To be built at Peabody’s North Goonyella mine in the Bowen Basin south-west of Mackay, the plant would initially be diesel-fuelled but would potentially use methane from mine drainage and gas extracted from other coal seams on the mining lease.

Ergon Energy would own and operate the plant, selling electricity to Peabody with excess electricity being sold back into the grid. CH4 would provide expertise in gas production and gathering.

Ergon Energy’s Executive General Manager Business Development Jim Chisholm said a successful project would provide a breakthrough in the use of embedded generation (power plant built at electricity consumption point) to provide reliable electricity for this and future mine sites.

Queensland energy minister John Mickel congratulated the parties involved in the agreement. He said the project would potentially be one of the first operational generation projects using coalmine methane as a result of the Queensland government’s new scheme which requires electricity retailers to source at least 13% of their power from gas-fired generation.

“The project delivers on one of the key aims of the scheme which is to diversify Queensland’s energy mix while reducing greenhouse gas emissions,” Mickel said.

CH4 said the project would give it access to additional gas reserves and enhance its market position as a pioneer in gas extraction using low-cost techniques. This agreement with Peabody follows a similar agreement with Anglo Coal, according to CH4.