To: Dennis Roth who wrote (110 ) 11/21/2005 12:23:59 PM From: Dennis Roth Respond to of 1740 Southland attracts interest for synthetic fuel plantsstuff.co.nz 21 November 2005 Two companies are investigating setting up billion-dollar synthetic fuel plants in Southland as interest grows in the region's lignite reserves. On Thursday Bloomberg reported that Solid Energy was investigating a $1 billion project to convert coal into diesel at a plant in Southland. Southland holds about 70 per cent of New Zealand's lignite reserves. Venture Southland deputy chairman Wayne Affleck said a solid fuel plant could provide more than 500 full-time jobs and have spin-offs for Southport, the engineering industry and other suppliers. More than 1000 temporary construction jobs could be created in building the plant. Mr Affleck described the Solid Energy news as "a bit of punting or promotion" but revealed there was strong interest from the L&M Group and a consortium of overseas investors to develop a synthetic fuel plant in Southland. L&M is prospect drilling in Western Southland and also has drilling licences in Edendale, Mataura and Winton. A synthetic fuel plant would convert lignite reserves into diesel and other fuels. Emissions from the plant could be controlled, he said. The plant's heat by-product could be generated into 500 megawatts of electricity. Mr Affleck said other industry could be attracted to an area where a reliable electricity supply existed. "We believe they (L&M) are pretty serious. They're spending millions on a feasibility study at the moment." Venture's energy study was the catalyst for L&M's original interest, he said. Mr Affleck said he suspected Solid Energy and L&M were talking about the same project. However, L&M Group managing director Greg Hogan said his company was not aware of Solid Energy's project. He acknowledged that production of liquid fuels was another of the attractions of lignite use. Electricity generated as a by-product could be sold to be used in the national grid or fed to other industry attracted to the plant's generation capacity. Environmental and economic viability issues had been investigated, Mr Hogan said. "We were satisfied that any issues could be dealt with." A pre-feasibility study would be started early next year and would take about a year to complete, he said. If the plant came to fruition it would represent a $US4 billon ($NZ5.8 billion) investment and produce 50,000 barrels of diesel a day. Mr Hogan said L&M could seek out other investment partners at a later stage. Solid Energy spokeswoman Vicki Blyth said a number of options including synthetic fuel, electricity generation and gasification existed around Southland's lignite reserves. "I guess the new thing that has emerged is gas (and) fuel." Gasification is a method of converting the carbon in coal or lignite to carbon monoxide and hydrogen which are the building blocks of the chemical industry and used in methanol and ammonia production. Solid Energy drilling was being done in Western and Central Southland, she said. Invercargill MP Eric Roy said lignite was highly valuable to Southland and the projects needed to benefit the region. The Government needed to make it clear what energy sources it was keen on promoting, he said.