface. This avoids costly infrastructure, energy and labor required to mine and transport raw coal, gasify it, and then dispose of mountains of ash. With UCG, the ash remains underground. Greenhouse gases can be captured and pumped underground or sold for enhanced oil recovery. The synthesis is used to make electricity, diesel, gasoline, lubricants, or other high-value products.

The concept has been considered for decades, but only recently have technological advancements in seismology, drilling and electronics converged to make it economical. Recent cost estimates for UCG projects come in at levels less than half conventional coal-gasification methods and well below shale gas production.

Several independent energy companies, such as Australian-based Linc Energy Ltd. (ASX: LNC), Wildhorse Energy Limited (ASX: WHE), and Cougar Energy (ASX: CXY) are using technological advancements to push their UCG capabilities forward. Currently, eight projects in Australia, China, Poland, Canada and Uzbekistan are underway. Their owners are surveying sites to build another 43 around the globe. All intend to target deep reserves and tightly manage environmental risks, capturing and sequestering greenhouse gases.

To review the potential for this technology, Zeus has prepared a 108-page report and online database with profiles of all 51 projects worldwide. Information can be obtained at www.zeusintel.com/UCGReport.

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