Solid Energy plans to build and commission, by the beginning of 2011, a US$22 million Underground Coal Gasification (UCG) pilot plant in Waikato, New Zealand. The successful application of the UCG process will open up access to coal seams which would otherwise be nearly impossible to mine using conventional mining technology. UCG complements traditional mining because it works best where conventional mining does not – in deep, difficult-to-reach coal seams.

Solid Energy will shortly lodge the necessary consent applications to build and operate the UCG plant which will convert up to 30,000 tons of coal into syngas.  The pilot will operate for up to two years on private property within the company’s existing Huntly West Coal Mining Licence area.  Work will begin on the proposed plant once consents are granted.

For the pilot plant, Solid Energy plans to drill up to seven wells about 25 to 50 meters apart into an underground coal seam 400 meters below the surface.  The company is also installing a number of other wells on site to gather process and environmental data.  The surface plant, including wells, is expected to be contained within an area measuring 300 meters long and 150 meters wide.

The pilot plant will yield process, technical and geological information, and verify modeled environmental effects.  Once the required information has been gathered, Solid Energy will shut down the pilot plant.  Results from the pilot will determine whether Solid Energy takes the project further to a commercial operation.

The project builds on an earlier UCG trial undertaken in 1994 by the then Electricity Corporation of New Zealand (ECNZ) in partnership with Glencoal Energy and Energy International. The ECNZ trials were abandoned because UCG did not prove cost-effective at that time.  Increasing energy prices and further advances in UCG technology, however, make UCG a viable energy option again.