On Wednesday, the state government issued Leigh Creek Energy (LCK) a petroleum production license (PPL) and associated activities license (AAL) for the former Leigh Creek coalfield, enabling LCK to take the next step in developing what it hopes will become the largest underground coal gasification site in Australia.
UCG is a mining process which sets fire to coal underground to release a mixture of carbon monoxide, carbon dioxide, methane, hydrogen and other elements. This mixture, known as syngas, can be used for a variety of purposes, including energy production and agricultural fertiliser.
LCK plans to use the syngas to produce one million tonnes of nitrogen-based fertiliser a year to supply Australian agriculture. It projects revenues of $26.5 billion and costs of $8.1 billion over the 30-year commercial lifespan of the project.
The Scottish Government banned UCG in 2016 when it revoked six exploration licenses following the recommendations of an independent report written by Professor Gemmell.
Gemmell, the former EPA CEO in South Australia and Scotland, wrote in 2016 that it is “extremely difficult to conceive of UCG progressing into use at this time” due to the “clear existing concerns over the apparent record of performance of the industry worldwide thus far, and the lack of data from effective demonstration of the technology in use”.
“Production, especially over the longer term has only been undertaken in a few cases and, where there are any data at all, there appears to be evidence of performance failure,” Gemmell wrote.
“As no long term ‘at-scale’ life cycle operation has been completed and recorded, and no detailed environmental performance or health records, it is extremely difficult to respond to this point.”
Speaking to InDaily, Gemmell said nothing to his knowledge had changed from the conclusions he reached in 2016.
“Not much has changed – of which I am aware – at any rate,” he said.
“The very few pieces of published work I have seen, largely Chinese and South African papers as well as some citations of earlier Russian Federation and Soviet work, are either technical or economically focused.
“There has been, again to my knowledge, no peer-reviewed work challenging conclusions about the risks on environmental, geologies, health or safety grounds.”
He also said current emissions targets – which in South Australia include a 100 per cent net renewables goal by 2030 and a net zero emissions target by 2050 – should make UCG projects a non-starter.
“Precaution and regulatory rigour aside, I would have thought the even tighter climate change agenda and carbon reduction needs and targets, globally as well as for Australia, would have made such proposals unacceptable,” he said.
“Anyone advocating UCG development would do well to answer the questions my report posed and use appropriate and credible data to do so.”
In a statement to InDaily, a spokesperson for LCK said its UCG project could be “safely operated and contained” given the site’s distance from sensitive land features.
“[UCG] creates little surface disturbance as above-ground facilities are easily located away from sensitive areas without impacting access to targeted reserves,” the statement said.
“It provides groundwater protection as in-situ gasification (ISG) can be conducted away from any nearby groundwater resources (which are also saline and therefore not used for livestock, agriculture or drinking purposes).
“Gases produced cannot escape in an uncontrolled way as the geology around the solid coal is tight and thick. ISG eliminates much of the energy waste associated with moving waste rock as well as usable product to the surface.
The spokesperson also said UCG produces less greenhouse gas emissions than conventional mining and has the potential for carbon capture storage. LCK’s managing Director Phil Stavely also said in his announcement to the ASX on Wednesday that his company expects the project to be carbon neutral by 2030.
UCG exploration was banned in Queensland after a Brisbane district court convicted Linc Energy, which operated a UCG plant near the town of Chinchilla, on five counts of wilfully and unlawfully causing serious environmental harm.
The court found Linc Energy mismanaged the underground burning of coal by injecting air at pressures that caused surrounding rocks to fracture, allowing toxic gases to escape to the surface in what former Queensland Environment Minister Stephen Miles described as “the biggest pollution event probably in Queensland’s history”.
Linc Energy, which went into administration and did not defend themselves in court, was fined $4.5 million for the incident.
The Queensland Government put in place a 314 square kilometre “excavation caution zone” around Linc Energy’s former site, due to concerns about hydrogen explosions.
Professor Gemmell’s 2016 report noted: “The performance of Linc Energy and other operators appears to provide evidence of significant environmental impacts and anecdotal exposures of workers to toxins resulting from operational failures.”
In response to concerns about UCG’s previous use in Australia, LCK pointed InDaily to an independent assessment of the Leigh Creek project undertaken in April 2018, which stated “[It] is unreasonable to draw an association between these projects due to material differences related to the site suitability, operational practices and the level of regulatory oversight”.
“It is the author’s opinion that the LCK project has presented robust science to clearly show a much lower risk than the Linc operation, and is focused on a transparent demonstration of environmental performance as a key step to commercialising its assets.”
LCK now needs to submit an Environmental Impact Report (EIR) and Statement of Environmental Objectives (SEO) to the SA Department of Energy and Mining before it can proceed to the final approval stage.
In a statement to InDaily, a state government spokesperson said the matters must be settled before the company began the project at Leigh Creek.
“Prior to commencing activities on the ground, Leigh Creek Energy must address matters such as securing the relevant Aboriginal heritage clearances and approvals, and submit a new Environmental Impact Report,” the spokesperson said.
“Leigh Creek Energy will be required to demonstrate how proposed operations will be undertaken in an environmentally safe manner before the grant of approvals.”
The state government granted LCK environmental approval to run a pre-commercial demonstration plant at Leigh Creek in 2018.
This decision concerned environmental experts Associate Professor Gavin Mudd and Dr Matthew Currell, both of RMIT University, who penned a letter to the lawyers of environmental group William Light Foundation to outline their concerns with the project’s EIR.
The Adnyamathanha Traditional Lands Association also sought a court injunction to stop the pre-commercial plant from going ahead.
LCK says the plant was successfully constructed, operated and decommissioned over the last two years.
Leigh Creek is a former coal mining town about 550 km north of Adelaide. In its boom years in the 1980s, it used to be home to more than 2500 people, but now has a population of less than 150 after Alinta Energy closed down the town’s coal mine in 2015.
LCK says its project will create more than 2000 constructions jobs from 2021 to 2022, as well as “1500 direct and up to 2800 indirect jobs” in the Northern Flinders Ranges region once the plant is operational.
The state government has committed $30.6 million over the next four years to “transforming the Leigh Creek township”, which was transferred into government hands in 2017.
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