Solid Energy believes coal seam gas could eventually supply up to 10% of NZ’s gas demand. The SOE has launched a 1MW power station at Huntly, fired by coal seam gas from a pilot field near Huntly. The initiative has been applauded by Energy Minister Gerry Brownlee, who is much friendlier towards coal and gas than his Labour predecessor David Parker, and is giving Solid Energy reason to feel optimistic about its future over the short to medium term. Both Brownlee and SOE Minister Simon Power attended the opening of the coal seam gas plant at Huntly last week. Solid Energy says gas from the Huntly wells contains only 1% CO2 and has 98% energy-rich methane. That means it has a lower carbon footprint than conventionally-produced natural gas, which until now has been NZ’s cleanest thermal power. Elder notes the energy is being generated in a rural environment, surrounded by cattle. He adds, “It’s not the sort of place where you’d expect to be producing power but we’re working with WEL Networks to increase what we can put onto the grid from that location.”

The pilot coal seam gas field was developed through a joint venture between Solid Energy and US oil and gas company, Resource Development Technologies. The joint venture company, Coal Bed Methane Ltd, undertook three years of exploration and assessment before generating electricity. Coal seam gas can be used for industrial energy, electricity generation and could be injected into gas transmission systems to supplement gas resources. It could also be a top quality gas feedstock for other uses.

Meanwhile, Solid Energy CEO Elder is still upbeat about the SOE’s vast lignite fields in Southland, which he says could provide electricity at a fraction of the cost of any other form of generation. It’s just unfortunate we now live in a carbon-constrained world, where the only politically acceptable way to burn coal is to capture and store the CO2. But technology to do this commercially is still at least 10 years away.

In the shorter term, coal seam gas is closer to being commercially viable. Solid Energy is continuing to assess the commercial viability of the wider coalfield at North Huntly and expects to make a decision on the next stage of field development within the next few months. Elder notes coal seam gas provides 15-20% of gas supply in the US and Aust’s eastern states, with the figure climbing to 70% in Queensland.

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