Alberta’s provincial government last week signed a final funding agreement for a unique carbon capture and storage (CCS) project that seeks to tap a deep unmineable coalbed and turn the coal into power-generating synthetic gas—or “syngas”—while underground.

The in-situ coal gasification project includes building a 300-MW baseload power plant that will be run by Swan Hills Synfuels. Developers will tap a coalbed near Swan Hills to access coal seams 1,400 meters beneath the earth’s surface—a depth that has traditionally been considered too deep to mine—and capture up to 1.3 million tons of carbon dioxide per year. The captured greenhouse gas will then be used for enhanced oil recovery in the area.

The province has committed C$285 million to the Swan Hills Synfuels project as part of its $2 billion CCS funding program. Construction is expected to begin in 2013 with carbon capture beginning in late 2015.

In Alberta, approved CCS projects under the program can receive a maximum of 75% of the total incremental cost to capture, transport, and store carbon dioxide. A maximum of up to 40% of the approved funding will be distributed during the design and construction stage based on achieved milestones and up to an additional 20% of the approved funding will be granted upon commercial operation. The remaining 40% of the funding will be provided over a maximum period of 10 years as carbon dioxide is captured and stored.

Alberta’s minister of energy, Ron Liepert, said the project had “tremendous potential” to change the way the province uses its vast coal resources. “This innovative approach will decrease the environmental impact while generating a reliable energy supply.”

 “The support of the province is helping to make this major energy project a reality, upgrading a low-value resource into valuable clean energy in Alberta,” said Martin Lambert, CEO of Swan Hills Synfuels. “We are excited to be building a baseload generating plant that will provide the reliability and economic stability that coal-fired power has brought to Alberta for many years, but with greenhouse gas emissions lower than that of comparable natural gas-fired generation.”

Sources: POWERnews, Province of Alberta, Swan Hills Synfuels