Two weeks ago, SGC signed a memorandum of understanding with Bulga Coal Management, a subsidiary of Xstrata Coal. The companies plan to investigate the merits of pre-draining coal seams in advance of mining, particularly at the Beltana longwall development project at the Bulga complex in the NSW Hunter Valley.
SGC have successfully run a 22 vertical well coalbed methane (CBM) drainage project in the Camden area of NSW since May last year. Gas from that project, fed into an auxiliary pipeline, currently services the power needs of about 20,000 homes. SGC, which holds the petroleum exploration licence in the Hunter Valley, targeted the Bulga area as having the highest commercial volumes of CBM.
"The proximity of Sydney Gas' acreage to Bulga's mining operations provides an excellent opportunity for both companies to combine their expertise and technologies and extract methane from Bulga's coal mines in advance of mining operations," said Jeff Gerard, Xstrata Coal's general manager - business development.
Should it progress beyond feasibility, the BCM project will be SGC's first involving an operating longwall mine. SGC plans to use conventional horizontal drilling methods from an in-seam location. The utilisation of the methane could either be by conversion into small volumes of electricity, along the lines of the established models at BHP Billiton Illawarra mines Tower and Appin. Alternately, the gas could be piped directly into turbines at power generation plants.
Sydney Gas' chief executive officer, Dr Bruce Butcher said: "This is an important step forward for the coal and coalbed methane industries in New South Wales. By collaborating with Bulga on this joint project, the methane that is a major problem for all coal producers, becomes a major asset. The advances in coalbed methane technology that our team have made, coupled with the vast experience in coal production by the Xstrata Coal group, should benefit both companies."
Beyond the obvious benefits of commercially exploiting methane - a once hated and threatening problem - there are some other important benefits. Once in-seam SGC could pre-drain lower seams as well, providing important exploration data to Xstrata as a valuable by-product and possibly opening up these lower coal seams for mining.
"The commercial exploitation of gas from Bulga's mines will benefit Bulga's partners and Sydney Gas' shareholders and investors, the local community and the State of New South Wales", said Gerard.
Of growing importance to large mining companies such as Xstrata Coal is their engagement with the debate around sustainable development. As Gerard commented: "The technological development for high concentration methane management is well developed."
And, like many NSW longwall mines, Enex faces continuing gas challenges in their current underground operations, at Teralba and United for instance.
"We don't believe any one solution is the be-all and end-all," Mr Gerard said, highlighting the industry's awareness that a range of technologies are already in application, with several others under current development.
Xstrata is currently in the process of commissioning a feasibility study to look at alternate future technologies for methane utilisation. The issue already identified by Xstrata, is how to deal with ventilation air. Methane levels in ventilation air are usually very low, at around 0.1% to 0.8%, which makes economic utilisation a major challenge. Research projects such as CSIRO's closed cycle gas turbine project are trying to address this problem but are still some way off delivering final solutions.
In the meantime, BCM is in the enviable position of having a 5-6 year window at Beltana before gas levels present a problem. By then longwall panels will have been pre-drained and solutions to dealing with ventilation air will have progressed.
"Sydney Gas is keen to develop an alternative energy source with Bulga by extracting methane from Bulga's mines so that coal can be safely mined, the cost of degassing reduced and overall productivity enhanced," Dr Butcher said.
