3 Sep 2012

Solid Energy considers underground coal gasification

7:00 am on 3 September 2012

Solid Energy is in the early stages of discussions with international companies into developing underground coal gasification operations in both New Zealand and offshore.

The State coal miner made a loss of $40.2 million in the year to June when it wrote down $110.6 million of assets, $71 million of which comes from its mining operations.

The company expects weak coal prices and demand to continue for at least the next two years and says it can no longer justify investing in its mining operations.

In the last financial year Solid Energy got its $22 million Huntly underground coal gasification pilot plant off the ground.

The plant converts the coal to gas deep underground and brings it up as synthetic gas which has a different chemical composition to natural gas but is as efficient.

Chief executive Don Elder says there is a large market for natural gas in New Zealand which is comparable to the market for synthetic gas.

He says underground coal gasification produces so much energy from such a small amount of coal that it is able to produce that energy at an extremely competitive cost.

Dr Elder says a number of prominent international companies have approached Solid Energy with regard to working with them on prospects internationally and several of them are also interested in developing underground coal gasification further in New Zealand for production here.

He says the discussions are at early stages but look promising.

Dr Elder says synthetic gas could be converted into electricity at, or possibly well bellow, the current price of converting natural gas.