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Tuesday, November 23, 2010

Should the Pike River mine have been developed?

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In the wake of the 2nd explosion at the Pike River Mine, we might ask whether the mine ought to have been developed, and in the wake of the explosion, whether it ought to be re-opened. I have a number of reasons for thinking that:
1. The mine ought not have been developed the way it was.
2. The mine ought to be re-opened subject to certain conditions

Should the mine have been developed.
The problem with how the mine was developed was the lack of consideration given to the high methane gas content in the coal. The reasons for ignoring or downplaying the gas content was:
1. Surface drilling to extract the gas would have required the development of roads to get drill rigs in, as well as pipe infrastructure. The gas could have been used in Greymouth, but that would have required a power station. It is doubtful that a coal seam gas power station would offer favourable availability factors given the discontinuous nature of probably gas supplies. It would have necessitated electricity supplies anyway, i.e. It would require spending more money. It therefore did not make sense to extract the gas. The other reasons for not extracting gas from the surface is the pristine forests in the region, and the ruggedness of the terrain. Clearly, coal seam gas extraction would have prevented this project from being developed.
2. Underground drilling to extract gas and pipe it out of the development heading was another option. This was less commercially appealing because you are not drilling the whole field; only those areas accessible from the development heading and ancillary tunnels. The coal seam methane extraction/drilling would also interfere with coal development; so this is even less viable than surface drilling to drain the gas out.

Mines in Queensland which have high methane concentrations have the methane drained from the coal prior to recovery as a matter of routine. e.g. Moura Coal Mine being a case in point.

Should the mine be re-opened?
It is easy enough to re-open the mine. The question is whether it ought to be. Logic would suggest that a mine explosion might happen again. The reality is that the mine should not be opened for a number of reasons:
1. High manning level - the mine operates using less mechanised methods of mining which exposes more labour to any explosion, compared to say longwall mining operations.
2. Difficult access - the difficulty getting access to the coal seams to drain the methane makes this a difficult task, raising opposition from the green groups.
3. Value of the coal - The coal is not critical to local industry. It is solely exported to foreign countries. It is valuable, however it might be best left where it is. Shareholders have lost all wealth; there is little to recoup from redeveloping the mine. NZ Oil & Gas was the largest shareholder. It las lost most of its investment...maybe it ought to stay lost.
4. Industry value - The coal industry is important to Greymouth. The reality is that this is one mine. Maybe the industry would be better off developing a coal seam gas extraction industry. Clearly this ought to be done solely on a scale to supply electricity to the local communities through existing electricity transmission networks. There are still several surface coal mines in the area which will continue to operate. They present no significant risk to life.


'Buying NZ Property – Download the free sample readings!

NZ presents some of the most alluring property in the Western World; particularly given the greater easy of residency, the low cost of property, and the liveability of the country. In addition, there is no capital gains tax, transfer taxes, VAT/GST or wealth taxes in NZ, so rest assured that NZ property is tax-effective! Learn more now!

New Zealand Property Report 2010 - Download the table of contents or buy this 180-page report at our online store for just $US19.95.


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