The Railbelt might not have a diverse energy supply, but it does have diverse energy prospects. Companies are in the early stages of new wind farms, geothermal wells and alternative forms of hydropower. But fossil fuels are diversifying, too. When there's nothing in the fridge, you have to get creative with what you find in the pantry.
One interesting trend that popped up this year is Underground Coal Gasification, a way to make gas in deep coal deposits. Underground Coal Gasification, or UCG, works because coal contains carbon that can be manipulated through chemical processes into a gas. That gas can heat buildings and make electricity, or be liquefied for other uses with carbon emissions roughly equal to natural gas, and certainly better than coal alone.
That description is heartening for two reasons. First, declining natural gas production in the Cook Inlet means alternative fuels that fit easily into the existing system will be welcome over the next few years. Second, Alaska is rich in coal reserves, surpassing all other states combined, but hasn't been able to use most of it because the deposits are either too far away or too deep underground, or because of opposition to coal mining.
At least three groups are now proposing UCG projects in Alaska. The farthest along could begin operations by 2015, around the time natural gas production in the Cook Inlet is projected to dip below regional demand in Southcentral. That gives Alaska several years to study a technology that promises large benefits, but that hasn't received as much attention as other alternative ways of wringing cleaner burning energy from fossil fuels.
Once loved, and loved again
UCG is not new, just overlooked. Sir William Siemens, a German scientist, proposed the idea in the 1860s. Soviet scientists began researching the technology in the late 1920s and began commercial operations in the 1950s, but let production decline in the 1970s.
In this country, UCG research and development waxes and wanes with public concern about energy. Between 1974 and 1989, following the oil embargo, the U.S. Department of Energy helped fund 33 UCG pilot projects, according to a September 2009 report on various low carbon coal technologies by the non-profit Clean Air Task Force.
That support began to dry up, though, when oil prices fell in the late 1980s.
"When low cost gas is abundant, people are uninterested in UGC," said Dr. Julio Friedmann, head of the Carbon Management Program at the Lawrence Livermore National Laboratory in California and author of the chapter on UCG in the Clean Air Task Force report. The LLNL participated in many of those initial pilot projects and is currently acting as a technical advisor to one of the UCG project sponsors in Alaska.
Friedmann said refined syngas, the product created through UCG, currently costs around $3 per million British thermal units of energy in most markets. That would make it cheaper than natural gas in both Anchorage and Fairbanks, and well below fuel oil.
Because UCG hasn't been a priority in decades, each new project requires the attention of a limited group of experts. Friedmann said that this knowledge gap should justify a federal research program, but isn't cause for public alarm. It does, however, present regulatory challenges for Alaska, which knows coal and gas, but not a mix of the two.
On the surface, UCG looks like a normal oil or gas project, except it uses two wells instead of one. The first well blows air into a coal seam. That produces heat underground that begins a chemical reaction. It reconstitutes the hydrogen, oxygen and carbon in the seam into a gas containing hydrogen, carbon monoxide, carbon dioxide and methane.
This mixture is produced through the second well, where it's refined and used.
UCG is different from Coal Bed Methane, a coal-gas hybrid process that riles many for water use and potential to contaminate water supplies. In Coal Bed Methane development, natural gas is extracted from shallow coal seams by removing large amounts of groundwater holding it in place. That creates a lot of water to dispose of, and also presents the possibility of contaminating drinking water if things don't go right.
In UCG, gas is created deep underground through a chemical process that uses, but doesn't remove, groundwater. UCG, ideally, occurs well below drinking water supplies.
Three projects proposed for Alaska
Between the high price of crude oil, the crunch on natural gas supplies and the abundance of coal, the Alaska energy market is primed for UCG. And companies are interested.
Cook Inlet Region Inc. is leading the pack.
The Alaska Native Corporation and the Houston-based UCG company Laurus Energy Inc., formed Stone Horn Ridge LLC to build a UCG project on the west side of the Cook Inlet, north of Beluga. As currently imagined, the Stone Horn Ridge project would fuel a 100-megawatt power plant. It would also capture carbon dioxide, keeping the emissions out of the atmosphere. By combining UCG and carbon capture technology, "CIRI is one of the most forward of the projects in developed countries," Friedmann said.
Stone Horn Ridge drilled exploratory wells earlier this year and plans to conduct more fieldwork this year. CIRI believes a project could be online in the 2014-2015 time frame.
Around the time CIRI announced its project, various energy players began pitching the idea of UCG to the Alaska Mental Health Trust Land Office, according to Mike Franger, senior resource manager for the Trust, which manages around 1 million acres in Alaska.
