It costs more than digging up a thick seam with little overburden, definitely. You wouldn't bother if you had cheap alternatives. But when "conventional coal" hits a plateau, rising prices will make "unconventional coal" a more attractive proposition. Gasification potentially allows a country like China to increase its total energy use while coal production stagnates.

I've seen CTL projects claim they can be profitable at $30 per barrel. Gasification is cheaper because you skip the liquification step and just burn the syngas in a power plant.
This is 19th century technology, by the way, been done many times before. It isn't common because oil and conventional coal is cheaper and in abundant supply - for now.

Isn't that pretty costly in dollar terms, though? I've only read about coal seam gas in a "carbon sequestration" context. Cost could keep production down, and the cost could restrict consumption - which in practical terms is the same as physical factors, and gives us a peak.

Coal seam gas is a very different thing to gasification (UCG - Underground Coal Gasification).

I agree with the reservations above about total coal resources (probably because I'm Australian as well and am very aware that our coal reserves can jump pretty quickly whenever anyone feels like going out and drilling a few more holes - which they only do when they want to start a new mine up).

One day coal production will peak - but I'm very wary that we'll see a lot more coal produced in Australia, China, Pakistan, South Africa and the US than some people imagine.

For more on the Oz context, check out these posts on coal to liquids and coal seam gas in Australia (note that since these were written the Monash CTL plant has been shelved and the UCG industry has been pushed out of Queensland by the CSG boys and is trying again in South Australia) :

http://anz.theoildrum.com/node/3817
http://anz.theoildrum.com/node/4618

http://peakenergy.blogspot.com/2008/08/csm-vs-ucg-in-queensland.html
http://peakenergy.blogspot.com/2008/11/triumph-of-csm-over-ucg-linc-flee...
http://peakenergy.blogspot.com/2008/12/monash-ctl-project-put-on-hold.html

Have to agree.

Here's the fun bit, though..

If we add up all conventional oil, conventional gas and easily-mined coal, get the total CO2 emitted and assume half is absorbed (empirical observation), I believe that final atmospheric CO2 hits circa 450-500ppm, which is at the outer limit of 'manageable' climate change. Probably.

If you start adding in tar sands, assorted non-con gas and especially gasified coal seams.. well, just don't bother with property lass than 12m above sea level.

For my part, obviously I am not keen on having a big chunk more CO₂ pumped out, whatever the source.

My query was only about the cost and technical difficulties involved in coal seam gas, because we're talking about its peaking. I mean, in oil we've got good old Saudi light sweet crude circa 1950, whack a pipe in the ground and out it spurts, and then we've got Alberta tarsands, a real mess to get the stuff out. If more of our oil comes from tarsands than easy reservoirs, then we're at peak.

So the question is whether coal seam gas is more like easy oil reservoirs, or more like tarsands.

I mean, I don't want another gramme of the stuff burned, oil, coal or gas. But that's not likely to happen, so the question then becomes, when are economic and technical factors going to give us the peaks, so that we end up burning less whether we like it or not.

@Gail

There is more than just an interest in doing in situ gasification. Worldwide there are around 30 to 50 small pilot projects going on or planned in this field in 10+ different countries (including Australia, India, South Africa, China, U.S., United Kingdom, Canada)