Mitig Adapt Strateg Glob Change

DOI 10.1007/s11027-014-9588-x

ORIGINAL ARTICLE

Cost comparison of syngas production from natural gas

conversion and underground coal gasification

Peng Pei & Scott F. Korom & Kegang Ling & Junior Nasah

Received: 14 June 2013 / Accepted: 4 June 2014

# Springer Science+Business Media Dordrecht 2014

Abstract Underground coal gasification (UCG) is a promising technology to reduce the cost
of producing syngas from coal. Coal is gasified in place, which may make it safer, cleaner and
less expensive than using a surface gasifier. UCG provides an efficient approach to mitigate the
tension between supplying energy and ensuring sustainable development. However, the coal
gasification industry presently is facing competition from the low price of natural gas. The
technology needs to be reviewed to assess its competiveness. In this paper, the production cost
of syngas from an imaginary commercial-scale UCG plant was broken down and calculated.
The produced syngas was assumed to be used as feedstock in liquid fuel production through
the Fischer-Tropsch process or methanol synthesis. The syngas had a hydrogen (H2) to carbon
monoxide (CO) ratio of 2. On this basis, its cost was compared with the cost of syngas
produced from natural gas. The results indicated that the production cost of syngas from
natural gas is mainly determined by the price of natural gas, and varied from $24.46 per
thousand cubic meters (TCM) to $90.09/TCM, depending on the assumed price range of
natural gas. The cost of producing UCG syngas is affected by the coal seam depth and
thickness. Using the Harmon lignite bed in North Dakota, USA, as an example, the cost of
producing syngas through UCG was between $37.27/TCM and $39.80/TCM. Therefore, the
cost of UCG syngas was within the cost range of syngas produced by natural gas conversion.
A sensitivity analysis was conducted to investigate how the cost varies with coal depth and
thickness. It was found that by utilizing thicker coal seams, syngas production per cavity can
be increased, and the number of new wells drilled per year can be reduced, therefore improving
the economics of UCG. Results of this study indicate the competitiveness of UCG regarding to

P. Pei (*) : S. F. Korom : J. Nasah

Institute for Energy Studies, University of North Dakota, 243 Centennial Drive Stop 8153, Room 366,
Grand Forks, ND 58202-8153, USA
e-mail: peng.pei@engr.und.edu
S. F. Korom
e-mail: scott.korom@engr.und.edu
J. Nasah
e-mail: junior.nasah@engr.und.edu

K. Ling
Department of Petroleum Engineering, University of North Dakota, 243 Centennial Drive Stop 8153, Room
366, Grand Forks, ND 58202-8153, USA
e-mail: kegang.ling@engr.und.edu
 Mitig Adapt Strateg Glob Change

natural gas conversion technologies, and can be used to guide UCG site selection and to
optimize the operation strategy.

Keywords Syngas . Underground coal gasification . Cost comparison . Sensitivity analysis .

Competitiveness

1 Introduction

Worldwide coal usage is expected to increase by 55 % by 2,030 as emerging nations develop

their coal supplies; of this underground coal gasification (UCG) is expected to be a major
player because nearly 85 % of known coal reserves are inaccessible using surface mining
techniques (UCG Association, 2014). In its simplest form, UCG involves two wells: one to
inject the oxidant into the coal seam, usually at depths>100 m (m), and another one to extract
the resulting gases, which are known collectively as syngas. UCG offers several advantages
over surface mining and gasification of coal that make it safer, cleaner, and more economical;
they include the following:

& No laborers work underground.

& All coal is gasified in-place, which reduces the surface footprint of the UCG plant by
eliminating the need for a surface gasifier, thereby eliminating associated dust emissions
and coal transportation, handling, and storage costs.
& All syngas generated comes to the ground surface at a pressure near the hydrostatic
pressure of the UCG cavity, which generally enhances its conversion to other products
and aids many carbon dioxide (CO2) capture technologies.

