Just over four years ago The Journal first revealed details of a scheme, emerging from Newcastle University, which could lead to the creation of a new North East industry using the region’s abundant, and world-famous, natural resource.
Now, Newcastle-based Five-Quarter is close to putting the first spade into the soil to allow it to tap into the region’s vast remaining coal reserves – and harness its energy in an environmentally friendly way.
Five-Quarter aims to create over 400 new permanent jobs in the North East region over the next five years – as well as a up to 300 jobs during the design and construction of new £1bn facilities to harvest gases from its pioneering underwater energy project.
It plans include a new £500m, 1GW power plant in Northumberland which will make Five-Quarter the dominant private sector employer in the county.
The proposals also include the creation a £500m gas processing plant in either Northumberland or Teesside which will process the syngas created by its underwater Deep Gas Winning process into feedstock for the region’s process and chemical industries.
Two of the founders of Five-Quarter chief executive officer Harry Bradbury and chief technology officer Dermot Roddy left high profile jobs at Newcastle University to pursue their ambitious proposals.
Mr Bradbury, a former Professor of Practice, said: “We are moving closer to launching our world-leading Deep Gas Winning project.
“As well as providing much-needed employment opportunities in the region the gas we produce from the coal seams under the North Sea will be of major benefit to North East industry.
“The gases that we can produce are a vital feedstock to industry and will be able to help the UK compete with the cheap shale gas coming from America. We may have less than a decade to save this industry.”
Underground coal gasification (UCG) has been practised for over a hundred years (see panel). Deep Gas Winning is a more advanced form of UCG from which deep multilayers of mixed rocks can be degassed.
The syngas extracted in the process consists of hydrogen, carbon monoxide, carbon dioxide and methane.
Methane can be used to generate electricity in the power plant which at 1GW is able to provide power for 500,000 homes.
The hydrogen and carbon monoxide are raw materials much sought after the by the process industries on Teesside.
As well as capturing the carbon dioxide and storing it underground in old North Sea oilfields and using it to help oil companies extract more reserves from their reservoirs – a process known as enhanced oil recovery – Five-Quarter is looking at innovative solutions.
Its chief technology director Dermot Roddy, former Professor of Energy at Newcastle University, says it can use the carbon dioxide to develop polypropylene which can be used for disaster relief shelters and other plastic uses.
Five-Quarter says it will be able to reduce the cost of CO2 from up to £50 a tonne to £5 a tonne.
Mr Bradbury said: “Coal is not the problem in itself but it’s the manner in which we use it. There is so much energy in coal that is if we can find a smart way to use it without releasing CO2 into the atmosphere then why not use it?”
As well as the power plant and gas processing facilities the initial programme in Northumberland will include up to four drilling sites.
The drilling sites will cover around one acre and use specialist drilling equipment of the type that is used to tap coal bed methane reserves. They will be located on brownfield sites with the pipes being about eight inches diameter.
The drilling will take around 90 days and the wells will produce for many years.
As well as licences for the North East coast Five-Quarter also has a licences for the Firth of Forth and it hopes the Northumberland plant will be able to use gas from north of the border in time.
In May last year Five-Quarter was awarded £15m from the Regional Growth Fund and last October the Treasury singled it out for a £1bn debt guarantee in its infrastructure fund programme, alongside huge projects such as EDF Energy’s new £16bn nuclear builds at Hinkley Point Somerset.
The Newcastle-based company is currently in talks with separate consortia of North American and European banks to provide debt finance to fund the work. Five-Quarter is also working on an equity launch to provide funds to run the business.
The company had initially planned to create a demonstration facility, but with a similar scheme operating successfully in Australia it has decided to skip this process.
Human resources was one of the first management roles the Five-Quarter board created, in order to make the most of the advance time period available for maximising local job opportunities.
Five-Quarter director of human resources Matt Cawood elaborated on its employment philosophy. He said: “We aim to create work for local people, making use of any existing production or practical skills they possess and retraining them to work in the unconventional gas sector.
“To that end we are utilising local resources as much as possible, both directly to create our new workforce, but also via third party suppliers such as recruitment agencies and training organisations.
“We are looking to create developmental and sustainable employment for workers based in the North East, as well as attracting people who have left the region and would like to return for this kind of dynamic new industry.
“We want to create our own particular company culture, rooted in the North East and the values and heritage of the region and we would much rather have North East-based workers who grow with us than to try and find ready-trained people from all around the world.”
