Centennial said the memorandum of understanding with AGL demonstrated a commitment to reducing Mandalong Mine’s impact on the environment while also meeting the mine’s growing energy needs.

Both parties will work cooperatively on a gas project that will see AGL design, own and operate an enclosed flare and onsite generation facility utilising waste coal mine methane gas supplied by the mine.

AGL will employ a staged approach to ensure the development of optimum technical and commercial solutions for utilising the methane delivered by the mine’s existing gas drainage plant.

A feasibility study will be conducted in coming months with the design and construction of an enclosed flare installation anticipated midyear.

Should the feasibility study be approved, onsite generation of at least five megawatts will be installed in late 2008, which is equivalent to powering the needs of the mine or approximately 6400 residential homes.

“The innovative flare and generation proposal by AGL will significantly reduce fugitive emissions and produce useful energy to meet the site’s growing energy demands as the mine continues to increase production,” Centennial managing director Bob Cameron said.