Coal to oil... a ray of hope :o)
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Solid Energy Investigates NZ$1 Bln Coal-to-Motor Fuel Plant
Nov. 17 (Bloomberg) -- Solid Energy New Zealand Ltd., the country's biggest coal miner is investigating a NZ$1 billion ($690 million) project to convert coal to motor fuel.
The government-owned miner has spent the past two years assessing lignite deposits on the country's South Island for making fuel. Another 12 months work will indicate the best fuels to make, the ideal size of the plant and which technology to use, Chief Executive Don Elder said.
``This is an idea whose time has come,' Elder said in an interview. ``Oil prices of about $35 to $40 a barrel means coal- to-liquids is probably viable here.'
Royal Dutch Shell Plc, Europe's second-largest oil company, and Johannesburg-based Sasol Ltd. are among companies investing in plants in China, the U.S., Africa and Australia converting coal to gas, motor fuel or fertilizer as rising prices make oil and gas too expensive to be used as feedstock.
Oil futures on the New York Mercantile Exchange averaged $20 a barrel in the 15 years prior to 2002, when prices started rising steadily on increased demand in Asia, particularly China. Prices averaged $43.45 a barrel last year, and $56.42 so far this year.
New Zealand, a nation of 4.1 million people, has about 15 billion tons of coal, Solid Energy said, citing a 1994 estimate. More than 80 percent of that is damp lignite, or brown coal, located in the sparsely populated Southland region of the South Island.
Turning that coal into jet fuel, gasoline and diesel would deliver more value than supplying a relatively small power station in the region where electricity demand is limited, Elder said.
Plant Scope
At least five million tons of coal a year would be needed for a fuel plant costing about NZ$1 billion, he said. A plant using 15 million tons a year could produce enough diesel and gasoline to make the country self sufficient in transport fuels, he said. New Zealand imports about 80 percent of its oil needs.
Sasol, the world's biggest maker of motor fuel from coal, uses technology invented by German scientists in 1923 that can convert coal or gas into fuels and chemicals such as diesel and naphtha. Feasibility studies are under way on two motor-fuel- from-coal plants in China, it said in September.
Shell and Sasol were also in talks to develop a 5,000- barrel-a-day coal-to-diesel plant in Gilberton, Pennsylvania, project developer WMPI Pty LLC, said in September.
Last week, Brisbane, Australia-based Linc Energy NL said it plans to use technology of Tulsa, Oklahoma-based Syntroleum Corp. to build a demonstration plant in Queensland state capable of producing about 20,000 barrels a day of low-sulfur diesel.
Christchurch-based Solid Energy's Elder wouldn't say who it has been working with on the project, nor where it would be located. As many as four of the nine major lignite fields in the region would provide suitable coal and would meet environmental standards, he said.
Should the project proceed, production could begin in five to six years. Solid Energy will probably lead the project through its planning consents and may retain an equity partnership after that, he said.
To contact the reporter on this story:
Gavin Evans in Wellington at gavinevans@bloomberg.net
Last Updated: November 16, 2005 13:47 EST
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