THE company which attracted fierce opposition to its plans to extract coal gas from under the sea around Scotland has collapsed.

Five Quarter, which was based in Newcastle and backed by the UK's biggest private landowner, the Duke of Buccleuch, went out of business last week, blaming lack of government support.

The news was welcomed by environmental groups as “another nail in the coffin” for underground coal gasification (UCG), an unconventional gas technology like fracking that has been stalled by a Scottish government moratorium on development.

Five Quarter had been granted exploratory UCG licences for two areas in the Firth of Forth, one off Musselburgh and one in the centre of the firth. It also had a UCG licence in the Solway Firth.

Another company led by the multi-millionaire oil tycoon, Algy Cluff, has UCG licences for three other areas around the Firth of Forth. But it has recently pulled back from its plans because of the moratorium.

On March 1, Five Quarter announced that it had “no option but to cease to trade in UK” and close its offices. “This is because global market conditions have changed, North Sea activities are in rapid decline, and there is considerable uncertainty about the direction of government strategy for energy,” said a company statement.

Friends of the Earth Scotland described the closure as “a huge relief” to communities around the Forth and Solway firths. “The collapse of Five Quarter is another nail in the coffin for the underground coal gasification industry,” said the group’s head of campaigns, Mary Church.

Lang Banks, director of WWF Scotland, argued that the UK government’s Coal Authority, which grants UCG licences, should not be allowed to reallocate Five Quarter’s permits to other companies. This would “eliminate the threat to our environment entirely”, he suggested.

According to the Coal Authority’s corporate manager, John Delaney, "an insolvency practitioner for the company may approach the authority with a request to assign the licences to another company. In this case the authority will only consent if the new company can satisfy the authority’s criteria for holding a licence.”

The chairman and chief executive of Five Quarter, Dr Harry Bradbury, said that the government had failed to give sufficient backing for foreign investment of more than £1 billion. The aim had been to create “a full carbon capture and decarbonising gas processing plant and related infrastructure to the highest global standards of excellence in environmental management,” he told the Sunday Herald.

“Five Quarter did not participate in underground coal gasification, nor so-called fracking, but had developed ‘deep gas winning’, an advanced engineering process for gas extraction without any form of environmental impact.”

Bradbury argued that inexpensive and high volume gas supplies would continue to be an essential part of the UK energy mix.