CIRI has been doing core drilling to assess coal resources on corporation-owned lands in the area. A five-hole program was nearing completion on June 2. CIRI owns substantial coal resources in the area.

Laurus is working on underground coal gasification in a number of countries using a process it developed.

CIRI hopes to develop a commercial-scale project that would produce a "synthesis" gas from underground combustion of coal. Synthesis gas is a mixture of hydrogen and carbon monoxide that can substitute for natural gas in some applications, such as powering turbines in a power plant, and used in manufacture of products.

It has a lower energy content than conventional natural gas, typically 200 to 300 British thermal units (btus) per thousand cubic feet of gas compared to about 1,000 Btus per thousand cubic feet of gas that is typical for conventional natural gas.

Ethan Schutt, CIRI's vice president for land and resources, said the corporation is considering use of the synthesis gas for a power plant. Alternatively, it could also be upgraded to substitute for conventional natural gas in the Enstar Natural Gas Co. system, Schutt said, or be used in the manufacturing of products, such as high quality fuels through the Fischer Tropsch process.

Schutt said the core drilling done this spring was to depths that varied between 2,000 feet to 2,600 across a wide pattern. The next step will be modeling and analysis of the coal resource, which will enable CIRI and now Laurus to focus on a specific site for further testing, he said.

Underground coal gasification involves injection of either air or oxygen from the surface to a suitable underground coal seam. A controlled combustion would be ignited and through a reaction that occurs, using a proprietary process owned by Laurus, results in forming of synthethis gas, which is then produced to the surface through a production well.

A commercial project would involve several air or oxygen injection wells and several production wells for the synthesis gas.

A commercial scale project would require an investment that could range between $20 million and $45 million, depending on whether an air separation unit or an oxygen plant is used. The oxygen plant option would require more initial investment, but it has certain advantages over an air system, Schutt said, mainly by eliminating a need to handle the nitrogen that would be in the air.

Additional investment would be required for pipelines and access roads on the surface, as well as the power plant or some other end-use for the synthethis gas, Schutt said. If the project is feasible, CIRI believes it could be in operation as early as 2015, he said.

The process generates carbon dioxide, however, and given the possibility that some form of carbon regulation or taxation will be imposed, CIRI is investigating commercial uses of the carbon dioxide. A possibility is its use in an enhanced oil recovery project in nearby Cook Inlet oil fields, which are nearing depletion, Schutt said.

CIRI has made a strategic corporate investment in Alaska alternative energy projects, including underground coal gasification, President and CEO Margie Brown said.

Coal gasification has the potential of adding a large new energy resource for Southcentral Alaska as a possible alternative to building a multi-billion dollar bullet gas pipeline from the North Slope, she said.

The corporation is also working on a $167 million, 52-megawatt wind energy project on Fire Island, in Cook Inlet just off Anchorage's international airport, which has the potential of generating enough electricity to power 17,000 homes in the Southcentral region.

If power sales agreements can be finalized with regional electric utilities the project could be in operation in 2012, eliminating the utilities' need to use 1.8 billion cubic feet per year of natural gas and extending the life of remaining Cook Inlet region gas reserves, CIRI spokesman Jim Jager said.