The province of Alberta, Canada, agreed on July 27 to give $297 million toward a $1.6-billion project that will create synthetic gas out of coal in Whitecourt, Alberta, that can't be mined. Then, the gas will be used to generate 300 MW of electricity.

Construction of the Swan Hills in situ coal-gasification project, 177 kilometers northwest of Edmonton, is projected to begin in 2013. By 2015, Edmonton, Alberta-based Swan Hills Synfuels expects to capture 1.3 million tons of carbon dioxide from the gasification. That CO2 will be used for enhanced oil recovery in the area.

The Swan Hills Synfuels project will use access wells, similar to conventional oil and gas wells, to access coal seams about 1.4 km below the earth’s surface. Underground, the coal will be gasified into a synthetic gas, which will be sent to the surface.

“The support of the province is helping to make this major energy project a reality, upgrading a low-value resource into valuable clean energy in Alberta,” said Martin Lambert, chief executive officer of Swan Hills Synfuels, in a statement. “We are excited to be building a base-load generating plant that will provide the reliability and economic stability that coal-fired power has brought to Alberta for many years, but with greenhouse-gas emissions lower than that of comparable natural-gas-fired generation.

A maximum of up to 40% of the government funding will be distributed during the design and construction stages. An additional 20% will be given to Swan Hills upon commercial operation, and the remaining 40% will be provided over 10 years as CO2 is captured.