Laurus Energy boasts cheapest, cleanest power in America

A new company called Laurus Energy, which recently received $9 million in backing from a Silicon Valley venture firm, claims it has found the cheapest way to deliver clean power in North America.

The Houston-based company says its energy is even better than natural gas as a source, because the gas is generated with a superior method that no one else is using in North America: Underground coal gasification.

Laurus accesses coal that lies farther underground than the 100-meter-or-less depth that conventional coal mining technology can access. And by accessing such deep coal seams, Laurus can use a technique of drawing gas from the coal in a way that is cleaner than natural gas — basically, by adding to it the carbon-free hydrogen and methane.

“This is lowest cost, cleanest power source in North America,” says Erik Straser, partner at Mohr Davidow Ventures, who led the investment into company.

The company owns exclusive rights to the technology for use in North America. So far the technology has been used by government energy agencies in countries in South Africa and Uzbekistan. Ergo Exergy is the company that owns the technology and licenses it out to different global operators. It was founded by Michael Blinderman, who also co-founded Laurus. Simon Maev is another co-founder at Laurus.

Laurus uses a process very similar to smoking a cigar. Just as a cigar has pores that lets you draw in smoke from one end to the other through layers of tobacco leaves, Laurus also uses cigar-like pores, only on a much larger scale: It drills holes in coal deposits, and sucks gas through those holes and across a distance of up to several football fields. Once the gas reaches the surface, the carbon dioxide (CO2) is siphoned off, and sold to oil recovery companies wanting it for their own processes. The rest of the gas, which has significant doses of methane and hydrogen, goes to fuel a power plant. That gas is cleaner than natural gas. And its use is much cheaper because Laurus’ process avoids spending the hundreds of millions of dollars needed to build a standard surface gasifier. (You can see a demo of the process here; click where it says “play next.“)

Laurus’ power will be about 75 percent cheaper than the lowest cost solar alternatives, and about half as expensive as natural gas, Straser says.

Laurus will also announce tomorrow that it has hired Rebecca McDonald, an energy executive who ran large divisions of Houston’s BHP Billiton Petroleum (one of world’s biggest extraction companies), as chief executive. Straser, who sits on the board of Laurus, said he wanted to announce the company’s CEO before talking about Laurus publicly. His firm, Mohr Davidow Ventures, invested in April.

The technology is also useful because it exploits coal, which is the nation’s largest energy resource. Laurus targets the coal seams that are between 200 and 1,500 meters below the ground, an area that is un-minable. Other, conventional sources of power, such as oil and natural gas have become much less plentiful in recent years.

To be sure, Laurus still exploits a non-renewable.

The company will need about two years before it can actually build the plants and deliver energy to the market. So far, it has started its mining in Texas and in Alberta, Canada. It is in talks with power plant operators to build a facility, as well as with CO2 pipeline operators. It will hit full-scale production in 2011, Straser says.