Syngas is a versatile product that may be upgraded to various chemicals and fuels. There
are two main approaches to produce syngas from fossil fuels: coal gasification and natural gas
conversion. While UCG has been estimated to cut coal gasification costs by approximately 30
~40 % (Geosits et al. 2005; Martelli et al. 2009) it faces stiff economic competition from low
natural gas prices due to the recent shale gas boom. The wellhead price of natural gas in the
USA has dropped from over $210 per thousand cubic meters (TCM) in 2006 to about $70/
TCM in 2012 (U.S. Energy Information Administration 2014a). In this market can UCG
syngas be produced cheaper than syngas from natural gas? This paper compares the cost of
syngas produced from UCG in the Harmon lignite bed in North Dakota, USA, to that from
natural gas conversion. Herein, syngas produced by natural gas conversion is defined as NG-
syngas; and syngas produced by UCG process is defined as UCG-syngas. This study estimated
the NG-syngas production cost, broke down the production cost associated with UCG-syngas,
discussed the competiveness of UCG, and investigated the influences of coal seam depth and
thickness. Approaches to reduce the production cost of UCG-syngas were discussed. Results
of this study helps to enhance the role of UCG as a strategically important approach to mitigate
the tension between a secure supply of energy and environmental protection.
Syngas is a gas mixture consisting primarily of hydrogen (H2), carbon monoxide
(CO), and CO2. The fraction of each gas component in UCG-syngas is different from
that produced from natural gas. The required H2/CO ratio of the syngas is determined
by the desired downstream product and the process used to make it. The most two
popular processes to synthesize liquid fuel are the Fischer-Tropsch (F-T) process and
methanol (CH3OH) synthesis.
Mitig Adapt Strateg Glob Change

The reaction inherent in the F-T process to produce liquid fuels (-CnH(2n+2)-) and water
(H2O) as a byproduct can be expressed, in general, as Eq (1) (U.S. National Energy
Technology Laboratory 2014):
2n 1H 2 nCOC n H 2n2 nH 2 O 1

where n is typically > 10 (Elvers 2001).

Synthesis of CH3OH from syngas can be expressed as Eq (2) (SuperMethanol 2014).
However, for kinetic reasons, a certain minimum quantity of CO2, about 2.53.5 volume
percent (vol%), must be present in practice to attain a high CO conversion (SuperMethanol
2014).
2H 2 COCH 3 OH 2
From Eqs (1) and (2), the H2/CO ratio is about 2 for both processes. Therefore, syngas
generated by coal gasification needs to be processed to adjust its H2/CO ratio to 2 through the
catalyzed, moderately exothermic water gas shift (WGS) reaction. The WGS reaction produces
H2 and consumes CO:
H 2 O COH 2 CO2 3
The processing cost was considered as a part of the syngas production cost. In this study,
production costs of UCG-syngas and NG-syngas were compared at this base.
The block flow of the gas-to-liquids (GTL) process is displayed in Fig. 1. Natural gas needs
to be purified and cleaned of sulfur before entering the conversion block. A common
purification process is prereforming, where all higher hydrocarbons are converted into a
mixture of CH4, H2, and carbon oxides (Aasberg-Petersen et al. 2003). Because the H2/CO
ratio is 2 for the liquid fuel synthesis, natural gas is converted to syngas by partial oxidation or
autothermal reforming (ATR), where it reacts with oxygen (O2) and H2O over a catalyst in an
adiabatic packed bed reactor to form syngas (Aasberg-Petersen et al. 2003; Rice and Mann
2007). Methane (CH4) conversion efficiency in ATR can be between 70 % and 80 % (Ruiz
et al. 2008; Guo et al. 2010). Syngas generated by ATR, which is primarily made up of CO and
H2 at a ratio of 2, is sent to the F-T reactor to manufacture liquid fuel.
The block flow diagram of coal to liquids (CTL) based on the UCG process is shown in
Fig. 2. Most of the sulfur in the coal is converted to hydrogen sulfide (H2S) in gasification.
Syngas produced from UCG needs to be cleaned of its sulfur content and have its H2/CO ratio
adjusted; therefore a sour gas shift reaction and an acid gas removal procedure were used.
These procedures are described below.

