Laurus Energy finds clean coal solution?

Houston, Texas-based Laurus Energy says it has the technology to cheaply convert North America’s biggest asset into energy.

Three-year-old Laurus came out of stealth mode this week, announcing it raised $8.5 million from Mohr Davidow Ventures in April to build a business around underground coal gasification (UCG) technology licensed from Ergo Exergy Technologies.

Laurus Energy’s exclusive rights for the North American market give it access to technology already in use in South Africa, India and Australia—technology unlike any other being used to produce a natural gas equivalent, said Erik Straser, general partner at Mohr Davidow Ventures and a board member at Laurus.

The process is cheaper and cleaner than current coal gasification techniques, with the added benefit of beng a proven technology, he said.

Montréal, Canada.-based Ergo’s proprietary process addresses how to site, start, manage and complete projects. The UCG process injects air into underground seams before igniting it, which burns the coal and produces syngas. Using existing technology, carbon dioxide can then be sequestered from the gas, leaving hydrogen, methane and hydrocarbons that burn cleanly in power plants, Straser said.

The UCG process leaves many of the contaminants from typical mining operations underground, preventing their release in the atmosphere. Additionally, the UCG technique opens up new, deeper coal supplies that were previously not accessible, Straser said. He couldn’t quantify the gains in the region’s accessible coal supply but said coal could be accessed at 1,500 meters, while current technology can access coal up to about 200 meters.

“This could satisfy hundreds of thousands of years of coal demand,” Straser said. “Think of the U.S. as the Saudi Arabia of coal. This makes it the super-Saudi Arabia of coal.”

The sequestered carbon can be used for enhanced oil recovery, while the syngas can be used to drive turbines for power generation, or even to make chemicals, fuels, semiconductors and packaged food.

The resulting gas is a cheap power source with environmental benefits over current technology, Straser said. The cost is about half the current price for natural gas.

Laurus is preparing several UCG projects in Alberta and Nova Scotia to fuel 1,000 megawatts of coal and natural gas power plants. The company is also preparing UCG plants in Canada to produce chemicals and liquid fuels.

Such a UCG project would likely cost in the tens of millions of dollars, while standard ground-level coal gasification plants would cost $1 billion to $3 billion, Straser said.

Ergo’s UCG process has been used for nearly 40 years in a facility in Uzbekistan that Laurus Energy’s founders Simon Maev and Michael Blinderman operated years ago (Blinderman also founded Ergo). The technology is just arriving in the North American market because demand only materialized in the last decade as natural gas prices increased, Straser said.

Coal fuels about half of U.S. electricity production and provides about a quarter of its energy. More than 60 percent of coal mined in the U.S. is dug from the surface, a process highly criticized for its environmental impact (see Top U.S. bank phases out loans to dirty coal).

Surface coal gasification projects by companies such as GreatPoint Energy are a cleaner alternative but still draw criticism for high costs and emissions (see New York drops plans for clean coal plant, FutureGen goes FutureBust and GE makes clean coal acquisition). GreatPoint is developing a single-stage catalytic gasification process to create natural gas that is 99.5 percent pure methane and can be transported using the existing natural gas pipeline infrastructure (see FutureGen migrates north?).