UCG Flaring Failure – Leigh Creek Energy again under the spotlight.

RM has been informed that the Leigh Creek Energy Project, dogged with scandal and controversy for several years has reported flaring failure and requested a four week suspension to attempt re-ignition. This opens up a can of worms for the regulator and the Minister of Mines and Energy Dan Van Holst Pellekaan who approved the operation despite it having no valid or legal license to operate.

Minister Pellekaan has ignored earlier warnings of independent RMIT hydro-geologists concerning proximity of the planned gasifier chamber to known faults below the Telford groundwater aquifer. Has the operation compromised the aquifer resulting in the ingress of water causing this embarrassing and predictable failure?

Is the SA EPA now on site testing the groundwater for contamination? Were accelerants such as diesel fuel or other forms used in the original flaring and will the company be using such toxic materials below the aquifer in its bid to ignite the coal?

In today’s release by the company, we learn this:

The process of developing the LCEP gasifier is continuing. The key indicators of gasifier development, being injected air flow rates, increasing temperature in the gasifier and decreasing oxygen levels in the outlet gas, are continuing. Whilst the gasifier has not yet advanced beyond the initial gas flow stage, the Company and its advisors are pleased with the following progress:
• PCD Operation for 35 days continuing the initial gas flows;
• Increased gasifier pressure and temperature; and
• Plant and Equipment operating as designed.

In addition to working on a range of adjustments to the operating parameters of the gasifier, the Company is in the process of preparing to inject an approved fuel source. As this fuel reignites it will provide an additional heat source to accelerate the gasifier development process.

What does this say about the so called ‘worlds best standards’ of mining cited by the Minister who failed to look at or respond to the independent RMIT advice pointing to danger and risk?

Will the Minister or his delegates approve the injection of contaminants into the ground in furtherance of this proven to be dangerous process?

Will the Minister disclose the total cost to the SA taxpayer of this folly and will he resign as Minister as this scandal reaches new heights?

The following document excerpts are from the SA Government website and are at odds with the company ASX release above?

Request:

5 November 2018
Mr Michael Malavazos
Director Engineering Operations
Energy Resources Division
Department for Energy and Mining
GPO Box 320
Adelaide SA 5001

Dear Michael,

Re: LCK Pre-Commercial Demonstration Gasifier Failure to Continue
The Pre-Commercial (PCD) Gasifier was initiated on the evening of 10 October 2018, and Leigh Creek Energy (LCK or the Company) announced “first syngas” to its shareholders on 11 October 2018. At the time of initiation, the gases observed at the outlet well were mainly a combination of air (nitrogen and oxygen) and products of combustion (carbon dioxide and carbon monoxide), the latter indicating that the gasifier had commenced the heating or “combustion” phase prior to coal gasification.

We have detected trace amounts of gasification products (methane, carbon monoxide) and have observed slowly increasing water content in the product gas and slowly rising casing shoe temperature, all indicative of combustion continuing. However, after three weeks of carefully management of gas flows to try to establish full gasification in the chamber, the development of the gasifier has not progressed further.
In this instance we have several options available, all requiring “re-ignition” of the gasifier. To this end, we will be providing the ERD with documented Management of Change processes for these re-ignition works.
Given that the gasifier has not reached gasification, we request that the 90-day ISG trial period be temporarily suspended for up to 4 weeks pending the outcome of the re-ignition.

If you require any further information or clarification, please contact Cristian Bolda, GM Operations, or Justin Haines, GM Technical in the first instance.

Yours sincerely,
Phil Staveley
Managing Director

Response and approval:

7 November 2018
Phil Staveley
Managing Director
Leigh Creek Energy Limited
PO Box 12, Rundle Mall
ADELAIDE SA 5001

Dear Phil,
Approval – Section 27 production suspension (PEL 650)
I refer to your letter dated 5 November 2018 requesting a 4-week suspension of the 3-month production period approved on 3 September 2018, with production beginning on 10 October 2018 from the in-situ gasification (ISG) demonstration plant in PEL 650.
In response, pursuant to delegated powers under the Act, I hereby give approval under Section 27(3) for this suspension conditional on:
at the expiration of the suspension (a maximum of up to 4 weeks to 5 December 2018), the 3-month UCG trial period will recommence.
Furthermore, I advise that your request and my subsequent approval will be published on the website of the Department for Energy and Mining that summarises the status of your PCD project (http://energymining.sa.gov.au/petroleum/projects/prj_leigh_creek_energy_isg ).
If you have any queries please contact me by phone on (08) 8429 2470; or email at michael.malavazos@sa.gov.au.

