Lignite factory 'uneconomic' - expert
Fri, 25 Jan 2013 6:35p.m.
By Jessica Rowe
Energy experts are criticising plans made by state-owned miner Solid Energy, saying efforts to build a large export factory in Southland’s Mataura valley are uneconomic.
The state-owned miner’s lignite briquettes are expected to go on sale this year, but an ambitious plan to export the pellets overseas is now looking unlikely.
Energy expert Professor Basil Sharp, of the University of Auckland, is dubious of the economics behind the company’s plans.
“The price of gas internationally has gone through the floor, and this obviously has an impact on the demand of coal,” he says. “I suspect that feeds back into Solid’s proposal.”
The whole scheme may be uneconomic, as new drilling technologies and fracking have triggered a dramatic downturn in coal prices, Prof Sharp says.
Solid Energy had planned to process the fuel into hotter burning briquettes and is bankrolling a $29 million pilot factory in Mataura.
The miner owns billions of tonnes of lignite in the area, but with coal prices plummeting, the future of the factory is now looking uncertain.
Solid Energy was unavailable to comment today, but on a corporate video, CEO Don Elder talks about his high hopes for the lignite reserves.
“We have one of the largest lignite resources in the world. On a per capita scale we are one of the largest in the world,” he says.
“We can turn those lignites to urea with powers our agriculture economy, we can turn them to diesel which powers our export economy.”
But with those economics now in doubt, Solid Energy is also facing pressure from environmentalists.
One group, the Coal Action Network, held a small protest outside the plant last week the weekend.
Parliamentary Commissioner for the Environment Jan Wright says that an abandoning of the pilot plant would be “good news for the environment”.
If big export plans are abandoned, it could tremendously help the work put towards green house gas emissions, she told 3 News.
Solid Energy says it hopes to make its lignite projects carbon neutral, by either offsetting or capturing and storing the emissions.
But it will take a big rise in global coal prices for solid energy to seriously exploit Southland's lignite reserves.
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27/01/2013 8:10:01 a.m.
Lynne Dempsey wrote:
The International Energy Agency has warned that two thirds of all proven fossil fuel reserves must stay in the ground. If we burn all the reserves already stockpiled, global temperatures will soar. Two degrees...three degrees... four or five degrees? The climate will deliver worse and worse disasters until it is 'game over' for most of life on the planet. Is this what we want? Why are energy companies greedily prospecting for even more of this dangerous stuff that if burned will wipe us out? Why is Solid Energy joining this immoral race to destroy the climate and imperil all life on the planet? Short term shareholder profits is why -and we are the shareholders! We are complicit in our own destruction if Solid Energy's plans for lignite go ahead.
26/01/2013 11:19:31 a.m.
cindy baxter wrote:
Don Elder is saying in his video that you can turn lignite into urea. Yes, you can do that, but why has Solid's partner in that project, Ravensdown, decided to bail on the deal?
Solid has yet to find a partner for its lignite-to-urea plans and the only other possible partner in New Zealand, Ballance, uses natural gas to produce urea at Kapuni. Why would it switch to lignite?
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