Cluff heralds new North Sea offshore coal project

A COMPANY hoping to revolutionise Britain’s energy provision by tapping into coal supplies under the sea bed will apply for planning permission within months to build a demonstrator project on the Firth of Forth.

Cluff Natural Resources, led by North Sea veteran Algy Cluff, specialises in a system known as underground coal gasification (UCG), which it says could eventually replace conventional gas and give the North Sea energy industry a new lease of life. If the application succeeds, the £15 million project will be the first time UCG has been attempted off-shore, and could pave the way for a much larger investment.

Cluff said UCG, which involves partially burning large seams of coal underground to produce a mixture known as syngas, could bring much-needed energy security to the UK as gas from conventional sources dwindles.

“This is the continuation of North Sea development by other means,” said Cluff, who was involved in the first wave of UK oil exploration in the 1970s. “It’s the North Sea mark two.”

Aim-quoted Cluff has accumulated eight licences for UCG around Britain since it was set up two years ago and has been carrying out engineering and environmental studies to support planning applications.

Cluff said the company’s first working project will probably be on the Firth of Forth, and the group is looking at several brownfield sites on which to build the initial complex.

“There are three or four sites we’ve got our eye on,” he said.

The firm has held talks with potential partners and customers for its gas, including Grangemouth petrochemical plant owner Ineos. Cluff said the proximity of Grangemouth, which houses many companies that use gas for both energy and as a chemical feedstock, makes the area especially ­attractive.

If the demonstrator project is a success, a full-scale development to produce and refine the gas would then be built, at a cost of between £200m and £300m, potentially creating hundreds of jobs. The firm expects to buy the small amount of land it needs initially and submit a planning application within six to nine months.

But Cluff says acquiring the land will be the least complicated of the company’s objectives. Even the drilling process itself looks simple compared with negotiating Britain’s planning process, which is likely to attract opposition from environmental campaigners.

“Planning is our biggest risk,” he said, pointing to the difficulties faced by the fledgling fracking industry in Britain.

Both are “unconventional” ways of extracting gas, but Cluff says the similarities between fracking and UCG largely end there. The process of coal gasification is in some ways more akin to drilling for oil, with a relatively small number of wells drilled sideways far underground and ­tying back to a relatively small development on the surface.

He also claims that despite problems with some early ­attempts, UCG, which is several decades old, is now much safer.

The UK is thought to be sitting on 17 billion tonnes of coal, with even more offshore.

In a note making the investment case for Cluff Natural Resources, analysts at Panmure Gordon said: “UCG could potentially unlock huge, untapped and indigenous coal resources, helping to secure the country’s energy supply for many years against a current backdrop of increasing reliance on imported gas.”