Eddie Hueppauff

Coal gasification projects determined to be developed in CQ

VALUABLE coal expanses in Central Queensland - once the target of the world's most powerful miners - are now acting as a backstop for gas companies trying to escape regulatory limbo.

Cougar Energy and Liberty Resources are determined to develop underground coal gasification projects in south-west Queensland, but the UCG process is being held back by a moratorium.

Cougar is now investigating the case for a new underground coal mine on its "Mackenzie" site in Central Queensland's Bowen Basin about 25km north-east of Blackwater and sandwiched between two already operating sites.

Liberty, too, has taken a second look at a long-held block of land about 170km south-west of Mackay, which it suspects will be rich with steel-making coal.

Like Cougar, the Liberty site is in the right neighbourhood - BHP Billiton Mitsubishi Allaince, Peabody and Vale operate nearby.

For both, their UCG plans remain the priority but if these currently fallow sites become something worthy of investment dollars, it may help them ride out the sector's uncertainty.

Cougar has already surpassed its early guesses for the site, confirming it could have 240 million tonnes of coal, up from the 170 million tonnes it had previously estimated.

Managing director Rob Neill said it was great news for land "that was not really doing anything".

"We thought it was prudent to move quickly on Mackenzie, getting that drilling program started," he said.

"Just six weeks later, we've been able to release an exploration update."

Mr Neill said the group was open to investors while considering the prospect of an underground mine producing up to 3 million tonnes of coal per year.

For Liberty, Queensland manager Scott Cross said the move into coal was about giving something to shareholders while its gas ambitions remain on hold.

"We really want to deliver (the fertiliser project) to Queensland but with the moratorium in place, we can't commercialise that project," he said.

"It's a project we want to run in parallel."

The UCG process involved the pumping of oxygen into coal seams which - combined with underground pressure - creates "syngas" that is brought to the surface for use.

Cougar's pilot project at Kingaroy was halted by the Queensland Government on suspicion of environmental damage - the government would later lay three charges relating to damaging groundwater.

Cougar has since launched court action in response to the shutdown, demanding $34 million in damages, which the government is expected to contest.

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