This week I planned to dig a bit deeper into the Saskatchewan helium story, however I’ve been learning more about the layoffs of workers from the southeast’s coal operations, so I thought I would talk about coal. As Pipeline News editor Brian Zinchuk told me, “helium’s been there for hundreds of millions of years, so another week or two shouldn’t matter.”
I want to tell you a story. This is a story about what was a good idea but a little ahead of its time. It’s about “what else can we do with the southeast’s coal?”
The story begins not in Estevan or Coronach but near Hudson Bay, Saskatchewan. In 2008, a small junior company called Goldsource Mines began a drilling program for diamonds near Hudson Bay to the east of the Pasquia Hills. Surprisingly, they didn’t find diamonds but instead diamond’s precursor, sub-bituminous coal, locally up to 100 meters thick.
Being a geologist who worked the subsurface of remote regions of Saskatchewan, I knew of other such basins, including some wells that encountered similar thick coal deposits. These were frothy times for the junior resource companies so putting together a group of investors to fund land acquisition was not hard, especially given the excitement generated by such a major wildcat discovery. A private company – NuCoal Energy Corp. – was formed, capitalized, and soon taking coal permits across Saskatchewan.
Coal, in and by itself, is not a fungible commodity like oil or gold, because its value depends upon the particular grade, quality, and heating value, so each deposit may have its own unique worth depending upon what it is used for. It is also illiquid in the sense that there is no open and ready market for coal in the absence of a specific buyer contract.
These peculiarities about making money from coal quickly led to NuCoal defining itself as “an energy company working with a coal resource and using cutting-edge technology to produce energy responsibly.” No longer were we a junior resource exploration company, we were an energy company focusing upon using cutting edge technology to convert an overlooked energy resource into a fungible and liquid product.
My job was to define the mineable coal resources and then identify development opportunities that would be profitable for our shareholders, at the same time being environmentally responsible. Other members of the corporate team examined the question “what do we do with the coal?”
In early 2009 an opportunity began to crystallize: since power production is a monopoly in Saskatchewan, we can’t set up another Poplar River; however, we can convert the coal into other useful energy products including synthetic fuel (synfuel), high-density coal briquette, and chemicals.
Following this logic, we were drawn to a region where coal was in vast supply and already being mined – the lignite coal basins of southeast Saskatchewan. From these deliberations was born the “South 50 Project,” a span of coal permits spanning from Coronach east to Bienfait. NuCoal’s intent was not to replace the existing coal infrastructure but rather augment it with a “Coal-to-Liquids” diversification opportunity.
I’ve created a powerpoint that provides the details about Nucoal and “South 50”, so I won’t burden you with technical details, however, here’s three important take-aways.
First, in 2010 there was little impetus for the existing coal industry to do anything other than mine coal for power generation. This is clearly no longer the case, as this use for coal is being eliminated.
Second, changing from one singular use – burning coal to make electrons – to another singular use – cooking coal to make only jet fuel or diesel – is not the way to do it. Rather, change the singular use to a multiple use approach, also known as “polygeneration.”
Polygeneration is already being done with lignite coal in the Williston Basin, and has been done since the 1980s. The Dakota Gasification Company plant at Beulah, North Dakota, has been producing over a dozen different products from the gasification of lignite coal. While syngas (synthetic gas) is the primary product, one of other products is the carbon dioxide that has been pipelined since 2000 to the Weyburn and Midale units for use in enhanced oil recovery.
Third, making anything out of coal will generate greenhouse gases. If it is burned to make electrons, the gases are a problem requiring mitigation. However, if these gases are captured as part of the polygeneration process, they can be converted into useful products. For instance, the CO2 generated by an Estevan-based coal polygeneration plant can be sequestered using existing technology or it can be used in the oilfields for miscible flooding.
What happened to NuCoal? While times were frothy in 2012, the economic crunch of 2008 soon caught up with us, and access to capital dried up. Given that our plant would cost in the billions of dollars, this was a problem. Second, our South 50 Project required the creation of a new greenfield mine wedged in between the Sherritt and Saskpower Poplar River operations, which meant having to overcome significant permitting hurdles. Third, private companies are hard to keep aligned in the best of times and NuCoal was no different – key shareholders had different views on moving forward, and in the end, it was this dissension that was the fatal bullet for the company.
What else can be done with Estevan and Coronach coal? How about converting the existing operations into polygeneration facilities? This would preserve jobs, make use of existing infrastructure, and add to Saskatchewan’s economy. Personally, I would give it another go, because enough has changed in eight years to possibly overcome 2012’s hurdles.
To close the loop, you might be thinking “what happened to Goldsource and Hudson Bay coal?” Well, I think I will answer that question in a later post…
Steve Halabura is a professional geologist with 40 years experience looking at Saskatchewan rocks. He is also past president of the Association of Professional Engineers and Geoscientists of Saskatchewan (APEGS). Halabura can be reached at email@example.com 1-306-220-7715.