Natural Natural
CO, H2
gas gas
Gas separation Autothermal Fischer-Tropsch
and purification reforming process

-CnH2n-,
water
Syngas production part
O2, steam

Upgrading Liquid fuels

Fig. 1 Natural gas to liquid fuel block flow diagram

 Mitig Adapt Strateg Glob Change

Syngas production part

Air CO2
Water
Air Shifted
Water gas shift Integrated
N2 separation syngas CO, H2 Fischer-Tropsch
reaction sulfur and CO2
unit process
separation

O2
sulfur
-CnH2n-, water
Unshifted
syngas
Upgrading

Overburden Liquid fuels

Gasification cavity Coal seam

Underlayer

Fig. 2 Block flow diagram of underground coal gasification and liquid fuel production

An appropriate fraction of the produced syngas is sent to the WGS reactor where CO reacts
with steam to generate H2 and CO2 according to Equation (3). Then the shifted syngas is
mixed with the unshifted syngas. Sulfur and CO2 produced both by the gasification and WGS
processes must be removed from the syngas. An integrated acid gas removal block, such as the
Double-abosber method, based on the Selexol process, or the Rectisol process can be used.
After the acid gas removal block, the syngas, which is mainly H2 and CO at a ratio of 2, is sent
to the F-T reactor to manufacture liquid fuel.

2 Estimate of NG-syngas production cost

This section estimates the production cost of syngas by natural gas conversion in a conceptual
GTL plant. The GTL plant was assumed to have a production capacity of 1,216 cubic meters
per day (m3/d). Because the syngas was assumed to be used as a chemical feedstock, instead of
fuel, the results of syngas cost are given in U.S. dollars per thousand cubic meters ($/TCM) of
syngas produced.

2.1 Description and assumptions

Table 1 lists some worldwide GTL projects in operation or planned. The capacities vary from
270 to 18,360 m3/d. Natural gas inputs range from 595,000 and 50,970,000 m3/d. From
Table 1, it can be estimated that about 1,800 to 2,800 cubic meters (m3) of natural gas is
consumed to produce 1 m3 of liquid fuel. In most cases, we can assume that the natural gas
input requirement is approximately 2,375 m3 per 1 m3 of liquid product (Slaughter 2007;
Callari et al. 2007).
The cost of syngas production (cost reported for 2012 in U.S. dollars) was calculated by
incorporating the capital cost, feedstock (natural gas) cost, and operating cost. A review of the
literature indicated that the capital investment of a GTL project has fallen in the past two
decades (Michael 2005; Wood et al. 2012). The Shell Bintulu project, which is the first GTL
Mitig Adapt Strateg Glob Change

Table 1 Some gas to liquids plants in operation or proposed

Project Capacity, m3/d Natural gas input, m3/d Reference

Chevron Nigeria 4,054 9,345,000 Slaughter 2007; Chevron 2014

Sasol/Qatar Petroleum, Oryx 4,054 9,345,000 Regan 2005; Slaughter 2007
Shell/Qatar Petroleum, Pearl 16,700 45,300,000 Regan 2005; Slaughter 2007
ExxonMobil Qatar 18,360 50,970,000 Yang 2004; Regan 2005;
Slaughter 2007;
PetroSA Mossel Bay 2,860 5,663,000 Slaughter 2007; Regan 2005;
PetroSA 2014
World GTL, Trinidad 270 595,000 World GTL 2014
Syntroleum Sweetwater 1,190 2,832,000 Yang 2004; Regan 2005
Shell Bintulu 1,750 3,115,000 Slaughter 2007; Rapier 2010;

plant in the world, was built with a unit capital cost of $570,000/m3/d (Rapier 2010). However,
now it is expected that the unit capital costs for GTL projects tend to be in a range of between
$170,000/m3/d and $250,000/m3/d (Regan 2005; Srivatsan and Amani 2012). In this study, we
assumed that, for a GTL plant with a production life of 30 years, the unit capital cost was
$210,000/m3/d. In the capital investment, the syngas production cost contributes about 60 % of
the total cost (Aasberg-Petersen et al. 2003; Smith 2004). The operating cost of a GTL plant
was assumed to be about $42/m3 of liquid fuel produced, and the syngas production island
contributed 60 % of the operating cost (Yang 2004; Michael 2005). The price of natural gas
was assumed to be between $35/TCM and $170/TCM, representing a range from stranded gas
to purchased natural gas (U.S. Energy Information Administration 2014a). The assumptions
for a GTL plant with a capacity of 1,216 m3/d are summarized in Table 2.

