An underground coal gasification (UCG) plant is bidding for a contract previously held by a renewable energy project.

Leigh Creek Energy has been operating a UCG pilot plant at the former Leigh Creek coal mine for about six months, and is now considering tendering for a $650 million solar thermal power plant that fell through last month.

Underground coal gasification is an ‘unconventional’ means of extracting gas from deep coal seams.

It involves setting the coal on fire underground and siphoning off gas produced through wells.

It is considered beneficial by some because it can leave landscapes relatively unscathed compared with conventional mining.

Additionally, the gas produced can be used for power generation or condensed to make liquid fuels such as diesel.

The disadvantages of UCG include the fact it is sensitive to local geological conditions, expensive to set up, highly specialised and poorly understood by regulators.

The Leigh Creek operation has its eyes on supply after SolarReserve's $650 million solar thermal power plant at Port Augusta fell through last month.

“We have the capacity to produce electricity and we can produce quite large amounts of it. We're in discussions on that, but we can assure you we haven't taken any steps formally on that yet,” Leigh Creek Energy chairman Justyn Peters said.

The Leigh Creek reserve is “the largest uncontracted gas reserve on the east coast of Australia”, Mr Peters said.

“We have the opportunity to pump gas to the Moomba reserve and then across to the east coast of Australia.”

There is significant opposition to further UCG works among the Adnyamathanha community — traditional owners of the Leigh Creek area.