SNG is produced through gas processing of syngas in established commercial-scale process plants and is predominantly methane.

It meets natural gas pipeline specifications and is equivalent to conventional natural gas or coal seam gas.

The LogiCamms report produced capital and operating cost estimates at a front-end loading 1 level (+/- 50%) for the manufacture of pipeline-quality natural gas from UCG syngas at a proposed plant at Carbon Energy’s Bloodwood Creek site, 45km west of the Queensland township of Dalby.

Capital cost and operating cost estimates for an 8 petajoule per annum and a 25PJpa case were analysed for an integrated UCG field and downstream SNG production plant to assess the economic viability of a potential project.

The cost of producing pipeline-quality natural gas from Carbon Energy’s UCG syngas was estimated to be in the range of $3.50 per gigajoule to $4.50/GJ (excluding carbon tax and other taxes).

It compares to recently forecast contract natural gas prices of $6.50/GJ to more than $10/GJ by 2015.

Carbon Energy managing director Andrew Dash said the Consultation Draft 2012 Gas Market Review released by the Queensland government last week identified a potential shortage in supply of natural gas to the domestic market.

“Over the past few years there has been significant expansion within the gasification industry globally which is contributing to more streamlined manufacturing options and more commercially attractive opportunities for the use of syngas,” he said.

“This includes applications to produce electricity, chemicals, liquid fuels and natural gas.

“We now have an independent assessment of the capital and operating costs for manufacturing pipeline-quality natural gas utilising our proven UCG technology.”

The Queensland government review identified that LNG proponents had been successful as customers of other producers.

A key focus of the study was to determine how key utilities for the UCG plant and SNG plant could be integrated and shared.

It included power generation, oxygen production, steam production, cooling water, acid gas treatment and raw syngas treatment in addition to developing an integrated site-wide mass and energy balance.

The report followed an earlier concept study into the production of alternative downstream products from UCG syngas which confirmed the opportunity for the production of ammonia and SNG.

The earlier study, released in December 2010, was conducted by consultants Ammonia Casale.