"When Cook Inlet Region started their project over there, we decided it would be a way to utilize a deep coal resource that otherwise wouldn't be able to be developed," he said.
In June, the Trust offered up 190,000 acres spread across the Denali Borough, the west side of Cook Inlet and the northern Kenai Peninsula for a UCG development. The process is being run as an exploration license, where any eligible company can propose a project on any of the lands being made available. Those proposals were due on August 20.
Franger wouldn't name any of the companies that originally pitched the idea of UCG, but it wouldn't be surprising if Linc Energy ultimately applied for an exploration license.
In March, the Australian company acquired 123,000 acres around the Cook Inlet. While Linc has plans to drill a conventional natural gas well this fall near Point MacKenzie, the company is far more interested in UCG and sees huge opportunities in Alaska. "Linc Energy has been studying the potential of Alaskan resources for some time and we have been quietly looking for the right opportunity to enter the region," Peter Bond, chief executive officer of the company, said in a prepared statement back in March.
Linc appears serious about Alaska, fast tracking a well and opening a local office, but the company hasn't accommodated several requests to talk publicly about its work.
What is it: coal or gas?
The unique aspects of UCG make it hard to lump together with other fossil fuel technologies, both from an environmental standpoint and a regulatory standpoint.
Environmentally, coal is increasingly under fire as a high carbon fuel with a large footprint. Technologies that promise clean coal often get called disingenuous. A new campaign called Alaskans for Energy Freedom, created by a coalition of environmental groups, plans to take aim at coal projects around the state, like Usibelli and Chuitna.
But UCG doesn't appear to be on the list.
"It's obviously better than coal mining," Dennis Gann, with the non-profit Cook Inletkeeper, said about CIRI's UCG project near Beluga. "If it could capture all the CO2 and some of the other toxic emissions, it could be on par with natural gas."
However, Gann also noted that Cook Inletkeeper and other environmental groups want natural gas to be a bridge to a renewable energy future, and not the future itself.
CIRI insists that its project will capture and manage carbon emissions in some form, but hasn't yet decided what that form will be. The carbon dioxide could be used to enhance recovery at nearby oil fields, a proven technique, or in some other way. The challenge with carbon capture is finding a way to make it earn money, rather than cost money.
UCG still presents environmental concerns, like all energy sources, most involving things you can't see: Will the combustion cause underground coal fires? Will the coal ash left behind contaminate the groundwater? Will the depleted coal seam collapse in on itself?
Friedmann said some concerns are valid and others aren't.
He called claims of vast underground fires "baseless" because the combustion occurs below the water table and "you can't light a fire underwater." Also, coal fires generally occur at shallower depths, where oxygen is naturally present to fuel the flames. In UCG, the depth requires the company to inject oxygen, which can simply be shut off if need be.
Friedmann said groundwater contamination and subsidence are real concerns, but avoidable if the project is located in the right place and designed properly. A notorious test project in the 1970s at Hoe Creek, Wyo. lead to contamination because it attempted to gasify a shallower coal seam in a freshwater aquifer. Today, UCG projects aim for much deeper coal seams, separated from freshwater aquifers by impermeable rock.
Friedmann also said that mapping faults and other geologic structures is important to designing a good project. CIRI is currently designing its project and searching for the best location to put it, and Friedmann said the work they're doing so far is good.
The biggest questioners of UCG in Alaska so far are Bretwood Higman and Erin McKittrick, a geologist and biologist, respectively, who run the environmental and outdoors website Ground Truth Trekking. They haven't raised issues that haven't already been raised by project sponsors, but want to examine groundwater contamination and carbon emissions in more depth now that proposals are commonplace in Alaska.
From a regulatory standpoint, UCG isn't easy to categorize either. The resource is coal but the method of getting it out of the ground is much closer to natural gas. The Coal Regulatory group, a section within the Department of Natural Resources, typically handles coal related developments in the state, but earlier this summer, the Alaska Oil and Gas Conservation Commission decided to require companies looking to drill UCG wells to get a permit from them as well, just like oil and natural gas producers do.
The AOGCC set a geographic boundary where anyone drilling a well deeper than 500 feet needs to get a permit first. The area covers the CIRI project, the Southcentral portion of the Mental Health Trust lands and the Linc Energy leases. The decision is not uncommon; the AOGCC recently took similar steps to regulate geothermal wells.
This all means UCG is in a familiar place for Alaska energy projects: the starting line.
Contact Eric Lidji at ericlidji(at)mac.com.