Lignite can power future

As drilling rigs scour the land and seabed off Taranaki looking for oil and gas, a senior Government energy official says the huge reserves of lignite coal should not be forgotten.

Mark Aliprantis said coal and lignite resources in the Southland region had the potential to play an important role in the energy sector as a primary fuel and as a means to produce electricity.

The lignite deposits were extensively explored and researched during the 1970s, as part of work designed to establish the next big energy source after the Maui gas field expired, but have so far not been exploited.

Lignite coal is young and low-grade, making it uneconomic to transport.

Talk is now building about setting up a $1 billion plant to turn the low-grade coal into methane, which could be used in a power station or converted into motor fuel, fertiliser or methanol.

Technology needed to convert coal into diesel or methane is not new, but recent developments have made the process cleaner, with CO2 emissions being captured and stored.

Bloomberg yesterday reported the chief executive of state-owned coal company Solid Energy, Don Elder, as looking into a scheme to use the lignite.

He said it was "an idea whose time had come" as oil prices had got so high.

Aliprantis, manager of petroleum and minerals investment in the Crown Minerals section of the Ministry of Economic Development, said New Zealand's commitment to reducing greenhouse gas emissions did not mean hydrocarbon resources would not be developed.

"Our climate change policies simply mean that the costs to the environment of various energy options will need to be considered and managed," he said in a speech this week at a minerals conference in Auckland.

The lignite deposits were New Zealand's "largest readily available energy resource", with the potential to be used as viable future feedstock for electricity production and possible conversion to petrochemicals or liquid fuels.

One deposit, the Hawkdun Lignite deposit, if mined and converted into synthesis gas, would provide as much energy as two Maui gas fields.

"If the lignite were converted to transport fuels in the form of petrol, diesel, jet fuel ... it could provide 71 million tonnes of fuel, enough to supply New Zealand's total requirements for 15 or 20 years," said Aliprantis.

If the lignite was converted to methanol, it could provide annual export income of $1.4 billion for the next 65 years.

Used to produce electricity in a power station, the Hawkdun deposit could provide fuel to power all of the South Island electricity demand or about 30 per cent of the national electricity demand for the next 65 years.