2.2 Cost of natural gas syngas

The production cost of unit volume of syngas in the GTL plant was calculated according to
annual interest rates and natural gas prices. The results are shown in Fig. 3. Depending on the
natural gas price and interest rate, the cost of NG-syngas varied between $24.46/TCM and
$90.09/TCM. Assuming that 1 volume of natural gas produces 2.25 volumes of syngas the
production cost per volume of syngas was lower than that of natural gas in the results.
Fractions of the annual capital cost, feedstock cost, and operating and maintenance (O&M)

Table 2 Assumptions for the gas to liquids plant

Production capacity 1,216 m3/d

Natural gas input 2,375 m3/m3 of liquid fuel product

Methane conversion efficiency in ATR 75 %
Plant life 30 years
Capital cost $210,000/m3/d
Fraction of syngas production in capital investment 60 %
Operating cost $42/m3 of liquid fuel product
Fraction of syngas production in operating cost 60 %
 Mitig Adapt Strateg Glob Change

100

90

80
Total cost on syngas, $/TCM
70

60

50
Interest rate = 5%
40 Interest rate = 10%
Interest rate = 15%
30

20
0 50 100 150 200
Natural gas price, $/TCM

Fig. 3 Cost of syngas production by natural gas conversion, as a function of interest rate and natural gas price

cost versus the price of natural gas when the interest rate was 10 % are shown in Fig. 4. It is
obvious that the cost of feedstock was the primary component of the syngas production,
contributing more than 55 % of the total cost. The capital cost was a relatively small portion in
the total production cost. Detailed results corresponding to different natural gas prices when
the interest rate was 10 % are listed in Table 3. The annualized capital cost, annual feedstock
cost, annual O&M cost, and total annual cost are given in millions of U.S. dollars per year
(MM$/yr).

3 Estimate of UCG-syngas production cost

In this section, the cost associated with the syngas production part in Fig. 2 is investigated.
Syngas produced from the UCG block was cleaned and processed to meet the required H2/CO

100%

90%

80%

70%

60%
Cost fraction

Annualized capital cost

50%
Feedstock cost
40%
O&M cost
30%

20%

10%

0%
0 50 100 150 200
Natural gas price, $/TCM

Fig. 4 Cost fraction of syngas production by natural gas conversion, interest rate=10 %
Mitig Adapt Strateg Glob Change

Table 3 Syngas production cost by natural gas conversion, interest rate=10 %

Interest rate=10 %, plant life=30 years, production capacity=1,216 m3/d

Natural gas Annual natural Annualized Annual Annual Total Total cost on
price gas feed capital cost feedstock cost O&M cost annual cost syngas
$/TCM TCM/yr MM$/yr MM$/yr MM$/yr MM$/yr $/TCM

35 1,054,000 16.23 36.90 11.17 64.30 27.11

50 1,054,000 16.23 52.71 11.17 80.11 33.77
65 1,054,000 16.23 68.53 11.17 95.92 40.44
80 1,054,000 16.23 84.34 11.17 111.74 47.11
95 1,054,000 16.23 100.15 11.17 127.55 53.77
110 1,054,000 16.23 115.97 11.17 143.37 60.44
125 1,054,000 16.23 131.78 11.17 159.18 67.11
140 1,054,000 16.23 147.59 11.17 174.99 73.77
155 1,054,000 16.23 163.41 11.17 190.81 80.44
170 1,054,000 16.23 179.22 11.17 206.62 87.11

ratio of 2. Syngas was generated at a rate sufficient to support the F-T block with a capacity of
1,216 m3/d. The total cost was estimated by summing the major components and miscella-
neous parts.

