Cluff Natual Resources is preparing to drill an underground coal gasification production test well in the Forth.
The company said it has made “significant progress” in accelerating the development of its UCG project.
Under its memorandum of understanding with energy services giant Halliburton, it is planning at least one UCG well.
Technical and geological work is being carried out in the Southern North Sea and Kincardine UCG project in the Firth of Forth, the initial focus for Cluff.
The company is preparing to submit a planning application for a UCG production test at Kincardine for what would be the first deep offshore project of its kind in the UK.
Chief executive Algy Cluff said: “We are delighted with the progress that has been made since the signing of the MOU with Halliburton in February.
“We are excited about the prospect of continuing to develop our strategic relationship with Halliburton with a view to accelerating the development and commercialisation of our assets, and look forward to providing further updates in due course.”
Cluff holds a total of nine UK licences for deep UCG, covering a total area of 690km2.
The company says UCG is a proven industrial process which allows coal to be converted into gas in-situ.
It would unlock an indigenous energy resource which is currently stranded due to its location and the decline of UK’s mining industry.
A new UCG industry in the UK will create new employment opportunities and tax revenues, the company says.
The areas that could benefit include Grangemouth, the site of the giant Ineos refinery, and Longannet, where Scottish Power’s coal fired station is to close.
UCG skills requirements are similar to other industries currently in decline in the UK including coal mining, oil and gas and petrochemicals.
UCG would increase the UK’s security of energy supply and make the country less reliant on foreign oil and gas, as well as provide a diversification of supply.
Cluff is working closely with authorities and regulators in its application for the project.