AIM-listed Cluff Natural Resources has announced plans to build the first plant in Britain that would use a controversial process to extract gas from "stranded" deep sea coal seams. The plans were announced following an independent survey that estimated that there are up to 335m tonnes of coal beneath the Firth of Forth in Fife, Scotland.

If underground coal gasification (UCG) overcomes safety concerns (it has a chequered history in the US), planning and environmental hurdles and can be made commercially viable, then supporters believe it could form part of the UK's future plans to provide diversity of supply, energy security and cleaner energy. The issue of the UK's depleting energy resources is well documented and have led to an increased profile of shale gas.

UCG is an unconventional method of gas extraction and requires the partial combustion of coal in situ. It has not previously been used offshore in Britain although it has been used for over a century in other countries, including Russia and the US. The UCG process involves injecting oxygen into a coal seam to convert the coal at high temperatures into "syngas", which is a mixture of gases including methane, hydrogen and carbon monoxide. The gas is then pumped to the surface and transported to an onshore processing plant.

Although it shares some similarities with fracking, UCG is technically very different. The UCG procedure requires one or two drill holes, a fraction of the fresh water and does not require setting off underground explosions. There is a belief that UCG could compete with fracking as an unconventional method of gas extraction due to the environmental and planning issues that can accompany fracking.

On the other hand, there is concern among some environmental commenters that the UCG process would only further increase Britain's reliance on fossil fuels and risk underground pollution. Furthermore, UCG has the potential to divert attention away from a renewables sector that is growing in importance. October 2014 saw wind power set a new record in the UK by providing 24% of the UK's electricity supply for a single day.

Clearly if the UK is interested in transitioning to low and zero carbon energies, then UCG has the potential to form some part of that plan. However, given the questions marks hanging over the commercial feasibility of the process, safety issues and environmental impact, not to mention financing UCG, it is going to take many years to know what exact role UCG will play. In the meantime, however, it will remain an interesting space to watch.

Anthony Long
London
+44 20 7551 7571
along@kslaw.com
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