Tom Bulford, writing for Penny Sleuth, UK, draws from his years of penny stock experience to share his two top coal picks in the UK market for 2010.

Tom Bulford (Penny Sleuth):

Joseph Stalin does not sound like a very nice man to have worked for.

He had this idea that digging up coal from underground in order to burn it as soon as it reached the surface was a bit of a waste of time and effort. Why not simply burn it while still underground and then simply draw up the heat and gases through a pipe?

Convinced that this was a smart idea he set his scientists to work on the problem. Unfortunately for twelve of these scientists, they failed to do so and Stalin had them executed.

But to be fair to Stalin, his idea was right but just a little ahead of its time. Last week the UK Coal Authority granted a license to Clean Coal, a subsidiary of the quoted Anglo-American (ticker: AAL) to put Stalin’s theory into practice.

Under the North Sea, within ten kilometres of the coast, is enough coal to satisfy UK demand for at least ten years. The difficulty is getting it out.

But thanks to a new technology called Underground Coal Gasification this is no longer necessary. Let me show you how it will work.

How to make hard-to-reach coal fuel a power station

A drill will bore its way through the ground at somewhere, on land, close to perhaps Grimsby. Having reached the required depth it will then take a ninety degree turn and head out sideways underneath the coastline until it hits the coal seam.
Next a second bore hole will be drilled into the coal seam. Once that is done the coal will be set alight underground, and will be constantly fanned by oxygen fed down one of the pipes. Up the other pipe will come a methane-rich synthetic gas able to fuel a power station.

This will not be the first time that this has been done. Similar projects are already up and running. In the course of investigating a penny share company last week, I came across another such plan.

This was Strategic Natural Resources (ticker: SNRP), and I managed to catch up with chief executive Jeremy Metcalfe, a man whose enthusiasm and energy defies his seventy years. . .

Click here for the rest of Mr. Bulford’s report at Fleet Street Invest, UK.