Media Release
Solid Energy exploring indigenous energy options crucial for New Zealand
26 February 2008
Solid Energy’s projects under development will lead the company to more than double its total energy production within a decade, and play an even more critical role in underpinning the country’s energy security, an energy conference was told today.
Speaking to the annual power conference in Auckland, Solid Energy’s Chief Executive Officer, Dr Don Elder, said Solid Energy was taking a leadership role in developing a range of energy options for New Zealand. The company’s business plans project investment of more than $1.1 billion in new energy projects over the next 10 years. This capital expenditure will be split about equally between its traditional coal mining business and its new energy developments, which have already evolved from the company’s $100 million R&D programme, commenced in 2003.
“As a nation, we need to be exploring a wide range of options to ensure security of our future energy supply, and we need to be looking to our indigenous energy sources,” Dr Elder said.
“Last year the International Energy Agency sent out a warning to member states including New Zealand. It predicted surging demand for oil over the next decade, of supply constraints, and consequent upward pressure on energy prices,” he said. “Oil is today sitting at $100 a barrel. We have to ask ourselves – what if it hits $150 or $200 in the next five years? This is now more than likely. That would mean $3 to $4 a litre for petrol and $2 to $3 a litre for diesel, compared to $1.75 and $1.25 today – prices that are already causing pain for many businesses and households.
“And we have to ask ourselves what other costs and risks we might also have to face if we continue to have total reliance on imported oil. The danger of being vulnerable to – or worse - drawn into conflicts in distant countries to protect oil supplies for the western world could increase sharply.”
Solid Energy is already New Zealand’s largest producer of primary energy, producing over 130 petajoules of energy annually – nearly equivalent to country’s entire annual consumption of electricity – and earning about $600 million of export and domestic revenue per annum. Dr Elder told the conference that within a decade he expected this to nearly quadruple, including another $500 million alone from Solid Energy’s investments in renewables - biomass and biodiesel.
“In three years we intend to be producing 70 million litres of high-quality biodiesel per annum. That’s fully half of the Government’s target for all biofuels, not just biodiesel. Development of the first stage of a new biodiesel production facility in Christchurch has begun and will be producing 15 million litres per annum by later this year.”
Through its biomass business, Nature’s Flame, Solid Energy has also commenced developing its third pellet fuel plant, in Taupo, to complement its two existing plants in Christchurch and Rotorua. The pellet fuel is manufactured from wood waste and used in pellet fireplaces to heat homes and pellet boilers for commercial and industrial premises. Pellet fires produce virtually no ash or carbon emissions.
Solid Energy is the largest producer of wood pellets in the Southern Hemisphere and is now New Zealand’s leading supplier of solar hot water heating. In mid-March, Solid Energy officially launches a new renewable energy business, called Switch, that provides integrated renewable energy solutions for businesses and homes. It will provide pellet fireplaces, pellet boilers, solar water heating and other energy appliances, with a network of distributors throughout the country.
Additionally, Solid Energy is developing some “very exciting opportunities” with coal gas, he said.
“The first is a coal seam gas project in the Waikato, extracting methane trapped in coal seams deep underground. Four appraisal wells have been sunk, and we are flaring gas right now to test flow rates. We expect to make a decision later this year about the commercial viability of the project. Potentially we’re sitting on a resource of up to 300 petajoules, as big as the Kupe gas field.”
“The second area we’re developing is underground coal gasification (UCG). This involves the controlled gasification of confined pockets of very deep underground coal. The ‘syngas’ that is produced is piped to the surface and can be converted into a wide variety of products such as electricity, fertiliser, liquid fuels, natural gas and hydrogen,” said Dr Elder. “Solid Energy is supported by the leading global technology provider in UCG, and has been working closely for three years with other international companies in this exciting new energy technology that has the potential to revolutionise the fuel sector.
“Because it is so deep underground and air supply is controlled and limited, the coal is gasified rather than burnt. To shut the process down once you’ve extracted all the gas, you simply stop injecting air. Interestingly, we are building on a successful UCG trial run by the Electricity Corporation in the early 1990s – but, with cheap Maui gas, additional gas from UCG was not required back then. UCG projects have been successfully undertaken in the former Soviet Union, Australia and South Africa, and we have access to the latest technology. We are currently progressing our plans for our initial pilot development.”
Eventually the gas produced could be sufficient to run one or more generating units the size of Genesis Energy’s e3p or Contact Energy’s Otahuhu C stations.
Dr Elder told the conference that, in addition to all these projects, Solid Energy was progressing its Southland coal to liquid fuels project and had developed strong relationships with key potential international partners.
There were a number of options potentially available to manage the CO2 emissions from a lignite-based project, including carbon capture and storage. In April, one of the world’s most-advanced carbon capture and storage projects - the Otway CO2 injection and sequestration project in Western Victoria, Australia - would pass a major milestone.
“In April, injection of 100,000 tonnes of CO2 underground to a depth of 2000 metres will start. The project incorporates a gas production well, injection and monitoring wells and a visitor’s centre,” Dr Elder said.
Solid Energy is a founding shareholder in the company that owns and is operating this project and is also a funder of the Australian-based Cooperative Research Centre for Greenhouse Gas Technologies, the research centre overseeing the trial. Apart from Australia and New Zealand, participating countries include Korea, Canada and the United States.