3.1 UCG plant description

As mentioned in the last section, the natural gas input requirement for a GTL plant was
approximately 2,375 m3 per 1 m3 of liquid product. Based on the reaction stoichiometry and
the assumption that the carbon conversion efficiency was 75 % in ATR, it was estimated that
1 m3 of liquid fuel needed 1,760 m3 of CO and 3,520 m3 of H2. For a GTL plant with a
capacity of 1,216 m3/d, its F-T block would consume 2,180 TCM/d of CO and 4,360 TCM/d
of H2.
In this study, we assumed that the UCG process was based on the Harmon lignite
bed in North Dakota, USA. Depth of the coal seam is about 245 m, with an average
thickness about 6 m. The UCG process employed the linked-wells procedure involv-
ing 2 vertical wells. The fixed bed Lurgi dry ash gasifiers at Dakota Gasification
Company were used as an analog for the lignite-based UCG reactor. Composition of
the syngas produced from North Dakota lignite by a Lurgi gasifier is listed in Table 4
(Probstein and Hick 2006). The heating value of the syngas is 11.9 megajoules per
cubic meter (MJ/m3) for dry gas, and 5.8 MJ/m3 for wet gas. The dry syngas has a
molar mass of 21.9 kg per kilomole (kg/kmol). To satisfy the input of the F-T block,
the UCG block needed to generate dry syngas at a rate of over 14,160 TCM/d.
The proposed UCG plant used an oxygen injection model. The injection and
production wells had an inside diameter of 15.4 cm (cm) (GasTech 2007). The
injection rate of O2 was 122 cubic meters per minute (m3/min) per well, or 175.6
TCM/d per well. About 9.7 mol of dry syngas was produced per 1 mol of injected
O2. Therefore, the syngas was produced at a rate of 1,705 TCM/d per cavity. As
estimated in the last section, at least 14,160 TCM/d of dry syngas were needed to
support the F-T island; therefore 9 gasification cavities were needed for operation.
 Mitig Adapt Strateg Glob Change

Table 4 Composition of syngas produced from North Dakota lignite

Composition mole%, dry mass%, dry mole%, wet mass%, wet

H2 38.8 3.5 18.9 1.9

CO 15.6 19.9 7.5 10.6
CO2 32.5 65.2 15.7 34.7
CH4 10.8 7.9 5.2 4.2
C2+ 0.8 1.6 0.4 0.9
Other 1.5 1.9 0.7 1.0
H2O 51.6 46.7
Total 100.0 100.0 100.0 100.0
Mean molar mass 21.9 kg/kmol (dry), 19.9 kg/kmol (wet)
Heating value 11.9 MJ/m3 (dry), 5.8 MJ/m3 (wet)

3.2 Cost component

The cost components associated with the UCG plant include well drilling, an air separation
unit (ASU), a sulfur removal system, a gas shift and a CO2 removal system, severance taxes,
and miscellaneous items. The capital cost and O&M cost of each item were calculated, and
then summed to calculate the total cost. Basic parameters and assumptions of the UCG plant
are given in Table 5 (Probstein and Hick 2006).

3.2.1 Well drilling

The cost of oil and gas well drilling is between $65/m and $1,400/m (U.S. Energy Information
Administration 2014b). Since the UCG wells are shallower than most oil and gas wells, we
assumed that the drilling and completion cost was $820/m for a 15.4-cm-diameter well with
stainless steel piping. Wells to be drilled in the project included injection wells, production
wells, and monitoring wells. The drilling depth is 245 m. Startup wells were considered as a
part of the capital investment. New wells for developing gasification cavities were considered
as a part of the annual operation cost.

Table 5 Description of the proposed underground coal gasification plant

Average lignite seam depth 245 m

Average lignite seam thickness 6m

UCG operation model Oxygen injection
Plant life 30 years
Lignite heating value 16.8 MJ/kg
In situ coal density 1.287 metric ton/m3
Dry syngas production rate At least 14,160 TCM/d
Dry syngas heating value 11.9 MJ/m3
Cavities in operation 9
Cold gas efficiency of UCG reactor 75 %
Cavity size Diameter=5 m, length=1,500 m
Mitig Adapt Strateg Glob Change

Since 9 cavities will be in operation, 18 process wells will be drilled for startup. To monitor
the impact of UCG on groundwater quality, two rings of monitoring wells were installed
around the hypothetical gasification area, with 18 monitoring wells in each ring. Therefore, a
total of 54 wells were drilled for startup.
The syngas was produced at a rate of 1,705 TCM/d per cavity. The dry syngas
heating value produced by oxygen injection model was 11.9 MJ/m3. Assuming the
cold gas efficiency of UCG reactor was 75 %, and the heating value of lignite was
16.8 MJ/kg, the coal gasification rate was calculated to be 1,610 metric tons per day
per cavity. The in situ density of lignite is 1.287 metric ton/m3 (Ellis et al. 1999).
Based on the cavity size given in Table 5, the life of one gasification cavity would be
24 days. About 137 cavities would need to be developed every year. So there would
be 274 new wells to drill each year.

