Cost comparison of syngas production from natural gas conversion and underground coal gasification

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