Petroleum and minerals explorer, Central Petroleum Ltd, and Allied Resource Partners  (ARP) have announced agreement to undertake a feasibility study on a $7.5 billion plan to convert coal deposits in the Pedirka Basin in Central Australia to diesel by gasification.


ARP will undertake a global search for funding and technology partners with the aim of  commencing construction of a 60,000 bpd plant before 2017.


In a statement to the Australian Stock Exchange, Central Petroleum (CTP) and ARP said that while there was still more exploratory drilling needed, they believed the deeper coal seams under 200 – 300 m would be “amenable to environmentally safe underground coal gasification extraction techniques offering capital and operating cost benefits, compared to traditional open cut and underground coal mining.”


Underground Coal Gasification (UCG) is a way of gasifying coal underground by heating and then extracting the produced ‘Syngas’, mostly a mixture of hydrogen and carbon monoxide. At the surface, Syngas can be converted to liquid fuels by the Fischer Tropsch process for transport to markets.


According to the announcement, unlike coal seam gas extraction, UCG does not rely on lowering the water table to drain the coal seams, and does not  need ‘fraccing’ to release the gas. By re-injecting any CO2 or by using it in the production of methanol, the UCG and GTL processes can be engineered to produce a negligible carbon footprint.


Because the coal seams in the Pedirka Basin are multi-layered and separated by layers of sandstone and shale, invasion of the overlying aquifers can be prevented by design engineering and monitoring and combustion pressure control.


ARP’s Joint Managing Director, David Shearwood, said  the scale and estimated profits of the Stage 1, 60,000 bdp project were expected to spark strong interest.  He said that if successful, the project would help Australia to become self-sufficient in liquid transport fuels, and possibly become an exporter.


Mr Shearwood said Australia’s proximity to Asia  combined with the ultra-clean nature of the product would “ensure sales prices achieved  should be at a premium to benchmark prices for finished petroleum products such as diesel and jet fuel.”