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Raising the prospect of diesel costing just a dollar a litre, Solid Energy chief executive Dr Don Elder fired up the 2008AUSIN conference. Speaking within minutes of the conference being opened by Energy Minister David Parker, Elder presented a buoyant view of the resources sector and advocated powerfully for the unlocking of the Otago/Southland lignite coal resource to power the country.Elder seemed to relish the opportunity to confront the coal-shy Labour-led Government with the economic potential of the 11 billion tonne lignite coalfields on the eve of its passing the Climate Change (Emissions Trading and Renewable Preference) Bill into law. In its original form the Bill imposed a 10-year moratorium on new gas or coal-fired electricity generation. Elder told the conference we could become self-sufficient in diesel with a single coal-to-liquid-fuel gasification plant in Southland at a cost of about a dollar a litre. That “ballpark number” included production costs, government royalties and taxes, carbon capture and storage, and a return on capital. “I’m not saying that this will be the price at the pumps, but New Zealand potentially has access to diesel at a dollar a litre,” he told Q&M magazine. A single Fischer-Tropsch coal-to-liquid-fuels gasification plant atop one of Southland’s billion-tonne lignite fields could replace all New Zealand’s diesel imports within five years, if the necessary processes, including consenting under the Resource Management Act (RMA), were condensed “to the fastest possible point.” It would otherwise take up to 10 years to deliver a world-scale plant “almost exactly the right size to replace New Zealand’s imported diesel.” Presently, the country imports diesel as a finished product at prices based on the current global oil price of around $165/b (US$115/b), or about $1.80/litre at the pumps. The carbon dioxide by-product of the plant would be captured in the gasification process at a “trivial” cost and permanently sequestered deep underground in coal seams, saline aquifers or depleted oilfields, Elder says. The technology is already mostly available, gasification of coal to liquid fuels having been developed by Germany to fuel the Luftwaffe during World War Two, and underground sequestration of gas being a routine part of oil production for the past 30 years. All that the sequestration technology lacks is monitoring of its efficiency, and Solid Energy is contributing to research into this aspect at depleted oilfields in Australia’s Otway Basin. Elder said there were plenty of places in Southland where gas could be sequestered, and only their capacity was as yet uncertain. An alternative would be to store it in off-shore Southland oilfields of the Great South Basin which is being explored for oil by consortia led by American giant ExxonMobil and Austria’s OMV. Solid Energy recently launched a pre-feasibility study into a lignite gasification plant, and private company L&M Group, which holds licences over three billion tonnes of Southland lignite, is already into the full feasibility stage of a plant likely to cost about $6 billion. L&M chairman Geoff Louden told the conference that a billion tonnes of lignite would convert to the equivalent of that many barrels of oil at a cost of about $100/b. He expected L&M to complete its feasibility study by 2012, and could have a plant up and running by 2017. Both Elder and Louden stressed that the timeframe for getting gasification plants up and running was to some extent dependent on the Government supporting in principle the notion of using the 11 billion tonne Southland lignite deposits to make the country self-sufficient in diesel. Q&M Vol.5 No.4 October-November 2008 All articles on this website are copyright to Contrafed Publishing Co. Ltd. |