3.2.2 Air separation unit (ASU)

From the literature, the capital cost of ASU is in a range of $36,000 to $53,000 per
metric ton of O2 per day (GasTech 2007; Integrated Environmental Control Mode
2012). In this study, the capital cost of ASU was assumed to be $42,000 per metric
ton of O2 per day. The operating cost was primarily the electricity cost. The O2
injection rate was 122 m3/min per cavity, or 207.6 metric ton per cavity per day. The
total O2 injection rate for 9 wells was 1,860 metric tons per day. Therefore, the
capital cost was MM$78.24.
The operating cost of ASU is primarily the electricity cost. Electricity consumption is 468
kW-hours (KWhr) per metric ton of O2 to run an ASU (Integrated Environmental Control
Mode 2012). The operating cost associated with ASU was calculated with a utility price of
$0.062/KWhr (North Dakota Department of Commercial 2014). O2 produced from the ASU is
at sufficient pressures to be injected into the coal bed, so no additional compression equipment
is needed.

3.2.3 Gas shift and sulfur/CO2 removal

Since the ratio of H2 to CO is already close to 2 in the produced syngas (Probstein

and Hick 2006), it was not necessary to add a WGS reactor to adjust the gas
composition. An integrated H2S/CO2 Selexol system was used to remove acid gas
from the syngas. H2S content was assumed to be 0.45 vol%. H2S removal efficiency
was set as 95 %. Captured sulfur was recovered by a Claus Plant. The CO2 was
assumed to be released to the atmosphere, so there is no CO2 conditioning and
compression requirement. Based on the cost reference from the Integrated
Environmental Control Mode (2012), the capital cost for the system is MM$
210.10, including CO2 and sulfur capture/stripping, Claus plant, and tail gas clean
up. The corresponding O&M cost was MM$ 24.10.

3.2.4 Severance tax

The State of North Dakota levies a severance tax on the extraction of coal from the ground.
The base tax is set at $0.413 per metric ton and must be paid monthly (Kent 2010). The
calculated coal gasification rate was 1,610 metric tons per day per cavity as calculated above,
so the monthly severance tax was $180,000. In other words, the severance tax would be MM$
2.16/yr.
 Mitig Adapt Strateg Glob Change

Table 6 Miscellaneous capital and

operating costs in syngas produc-
tion by underground coal
gasification
Miscellaneous capital cost
Pipes and accessories
Project and process contingency
Site facilities and equipment
Engineering fees
Miscellaneous operating cost
Pipes and accessories
Salaries
Maintenance labor and materials
2.5 % of total capital cost
20 % of total capital cost
7.5 % of total capital cost
10 % of total capital cost
2 % of total operating cost
20 % of total operating cost
10 % of total operating cost

3.2.5 Miscellaneous costs

Miscellaneous costs included pipes and accessories, project contingency, salaries, site facilities
and equipment, maintenance labor and materials. A list of the miscellaneous costs is given in
Table 6.

3.3 Cost of UCG-syngas

Based on the descriptions and assumptions above, the capital cost associated with the UCG-
syngas production was calculated and the results are shown in Table 7. Figure 5 displays the
cost fractions of each item.
Based on the descriptions and assumptions above, the O&M cost associated with the UCG-
syngas production was calculated. Table 8 lists the results. The drilling cost of new wells was
the largest component in the O&M cost. The cost fractions of each component are shown in
Fig. 6.
The total costs of UCG-syngas as a function of annual interest rate are given in Table 9. The
annualized capital cost was about 25 % of the yearly expense, while the O&M cost covered the
remaining 75 %. The total cost was close to the NG-syngas for natural gas prices between $50/
TCM and $65/TCM. For comparison, the cost of producing syngas from Illinois #6 coal, by a
General Electric quench gasifier is $50.40 per gegajoule, or about $60/TCM of syngas (Gary
2004).

