Embattled Leigh Creek has been thrown a lifeline with plans launched to set up Australia’s only gasification processing plant at the soon to be abandoned coal mine.

The Leigh Creek Energy Project (LCEP), an in-situ coal seam gasification operation, has announced its intention to build the extraction plant after Alinta Energy brought forward plans to close the coal mine in South Australia’s north.

The plant is touted to fill a demand gap for domestic gas nationally and will also provide competitive locally sourced energy for big business.

It is also slated to be a major South Australian producer of fertiliser, bringing costs down for primary producers.

The operations are expected to ramp up in 2018 and will have a 30-year lifespan.

It will employ up to 500 workers during the construction phase and this will level out to about 150 employees when production begins.

LCEP chairman Justyn Peters told InDaily today Leigh Creek had the infrastructure, materials and the workforce it had been looking for to start a gas extraction operation.

“We looked at a lot of sites around Australia and everything was here,“ Peters said.

“All the infrastructure was all there in place and that saves us millions and millions and millions of dollars.”

Alinta told its workers in the tiny town of Leigh Creek, 560 kilometres north of Adelaide, last Wednesday that operations would shut down on 17 November, leaving some 200 people out of work.

A further 240 workers were told they would lose their jobs when Alinta shuts down its Flinders operations in Port Augusta in March 2016.

Leigh Creek

Once operational, the new project will administer an in situ gasification process to convert carbonaceous materials (coal) into a synthetic gas and after it is cleaned up can be interchanged with natural gas.

Gasification is a production process applied to original seam coal deep underground.

Injection and production wells are drilled from the surface to access the coal seam.

Peters said the process was different to coal-seam gas extraction, which has attracted strong criticism in Australia and overseas from neighbouring landowners, as heat rather than water was used to extract the gas and the coal for the Leigh Creek project was confined to an area of 3.5 x 7.5 kilometres.

He said LCEP wanted its workforce to remain residential, rather than fly-in fly-out, and continual community engagement would be held leading up to the 2018 start date.

“We are also working with Alinta Energy in an effort to come to a positive outcome with regards to medium and long-term issues associated with the closure of the Leigh Creek Coalfield in an attempt to minimise regional job loss.

“Whilst it is unfortunate that Alinta has decided to close the operations, they have been extremely accommodating and incredibly supportive to us in the hope we will contribute to a new future for Leigh Creek.”

Peters said although there would be a three-year gap between Alinta shutting down the coal operations and the gas plant starting up, construction of key infrastructure and ramp-up work should provide employment for more than 500 people during the period.

As the town adjusted to its new future, the State Government yesterday announced former education minister Jane Lomax-Smith would head a team to investigate business options for Leigh Creek.

LCEP was acquired by Marathon Resources on 27 May 2015 and relisted as LCEP on the ASX on 3 July 2015.

InDaily has contacted SA Treasurer and Minister for Mineral Resources and Energy Tom Koutsantonis’ office for comment.