Underground coal gasification
Underground coal gasification (UCG) is the process by which coal is converted to gas underground via enforced combustion. UCG is used to access coal resources that are either uneconomic to work by conventional open cut or underground coal mining methods, or are inaccessible due to depth, geology or other mining and safety considerations.
UCG is a pilot project, three demonstration sites
In February 2009 the Queensland Government released its policy on underground coal gasification (UCG).
The policy provides for a UCG pilot phase to gather the information necessary to assess the future viability of a UCG industry in the state. In particular, the policy makes provision for three UCG pilot projects to demonstrate the technical, environmental and commercial viability of the UCG technology. The Queensland Government is due to decide the future of UCG in Queensland in 2012.
The three pilot projects are Carbon Energy at Bloodwood Creek, near Dalby, Cougar Energy near Kingaroy and Linc Energy near Chinchilla.
In July 2010 an Environmental Protection Order directed Cougar Energy to stop and not recommence underground burning of coal following water quality tests in groundwater monitoring bores close to the plant.
A separate incident at Carbon Energy subsequently led to the department issuing an Environmental Protection Order which directed that this pilot commence a controlled shutdown. Carbon Energy restarted its UCG trial in February 2011 following modifications to its water management processes and an intensified groundwater monitoring program. In March 2012, Carbon Energy announced that it intended to suspend operations at Bloodwood Creek and focus on decommissioning and rehabilitating the site.
The Linc Energy pilot project has continued its UCG operations.
The department continues to closely monitor the environmental impacts of all UCG pilot projects, in particular any air emissions and impacts on groundwater.
Project update
Carbon Energy
On 11 July 2011 the department laid charges against Carbon Energy Pty Ltd and one of its directors relating to incidents at the Bloodwood Creek site, 45 kilometres (km) west of Dalby, during 2009.
The department will allege that Carbon breached conditions of its environmental authority and failed to report an incident as required under the Environmental Protection Act.
The department will also allege that one of Carbon’s directors in their role as an executive officer failed to ensure that Carbon notified the department of an incident as required under the Environmental Protection Act.
The charges relate to a spill of process water and the irrigation to land of process water in 2009.
After conducting a site inspection in June 2010 the department became aware of a process water spill that reached Bloodwood Creek in August 2009. Process water is the result of condensed steam that is brought to the surface during the UCG operation and typically contains a range of contaminants associated with coal combustion, including BTEX. During its investigation the department also became aware that process water had been irrigated to land without approval.
In July 2010, the department required Carbon to conduct an environmental evaluation into the source, cause and extent of any environmental contamination caused by the spill.
An environmental protection order was also issued in July 2010 requiring that the UCG operation stop.
During late 2010 Carbon responded appropriately to the environmental evaluation requirements and lodged applications to amend its environmental authorities to reflect the improvements to infrastructure and practices at the site identified through the environmental evaluation.
The department issued amended environmental authorities to Carbon Energy allowing it to restart its UCG trial in February 2011.
The amended environmental authorities provide more stringent environmental protection and more rigid processes the company must implement and adhere to.
An interim report on the Carbon Energy pilot project by an independent scientific panel supports the department’s decision to issue Carbon its new environmental authorities.
CSIRO has provided a letter to the government expressing concern about a possible misinterpretation of the independent scientific panel's reference to Carbon’s reliance on a modelling expert from CSIRO.
The department’s current prosecution against Carbon for past practices, will not impact Carbon’s continuing operations.
Cougar Energy
The department amended Cougar Energy’s environmental authority on Thursday 7 July 2011 so that only decommissioning and rehabilitation activities are allowed at the site. This strong action was taken after Cougar Energy could not demonstrate that the pilot project could recommence operations without unacceptable risk of causing environmental harm.
An interim report on the Cougar Energy pilot project delivered by an independent scientific expert panel supports the department’s decision.
On 30 September 2011 Cougar lodged an appeal of this decision in the Planning and Environment Court. An Environmental Protection Order preventing the recommencement of Cougar Energy’s trial at Kingaroy remained in place until the appeal had been decided.
On 8 November 2011, the department rejected a Cougar Energy request to suspend the requirements of its environmental authority that required commencement of a groundwater rehabilitation program until the appeal had been heard. On 21 December 2011 the Planning and Environment Court dismissed Cougar’s application to stay this requirement meaning that Cougar is still required to comply with these conditions.
As further detailed in the a media release of 1 July 2011, the department has also laid charges against Cougar for three breaches of its environmental authority in 2010, linked to the release of benzene and toluene into groundwater at Kingaroy.
A civil action has been brought by Cougar in the Supreme Court of Queensland alleging breach of statutory duty and negligence. The suit arises principally out of the decision to require Cougar’s pilot UCG facility to be decommissioned and rehabilitated. Cougar is seeking damages exceeding $34,000,000. The department will vigorously contest this suit.
Linc Energy
In July 2010, the department required Linc to conduct an environmental evaluation into the extent to which increases in salinity in groundwaters are likely to be caused by Linc’s activities.
During late 2010 Linc responded appropriately to the environmental evaluation requirements and the department accepted the findings of the investigation.
An interim report by the same panel on the Linc Energy pilot recommended it continues as planned.
The department has also recently required Linc Energy to undertake an investigation into the source, cause and extent of odour emissions that have been detected at sensitive receptors near the Linc site.
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