4 Cost comparison and sensitivity analysis

In the estimate of NG-syngas cost, we assumed that the natural gas price varied between
$35/TCM and $170/TCM to represent a possible range of cost from stranded gas to

Table 7 Capital cost in syngas production by underground coal gasification

Item Value, MM$ Fraction

Startup wells 10.80 2%

Air separation unit 78.24 16 %
Gas shift and acid gas removal 210.10 42 %
Miscellaneous costs 199.43 40 %
Total 498.57 100 %
Mitig Adapt Strateg Glob Change

Startup wells,
2%

Air separation
unit, 16%

Miscellaneous
costs, 40%

Gas shift and

acid gas
removal, 42%

Fig. 5 Breakdown fraction of capital cost in syngas production by underground coal gasification

purchased natural gas. If the natural gas price is below $65/TCM, NG-syngas was more
competitive than UCG-syngas produced from the Harmon lignite in North Dakota, USA.
Most of the recent GTL projects are joint-invested by petroleum companies, and these
GTL plants target stranded gas from the investors oil field, taking advantage of low
price. Considering that stranded gas is not so widely available as deep coal beds, and the
terminal price of NG-syngas will be increased by additional transportation fees, UCG-
syngas still may have an optimistic market. Although the UCG-syngas cost was less than
30~40 % compared to that from a surface gasifier, it may still be necessary to lower the
cost further to compete with cheap stranded gas.
As indicated in Tables 8 and 9, the O&M cost contributed approximately 75 % of
the total cost of UCG-syngas; and new well drilling was the largest portion of the
O&M cost. Drilling cost per well is a function of depth. The number of new wells to
drill each year is a function of coal seam thickness. Thicker coal seams allow
gasification cavities with larger diameters. Therefore, more coal is available per
cavity; and fewer cavities, and fewer new wells, are needed every year to support
downstream syngas demand. To examine the effects of depth and seam thickness, a
sensitivity analysis of UCG-gas cost as a function of coal depth and thickness was
performed.
Assuming the depth varied from 185 to 275 m and the seam thickness varied from
6 to 15 m, production costs of UCG-syngas are given in Fig. 7. The cost drops with
seam thickness and increases with seam depth. However, the effect of depth was not

Table 8 Operating and maintenance cost in syngas production by underground coal gasification

Item Value, MM$/yr Fraction

New well drilling 54.80 37 %

Air separation unit 19.80 13 %
Gas shift and acid gas removal 24.10 16 %
Severance tax 2.16 1%
Miscellaneous costs 47.46 32 %
Total 148.33 100 %
 Mitig Adapt Strateg Glob Change

Miscellaneous
costs, 32% New well
drilling, 37%

Severance tax,
1%
Gas shift and Air sepraration
acid gas unit, 13%
removal, 16%

Fig. 6 Breakdown fraction of operating and maintenance cost in syngas production by underground coal
gasification

as pronounced as that of the seam thickness. Using the case that the coal depth is
245 m as an example, detailed descriptions of the results are given in Tables 10. With
a coal thickness of 6 m, the UCG-syngas cost was around $38.94/TCM. If the seam
thickness reached 15 m, the syngas cost dropped by over 20 %, to about $29.71/
TCM, close to the cost of NG-syngas at the natural gas price of $35/TCM.
Except well drilling, the gas shift and the sulfur and CO2 removal system also
represented a relatively large portion of the cost, sharing 42 % of the capital cost, and
16 % of the operating cost, respectively. As indicated in Table 4, CO2 makes up more
than 30 % of the syngas volume. If more carbon can be converted to CO instead of
CO2 during the gasification process, the cost associated with CO2 removal system will
be decreased, as will the total syngas production cost. However, increasing the CO
percentage by improving conversion efficiency is difficult.
From the chemistry of coal gasification (Lewis et al. 1954; Thomas and Gregg
1981), yields of CO over CO2 can be increased by maintaining the combustion zone
temperature greater than 1,340 C degrees. As generated gas travels through coal seam
to the production well downstream, part of the CO2 is reduced to CO by the
Boudouard reaction:
CO2 C2CO 4