The permanent jobs will break down as approximately 145 in operations in the plant, 225 in drilling operations and 30 in the corporate and logistics field.
Five-Quarter’s partners on the new development include some of the world’s premier companies in directional drilling for hydrocarbons, coal mine drilling and geophysics.
Mr Cawood added: “We can’t quote exact figures for the employment opportunities we will be creating via our partners at a sub-contracting level at this stage but we envisage that some of the jobs – especially in drilling – will end up being direct Five-Quarter jobs and will be in addition to the 400 jobs initially proposed.”
The company says that some of the jobs created by its partners will inevitably mean continued employment for some of the specialists currently nearing the end of their work contracts on North Sea oil and gas platforms.
Mr Roddy said: “As we develop our proposals for carbon capture and storage technology below the North Sea – using offshore saline aquifers and potentially depleted oil and gas fields, as well as the cavities left behind by our Deep Gas Winning process to store the carbon dioxide produced by our process – we may also be looking to refurbish and re-use offshore pipelines and platforms and to provide C02 for enhanced oil recovery or enhanced gas recovery in order to help extend the lifespan of the North Sea oil and gas fields.”
Five-Quarter is currently in talks with one of Teesside’s major players to take components of its syngas and hopes to be in a position to sign a £3bn deal, over 25 years, with this company later in the year.
Mr Bradbury said: “Our Teesside counter party is prepared to invest substantial sums of money in new facilities which will support and help create hundreds of jobs on Teesside.
“Teesside currently needs eight million tonne of syngas a year and the deal with Five-Quarter will supply three million tonnes of this.”
The UK process industries, which manufacture products using the gas feedstock Five-Quarter will produce, could be the biggest beneficiary in terms of job protection from having an assured source of feedstock at the kinds of volume and price they need.
This huge industry sector is a massive employer supporting around 170,000 direct jobs and up to 500,000 in associated industries.
Mr Bradbury added: “More than 1,400 regional companies are directly involved or in the supply chain of these sectors and together they generate £26bn of annual sales, employ 190,000
people and export £12bn per year.
“As we’ve seen in recent times, the geopolitical aspect to the UK’s energy supply adds a volatility that we can bypass for industry by having an assured indigenous supply of the right
kind of gases.
“Not only that, but the volume of gas British industry needs and the price it needs to pay can be assured by our Deep Gas Winning process, helping British manufacturing to stay competitive, especially as the USA is now well on its way to becoming energy independent, with Asia taking steps in the same direction.
“We cannot afford to stand still and watch UK industry migrate away to follow this supply away from our shores in the longer term, putting the whole of this industry sector at risk.”
Five-Quarter is committed to building on a brownfield site in Northumberland, although speculation it will be based on the site of the former Lynemouth aluminium smelter site appears to be receding.
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Deep Gas Winning
Underground coal gasification – or Deep Gas Winning - is the process of converting raw coal that is still in the ground into a combustible gas that can be used for high-value products such as heating, power generation or the manufacturing or fuels.
As opposed to surface gasification, underground coal gasification uses the coal cavity itself as the reactor for the process.
This involves the drilling of two wells into the coal bed. The first well is for injecting oxygen and steam. With the supply of oxygen limited, the coal is partially oxidised, forming a gas that still retains around 80% of the original energy content of solid coal.
This syngas – a combination of hydrogen carbon monoxide, carbon dioxide and methane – is then recovered from the second well for use in power generation or conversion into liquid fuels.
Five-Quarter is looking into improving the process by heating up the rock before drilling using fibre optic lasers. This will allow the drill to cut coal more quickly and could reduce the cost of the process by as much as 90%.
Over 100 years in the making
The first UCG trials were conducted in the Durham Coalfield 100 years ago although the industry has never reached maturity.
There are currently demonstration facilities in the US, Canada, Australia and China without any large-scale commercial breakthroughs.
But Newcastle-based Five-Quarter believes its ability to utilise horizontal drilling techniques from the oil and gas industry will give it a world-leading edge.
It has secured licences for a 600sq km area of the North Sea, stretching from the mouth of the River Tyne up to the Scottish border.
Five-Quarter highlight how 75% of the North East’s still underground and if recovered this will provide enough energy to power the world for the next five years.
It also expects the gas to as competitive in price as US shale gas with some prediction it may come in at US $2.50 a gigajoule, compared to US shale which is currently around $5 a
- In next month’s Journal North East Energy, Marine and Offshore Report Harry Bradbury will outline how important its gas is to the future of North East industry. The supplement is published on September 25.