Powering Pakistan – coal for electricity
Emerging economies have an insatiable demand for power, both to satisfy their population’s needs and to fuel industry and developing infrastructure. Pakistan is looking to coal.
Pakistan has a generating capacity of 19.3GW or about one quarter of that of the UK, despite having a population almost three times as large. The mix of energy is also different, with Pakistan’s nuclear output at two per cent (UK 16%) and coal at 0.2% (UK 35%). The remainder of Pakistan’s energy is provided by gas/oil, at 63%, and hydro, 34%.
Electricity consumption in the country has been growing due to urbanisation, industrialisation and rural electrification. From 1970 to the early 1990s, the supply of electricity was unable to keep pace with a demand that was growing at around nine to 10% per annum. Companies that faced real increases in the price of electricity took advantage of changes in legislation, resulting in the up take of self-generating capacity. So much so that demand from the grid fell in the late 1990s. Demand is now rising again – the Pakistan Government estimates six to eight per cent annual economic growth in the coming decades leading to UK-level power capacity by 2025.
This growth will, according to forecasts by the Pakistan Government, be met by increasing coal-fired generation, whose share is expected to rise to 17% as oil and gas contributions fall. The underlying assumption is that Pakistan’s indigenous coal resources will supply new power stations to meet demand.
A rough appraisal of the country’s coal resources puts them at over 185bln tonnes, 90% of which are to be found in the Thar coalfield, Sindh Province, that covers an area approximately 140 by 65km in the south of the country. Coal grades are from sub-bituminous to lignite, with calorific values suitable for power generation.
This resource, combined with a ready market, has attracted London Stock Exchange Plus market listed Oracle Coalfields plc to the area. The company is led by Shahrukh Khan, a developer of large and complex natural resource projects throughout Asia and the Middle East. He says, ‘The combination of infrastructure, market and natural resources makes for a prospective investment opportunity. To this end, Oracle shall develop an open pit coal mine and engage partners to construct a mine mouth power station. The mine will be based on licences held by our 80%-owned Pakistan subsidiary Sindh Carbon Energy Ltd’.
So far geological and pre-feasibility studies have been carried out over the company’s two licence areas, the Indus East 100km2 licence area, 140km northeast of Karachi, and the 66.1km2 Block VI of the Thar coalfield, approximately 450km southeast of Karachi.
The coal in both areas is found within the Barra formation of Palaeocene age comprising sandstone, claystone and minor partings of carbonaceous shale. The sandstone has fine and coarse horizons while the claystone is hard and compact. The coal formations are found within claystone horizons that also host thin siderite bandings.
Within the Thar coalfield, coal seams vary in thickness from 0.2-36m but little is known of the structure within the licence areas, although regionally, it is shallow-dipping to the northeast with little faulting. Beneath the Barra formation is a Pre-Cambrian granite basement. Unconformably, above are desert sands and the alluvial sediments of silt, clay and sands of the past and present Indus delta. These are mainly unconsolidated requiring little drilling and blasting to reach the coal-bearing formations, facilitating open pit mining.
The company believes the Block VI licence offers the best opportunity. Recent drilling of seven verification holes has confirmed previous work by the China North East Geological Survey Bureau, which in 2006 completed a 35-borehole programme. Commissioned by the Sindh Coal Authority, the programme drilled 9,852m, of which 5,986m was cored.
Dargo Associates, a UK coal specialist consultancy, is reviewing the drilling data. It has provided a JORC-compliant measured resource of 1.4bln tonnes and a proven reserve of 371Mt,based on a number of coal horizons with a cumulative thickness of 20-28m at a depth of approximately 150m.
The average calorific value is 3,537kcal/kg, ash levels are low at 7.5%, as is the sulphur content at 1.2%. ‘This coal is ideally suited to power generation,’ states Khan. ‘Its depth, the nature of overburden, which requires no blasting, and a manageable stripping ratio of 1:6.9 indicate that open pit mining is possible in the southern part of the Block VI licence area.’
Dargo has identified sufficient coal to support a 1,100MWe power generator, but initial plans are for a 300MWe mine mouth power station. Estimates so far indicate a 2.5Mt/yr mining operation producing 1.75Mt of lignite for the mine-mouth station and 750,000t for local industry.
‘In a recent meeting two local generating companies expressed an interest in Oracle’s invitation to build a mine-mouth power station. Both companies are producing power, have access to funding and the technical ability to complete the project,’ explains Khan. ‘In further meetings, senior officials in the Government of Sindh Mines & Minerals Development Department confirmed their active consideration to the building of a canal to provide water to the project area, undertake the groundwork necessary to link the site to the country’s railway system, and to upgrade the existing grid to 500KV.’
Work on a bankable feasibility for Block VI began in the second quarter of this year following a successful fundraising private placement with institutional and private investors. The work on Indus East is in abeyance, as the underground mine development and, in particular, the roof support will require further investigation and drilling.
Khan says, ‘For Block VI, we have also engaged Wardell Armstrong International to undertake an Environmental and Social Impact Assessment in parallel to the feasibility study to World Bank standards. Although the Thar is one of the more vegetated deserts it has a low biodiversity. Two aquifers lie above the coal seams that will require dewatering before mining and will offer a local water resource to this dry region’. He believes this will be welcomed by the local subsistence farmers.
Khan adds, ‘Our work towards feasibility (due early 2010) indicates that there are significant coal resources in the Thar region that will help Pakistan to meet the energy gap. This power will be fundamental to the economic development of the country’.
Further information: Oracle Coalfields