Table 9 Total cost of syngas produced by underground coal gasification

Interest rate Annualized capital cost O&M cost Total cost of syngas
MM$/yr MM$/yr $/TCM

8.0 % 44.29 148.33 37.27

8.5 % 46.39 148.33 37.68
9.0 % 48.53 148.33 38.09
9.5 % 50.69 148.33 38.51
10.0 % 52.89 148.33 38.94
10.5 % 55.11 148.33 39.37
11.0 % 57.35 148.33 39.80
Mitig Adapt Strateg Glob Change

43
Depth = 185 meters
41
Depth = 215 meters
39

Total cost on syngas, $/TCM

Depth = 245 meters

37 Depth = 275 meters

35

33

31

29

27
5 7 9 11 13 15
Lignite seam thickness, meter

Fig. 7 Cost of syngas produced by underground coal gasification as a function of coal seam depth and thickness

To maintain the required H2/CO ratio, the H2 content has to be increased in

proportion with CO, either by the WGS reaction (Equation. 3) or gasification reaction
(Equation. 5):
H 2 O CCO H 2 5
The gasification reaction produces H2 and CO at a ratio of 1. The WGS reaction generates
additional CO2, which needs to be removed again. Hence during the UCG process, it is
challenging to reduce the CO2 content in the syngas, while increasing the H2 and CO at an
appropriate ratio. However, chemical optimization the gasification process is beyond the scope
of this paper.

5 Conclusions

UCG technology may use coal seams that are too deep to be economically mined, significantly
increasing global recoverable coal reserves. It has a smaller environmental footprint compared

Table 10 Cost of syngas produced by underground coal gasification, as a function of seam thickness, at the
depth of 245 m

Dry syngas production rate=14,160 TCM/d, interest rate=10 %, plant life=30 years

Lignite seam thickness Cavity radius New drilling cost Annualized O&M cost Total cost on
capital cost syngas production
m m MM$/yr MM$/yr MM$/yr $/TCM

6.0 2.5 54.80 52.89 148.33 38.94

9.0 4.0 21.90 52.89 115.43 32.57
12.0 5.5 11.53 52.89 105.05 30.56
15.0 7.0 7.10 52.89 100.63 29.71
 Mitig Adapt Strateg Glob Change

to conventional mining and surface gasifiers. Also, as the syngas is generated by UCG at
relatively high pressures, when UCG is incorporated with a CCS system, the energy penalty
and cost associated with CO2 capture and compression can be reduced. UCG is a clean and
efficient technology to mitigate the conflict between energy supply and environmental issues.
Successfully applying this technology will be one of the mitigation and adaptation strategies
for satisfying energy demand at the world scale. However, with the availability of cheap
unconventional natural gas, the competiveness and cost components of UCG need to be
reviewed and studied. In this paper, the competiveness of the UCG-syngas to NG-syngas
was analyzed and approaches to reduce UCG production costs were discussed. The production
costs of syngas from natural gas conversion and UCG were calculated and compared at the
same base with the H2/CO ratio at 2 and the syngas was used to feed an equivalent F-T block.
The results indicated that the production cost associated with NG-syngas is largely determined
by the price of natural gas. Assuming the price of natural gas varied between $35/TCM and
$170/TCM, the cost of NG-syngas ranged from $24.46/TCM to $90.09/TCM. The capital cost
was a small portion of the total cost, so the effect of interest rate was minimal.
For UCG-syngas, its production cost is significantly influenced by the coal seam depth and
thickness. Using the Harmon lignite bed in North Dakota (depth=245 m, thickness=6 m) as an
example, the production cost varied from $37.27/TCM to $39.80/TCM. The cost was within
the range of NG-syngas costs. Therefore, some approaches have to be taken to enhance the
competitiveness of UCG-syngas route. An effective way is to utilize thicker coal beds,
especially for large projects like a CTL plant. The thicker the coal bed, the larger the
gasification reactor can be. Therefore, one cavity can provide more coal to gasify and fewer
new cavities have to be developed each year. This saves significant expense in well drilling
each year, which is the largest portion of the annual O&M cost.

Acknowledgments Partial funding for this research was provided by the North Dakota Industrial Commission,
USA; however, this agency makes no warranty on its accuracy and assumes no liability with respect to its use.

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