Europa Oil & Gas (LON:EOG) saw its shares edge up 2.2% to 11.5p this morning on news that the Coal Authority had awarded it two licences for underground coal gasification off the east coast of England. These areas are adjacent to Europa's existing East Midlands licences, which include three revenue generating oilfields.

Underground Coal Gasification (UCG) is a developing technology that recovers up to 80% of the calorific value of in situ coal by a process of controlled combustion. UCG, when combined with CO2 storage in the depleted coal seams, is believed by experts to create a source of energy which rivals nuclear for low emissions and has lower unit costs than conventional gas-fired power stations. With only 30% utilisation rate for the coals, the estimated potential UCG energy resource in Europa’s two licence areas is 36EJ or 6 billion barrels of oil equivalent.

Paul Barrett, the company’s managing director, said: “Whilst UCG is in its infancy in Europe, it has great potential to extract energy cleanly from vast resources of virgin coal still present in parts of the UK. Europa's existing business position in the East Midlands is a perfect platform to pilot these technologies, whilst the proximity of the licences to refinery, gas and energy infrastructure is a key to future commercialisation of this resource.”

The UCG licences have an initial three year term and are held by Europa, with 90%, and Oxford Coal Consulting Ltd, with 10%. They include Humber South, which spans 100 sq km along the coast next to the Mablethorpe Gas Terminal and Offshore Holderness, which spans 100 sq km along the coast next to the Aldborough Gas Storage Facility and north of the Easington Gas Terminal.

Europa's business strategy is based on developing a Eurocentric portfolio of onshore exploration and production assets. The company’s three oilfields in the UK East Midlands – West Firsby, Whisby and Crosby Warren – provided production in the six months to January 31, 2010 of around 172 barrels of oil per day. Europa also has a varied appraisal development asset base in Romania, France and the UK.

Unlock the rest of this article with a 14 day trial

Unlock with Email
Unlock with Google

Already have an account?
Login here