LONDON, Oct 1 (Reuters) - Plans to burn Britain's large reserves of coal to produce gas for power plants may wait for years because of concerns about climate change and a public perception that the technology is similar to fracking.
Cluff Resources, one of the companies trying to develop underground coal gasification in Britain, said the technology is not likely to be deployed for at least another five years, while government officials are tied up with the public opposition to hydraulic fracturing, or fracking, for shale gas.
"The opposition to fracking has caught the government and companies drilling for shale gas by surprise, and it is taking up a lot of their executive time. Accordingly, we need to explain the absolute difference between fracking and the offshore coal gasification technology," the company's chairman, Algy Cluff, said in an interview.
In common with fracking, underground coal gasification entails the injection of a mixture of compounds to yield a gas that can be used in power generation. Both techniques create toxic byproducts that must be removed from the processing site and made safe.
Coal-to-gas projects involve boring mostly into thin, unmineable coal seams deep offshore. A mixture of air, oxygen and steam is injected underground to combust subsea coal reserves.
By contrast, fracking unlocks natural gas through high-pressure injection of chemicals, sand and water at land-based sites.
Cluff, who helped pioneer the development of Britain's offshore oil and gas industry in the 1970s, said underground coal gasification sites could use much of the pipeline infrastructure already in place to transport the gas and would be much less disruptive to rural communities than fracking for shale gas.
Cluff and at least four other companies - Clean Coal Limited, Five-Quarter Energy, Riverside Energy and Europa Oil & Gas Limited - have been issued with 21 licenses for coal seam blocks.
But additional permits will be needed from a range of government agencies before drilling and production can start.
The process was first adopted on a wide scale by the Soviet Union during the 1930s, but after the Second World War the technology failed to advance beyond the experimental stage because of cheap oil and gas prices.
Higher gas prices and technological improvements have rekindled interest in underground coal gasification in recent years. Four projects are currently operating in Australia, China, South Africa and Uzbekistan.
Britain produces around half of its natural gas from the North Sea, and that figure is likely to fall to around 25 percent by 2030, according to government estimates, increasing its dependence on imports from Norway and Qatar.
"We are potentially talking about a second North Sea here (in terms of gas production from coal). It's far too big an opportunity for government and energy majors to ignore," Cluff said.
In this technology, the coal from deep seams is burned, and the resulting gases are processed. Carbon dioxide and toxic byproducts are separated from gas that is used to generate power and to manufacture industrial chemicals.
The CO2 could be pumped back into the subsea cavities and nearby depleted oil and gas wells, Cluff said.
Burning coal underground and using the gas for power generation produce twice the carbon per megawatt-hour of a conventional gas-fired power plant.
Britain's government has already said it will allow underground coal gasification only if the process uses carbon capture and storage, a technology that has struggled to attract funding because of high costs and technical obstacles.
Not including the expense of carbon capture and carbon permits, the cost of coal gasification and the resulting power generation would amount to around 52 euros per megawatt-hour (44 pounds/MWh), according to a recent EC-funded report, compared with an estimated 48 euros per MWh from conventional gas power generation in Britain.
Meanwhile, local opposition is growing in coastal areas of eastern and northern England, Wales and Scotland near the proposed coal gasification projects.
Frack Off, the pressure group that coordinated protests this summer against exploratory drilling for shale oil in Balcombe, southern England, has said setting fire to coal underground would be "insane".
"Previous small-scale tests have been dogged by contamination of groundwater with toxic and carcinogenic coal tars, explosions and other mishaps. On an industrial scale it would rival the Canadian tar sands for scale and environmental impact, producing vast streams of toxic waste," the group said.
Critics say the technology would be more carbon intensive even than traditional coal mining.
But Cluff and other operators said Britain's tough regulations, use of deep offshore coal seams, carbon capture, good management and regular monitoring would mean that they could gasify coal without polluting air, water or soil.