Marathon’s first order of business will be a planned appraisal drilling program the Leigh Creek coal resource, which should be completed by the end of September.

Last week it secured approval for the initial phase of drilling, and quickly engaged a drilling contractor so the resource, which is targeting deep coals below open pit depth, and be brought up to a JORC 2012 compliant standard, to then better quantify the in-situ gas potential.

Past work suggests there could easily be 350 million tonnes of coal in the ground.

The work will also help accurately define background water quality in the area and accurately map the coal seams at Leigh Creek.

The company says the project is outside the Great Artesian Basin, with drilling intended to occur in locations where water at depth is saline.

Marathon started marketing its potential sales gas in December, with first sales targeted within three years.

Underground coal gasification has been proven in Australia, but not at Leigh Creek, and while there were several promising trials in Queensland many ended under a cloud.

While most issues have been settled, Linc Energy continues to fight with the Queensland government over pollution claims associated with its Chinchilla pilot project.

Marathon says the east coast gas market is strong, exacerbated by existing shortages, a moratorium on UCG in Queensland and doubts over supply of CSG in New South Wales and Victoria.

Those factors combine to make Leigh Creek an attractive alternative opportunity to supply gas to domestic markets and industrial consumers, the company said.

Marathon says it commenced marketing in December, with a three-pronged approach, targeting small-scale gas sales to industrial customers for early production, aimed at providing the data needed to better understand how the coals perform and would the feed into a plant and pipeline design plan.

The Moomba-Adelaide pipeline system is just 125km away.

The pipedream, so to speak, is sales into the Gladstone LNG projects.

Marathon says it probably can ramp up and down its project quickly to meet seasonal demand and incorporate modest forms of gas storage as a support a buffer for its own needs as well as better meet customer’s needs.

It says early discussions with retail gas suppliers, domgas users and several international LNG companies have been promising.

The Leigh Creek project in central SA is about 550km north of Adelaide, over and around the existing coal field that Alinta Energy recently said was effectively depleted of surface minable coal.

Alinta plans to shut down the mine and the existing, aging coal-fired power stations near Port Augusta the mine supplied in the coming years.

Marathon’s proposed project intends to develop an in-situ gasification process at coals between 400m and 1500m deep.

ISG facilities operate by drilling two opposite sides of an underground coal seam.

Rather than igniting the coals, Marathon uses an oxygen injection technology to initiate the gasification reaction.

The other well is used to return syngas to the surface where it is processed further and cleaned for power, gas, and chemical purposes.

Marathon is targeting domgas resources, ammonium nitrate for fertiliser and explosives and remote power generation.

Marathon’s new management team, Justyn Peters and David Shearwood, had previously attempted to take control of Liberty Resources, which was involved in a similarly ambitious plan to develop stranded coal assets for energy and fertilisers in Queensland at a cost of $4 billion.

Liberty is now an IT concern and its assets have been sold or relinquished.

Peters spent six years with Australian UCG pioneer Linc.

Peters and Shearwood said on Friday that they had looked at many sites around Australia to undertake a UCG project and that “Leigh Creek stood out above all others we evaluated”

“The town of Leigh Creek has medical facilities, school and significant infrastructure already in place. It has power, water, rail and a highway and, most importantly, a potential workforce only kilometres away from the Leigh Creek mine,” they said.

Marathon also has four other applications around Leigh Creek, PELA 643 in the southern Cooper Basin, and PELA 649 located on the Eyre Peninsula, south of Lock, close to the Lock coal project.

SA has limited but large low rank sub-bituminous coal deposits, which in recent years have been the focus for planned multi-billion coal to gas and coal to liquids proposals, none of which has advanced to the pilot stage.

South Australia is littered with projects aimed at developing the coal deposits that have gone nowhere.

Altona Resources and Syngas Energy each were working toward massive CTL projects in the Ackaringa Basin.

Altona claims to have a resource equivalent to 7.8 billion barrels of clean-burning fuel for Australia and the world, although it is still looking at available options to find the most suitable method of producing diesel, methanol and other petrochemicals from its project areas around the Wintinna resource.

Syngas maintains its St Vincent Basin coalfields, but work on the Clinton project has stalled and the Moorbank deposit was allowed to lapse last year. It is likely that Syngas will allow all its SA permits to wither away while a new shareholder group re-focuses it on Asian energy opportunities.

In 2013 the London-listed company lost CNOOC as a joint venture partner and gained two new farminees Sino-Aus and Wintask and is still pursuing a 15,000 bbl and 6200 tonne per day methanol plant.

Strike Energy conducted pre-feasibility studies over the Kingston coal deposit in the Gambier Basin for a 10,000 barrel per day liquids project, but its FuturGas project has fallen off the radar in recent years and the licence over the Kingston deposit was recently handed back to the government.

So far, none of the ambitious SA plans has succeeded.