Yours sincerely

Michael Malavazos
Director Energy Resources
Department for Energy and Mining
Delegate of the Minister for Energy and Mining

Section 27 of the Petroleun & Geothermal Energy Act 2000

When we refer to Section 27 we see no apparent basis for the actions planned as indicated in the company announcement and no mention of the plan to introduce fuel in the request or the response to the request? Will the Minister who has approved the mine without a license also be taking responsibility for any subsequent actions which appear prima facie to have no basis again under the Act he has responsibility for?

27—Production of regulated resource under exploration licence

(1) The holder of a petroleum exploration licence may produce a regulated substance from a well in the licence area for the purpose of establishing the nature and extent of a discovery.

(1a) The holder of a geothermal exploration licence may produce geothermal energy from a well in the licence area for the purpose of establishing the nature and extent of a discovery.

(2) However, the licensee must not produce a regulated resource from a well for more than 10 days in aggregate without the Minister’s approval.

Maximum penalty: $20 000.

(2a) The holder of a gas storage exploration licence may place petroleum or another regulated substance in a natural reservoir for the purpose of establishing the suitability of the natural reservoir for storage purposes.

(3) The Minister may grant an approval under this section on conditions the Minister considers appropriate.

Will the Minister be again brought before the Supreme Court of South Australia and will the next injunction point directly to the illegalities approved of by the Minister? Does the Minister consider it appropriate to pump fuel underground to expedite a failed UCG experiment and is he ready to face the consequences?

http://energymining.sa.gov.au/__data/assets/pdf_file/0020/335090/_2018_094.pdf

RM has contacted the Minister Pellekaan for comment and to date there has been no response.

Greens SA Leader Mark Parnell continues to pursue the Minister for answers from the upper house:

Speech

Legislative Council

QUESTION: Government advice sought on underground coal gasification

November 13th, 2018

On the 13th of November, Mark asked the Minister for Trade, Tourism and Infrastructure representing the Minister for Energy and Mining a question about underground coal gasification.

The Hon. M.C. PARNELL: It would be no surprise to members that many South Australians have been writing letters to the Premier, to the environment minister and also to the Minister for Energy about underground coal gasification. One constituent has provided me with the response that the Hon. Dan van Holst Pellekaan MP, Minister for Energy and Mining, provided, and it includes the following line:

In recognition of the sensitivity of LCE proposal,—

that is Leigh Creek Energy—

the South Australian Government regulators sought additional advice from independent national and international USG experts prior to granting each stage of the approval.

I note that the USG is a typo: it should be UCG. The government is claiming that it has taken advice. My questions are:

1. Who are these experts and what was their advice? Will the minister make that advice available to members of the public?

2. Were any of these experts Professor Campbell Gemmell, who was the chief executive of the South Australian Environment Protection Authority and who is one of the world’s foremost authorities on underground coal gasification and an advisor to the UK and Scottish governments?

The Hon. D.W. RIDGWAY (Minister for Trade, Tourism and Investment): I thank the member for his ongoing interest in this matter, one that has spanned many years now. Underground coal gasification is an issue that falls fairly and squarely under the responsibility of the Hon. Dan van Holst Pellekaan, and I will take that question on notice and bring back a reply.

Speech

Legislative Council

QUESTION: Leigh Creek Energy Project

November 15th, 2018

On the 15th of November, Mark asked the Minister for Trade, Tourism and Investment, representing the Minister for Energy and Mining a question about Leigh Creek Energy Project.

The Hon. M.C. PARNELL: Forty minutes ago, Leigh Creek Energy notified the Australian stock exchange of the failure of their gasification process as part of their precommercial trials of underground coal gasification at Leigh Creek. Apparently, the company wrote to the department on 5 November. It pointed out that the gases that were observed on 11 October were mainly air, nitrogen, oxygen, with some products of combustion—carbon dioxide and carbon monoxide—but they have only detected trace amounts of gasification products, being methane and carbon monoxide.

They then sought a suspension of their three-month trial, a suspension of four weeks, so they could try to reignite the coal seam under the ground. That was on 5 November. Two days later, on 7 November, under delegated authority, the director of Energy Resources with the Department for Energy and Mining approved that suspension. Today, at 2.20pm central time, the company notified the stock exchange.

My questions, which I would ask the minister to pass on to his colleague in another place, are:

1. Is the government undertaking any independent monitoring of pollution from this project or is it relying entirely on information it receives from the proponent?

2. What is the government’s estimate of the quantity of greenhouse gases that have been or are being vented directly to the atmosphere in the absence of flaring?

3. Is the minister at all concerned that the company didn’t notify the stock exchange for eight days after seeking permission for the extension?

4. When will the government realise that risky and polluting coal projects have no place in South Australia’s renewable energy future?

The Hon. D.W. RIDGWAY (Minister for Trade, Tourism and Investment): I thank the honourable member for his ongoing extreme and enthusiastic interest in the Leigh Creek Energy Project. I will be very happy to take all of those questions on notice and refer them to the Minister for Energy and Mining in another place.