Stealth Ventures Ltd

Nova Scotia

The company’s Nova Scotia CBM properties are in early stage exploration mode.

Stealth’s Cumberland asset still provides corporate exploration upside and has massive potential as was identified by the February 17th (2006) NI 51-101 compliant resource report booking an estimated 1.2 TCF of “Discovered CBM Resource” (gas-in-place) potential. The self contained coal basin covers 177,000 of contiguous coal in which the Company has a 100% WI. The total net thickness approaches 90 feet deposited in a vertical range of 2,000 to 8,000 feet. Coal ranks range from high volatile “A” to low volatile bituminous, with measured gas contents ranging from 100 to 510 scf/ton of coal. The Cumberland licence area is in close proximity to the Maritimes & Northeast pipeline and is expected to have future access to low-pressure gas infrastructure.

Drilling operations at CBM #13.

As part of Stealth’s strategic business plan for this resource play, a basin commercial development plan (Part I 47.5MB & Part II 94.3MB) examining all aspects of basin development was submitted to the Government of Nova Scotia for review in the Spring of 2007. On October 26th 2007 the Government granted Stealth the first onshore production permit for the Cumberland Basin, which gives long-term stability to the project for the next ten years.

Three long-reach horizontal test wells were drilled in late 2006 to evaluate the Coalbed Methane potential of the Cumberland Basin.

UCG Technology

UCG is an industrial technique which enables un-mined coal to be converted in-situ into product gas "syngas" which is bought to the surface via a separate production well. The conversion of the coal to syngas is achieved through a controlled underground gasification process initiated by the injection and ignition of oxidants into the coal seam. The coal seam is ignited and gasified, generating carbon dioxide (CO2), hydrogen (H2), carbon monoxide (CO) and small quantities of methane (CH4) and hydrogen sulphide (H2S) at high pressure. As the coal face burns the immediate area becomes depleted, the oxidants injected are controlled by the operator with the objective of guiding the burn along the coal seam. The controlled nature of the burn allows complete seams of coal to be gasified.

The traditional UCG technology allows the exploitation of coal seams by vertical boreholes, which necessitates creating a physical connection by drilling a connecting borehole or fracturing the coal. Vertical drilling usually means boreholes are close together, so that accessing deeper seams is expensive. The more advanced Controlled Retraction Injection Point System "CRIP", a moveable injection point system adapted and developed from existing oil and gas drilling technologies. It is more flexible allowing the creation of inseam boreholes which allow the exploitation horizontally of seams. This allows deeper coal seams – to at least 1000m – to be exploited and reduces the number of injection boreholes required to exploit a coal seam and thus significantly reduces the costs and timeline for exploitation of the coal seam.

A complete UCG installation will include multiple injection and production bore holes together with a surface mounted gas separation plant and CO2 separation unit. These are linked to a power generation plant either a) directly on site as shown in the diagram below, or b) through an existing / specifically built pipeline network, to transport the syngas to a remote power generation plant or to a gas to liquids plant for onward transportation.

CRIP Technology

With the recent improvements in drilling, modern UCG is now principally based on directional drilling that allows a better control of the well configuration and the gas quality. From the first UCG trials that used the Linked Vertical Well (LVW) technique, there was strong evidence that maintaining the injection point at a low position in the coal seam is essential for obtaining good gas quality and high resource recovery. The tendency to develop the gasifier towards the top of the coal seam (by gravity effect) was characterized as "the overriding effect". Maintaining a low injection point is very difficult with a vertical injection well, and the desire to establish this more constant burn geometry and to control a seam-bottom injection led to the concept of Controlled Retracting Injection Point (CRIP).

CCL's UCG technology it will use is primarily based on the CRIP module concept that uses a deviated in-seam well for the gasifying agents' injection and a vertical well for the recovery of the produced syngas. Each module composed of one pair of wells can be controlled independently.

It is usual to use oxygen as the primary accelerant – it is possible to use air, which is cheaper, but the resultant syngas is of a lower quality. Although there may be occasions when the use of air makes sense, it is anticipated that oxygen firing will normally be CCL's process of choice.

Schematic representation of the CRIP module concept

This CRIP module concept is the starting point of the process calculation. For each two-well module, the module is defined as the volume of coal confined within a parallelipedic volume having dimensions equal to the coal seam thickness, the in-seam length and the inter-module distance. In a commercial-scale UCG operation using these two-well CRIP modules, continuous operations are achieved by relaying different gasification modules in parallel. The figure below represents the well field and module layout of modules run in parallel.

Layout of modules run in parallel

Each module will be controlled basically by four parameters: (1) the rate of oxygen /air injected, (2) the water/oxygen ratio, (3) the reactor counter-pressure and (4) the position of the injection point in the in-seam section of the deviated injection well.

1. The rate of oxygen injected. The oxygen rate is controlling principally the gasification rate and the power developed underground. Experiences of previous UCG trials indicate that approx. 1.5 to 2 MW are developed underground for 100 m3 (STP) of oxygen injected per hour (or 143 kg/h) and approx. 2 to 3 kg of coal are gasified per kg of oxygen injected.
2. The water/oxygen ratio. By controlling the water/oxygen ratio, the gasification efficiency can be optimized. In practice, the action from surface on this parameter is limited due to the fact that an important part of water may come from the underground system. Depending on the importance of the underground water influx and the coal moisture, the variation of the water injected from surface will more or less control the gasification efficiency. Experience has shown that the optimum is ranging from 2 to 3 (ratio of the total water reacting underground to the oxygen injected).
3. The reactor counter-pressure. The control of the reactor counter-pressure is very important in UCG. The reason is that the underground reactor is opened to the underground system. The pressure of the underground reactor will control indirectly (i) the free water influx coming from the underground system and (ii) the gas losses to the underground system. To minimize contamination to the underground system, the counter-pressure of the underground reactor will be controlled significantly less than the average water pressure existing in the underground system (surrounding strata of the underground reactor), creating all the time a positive pressure gradient towards each gasifying module. The counter-pressure of the underground reactor is controlled from the production wellhead.
4. The position of the injection point. During underground reactor growth, efficiency of gasification will decrease in function of two main factors:
   • The increased distance from injection point to gasification zones (coal faces).
   • The increased contact surface between underground reactor and surrounding strata (increase of heat losses and free water influx).
   To optimize efficiency, CRIP manoeuvres will be realized along the in-seam section of the deviated injection well.