Biofuel production at Northland's oil refinery urged by lobby group

Bioenergy Association is calling on Refining NZ to consider production of biofuels sooner rather than later. Photo / Supplied

Refining NZ switching to a fuel import terminal without seriously considering the production of biofuels will increase the barrier to low emission transport.

The Bioenergy Association said it was in the national interest the refinery manufacturing equipment be re-purposed for biofuels from the very start of the conversion process otherwise, domestic biofuels production would face a significant barrier if a new bio-refinery would have to be built from scratch.

In its bi-monthly report to the NZX, Refining NZ said refining margins have remained low because of the impacts of Covid-19 and that the company has reached in-principal agreement with Mobil, the third and final customer, on key commercial terms in August.

The company has also secured shareholder and lender consents and is close to completing the detailed planning to be ready for a final investment decision by the Refining NZ board, expected at the end of this month.

A spokeswoman said finalisation of Terminal Services Agreements with customers was now the key remaining step ahead of the final decision.

The refinery remained on track for conversion to take place in the first half of next year, she said.

But the association said the refinery's closure would increase the barrier to easy achievement of low emissions transport.

"To maximise the future opportunities, and reduce potential cost barriers, and ensure that the required equipment at the refinery is maintained in a suitable form, the objective should be to provide incentives for Refining NZ to keep assets that may be used for refining of alternative fuels," executive officer Brian Cox said.

He said a biorefinery could produce biofuels for heavy transport, marine - such as the Inter-islander - rail and sustainable aviation fuel.

"Use of the existing site will be very important if domestic biofuels are to be available sooner, with the consequential greenhouse gas emissions reduction. Obtaining resource consents to build new green-field biorefineries and further development of the production capability can be expected to take up to 10 years."

Cox said the maximum value of the refinery for future biofuels production would be achieved if the Government assisted Refining NZ to keep the facility operational, at least for a period in which to develop a future plan for repurposing the assets.

The refinery spokeswoman said Marsden Pt has huge potential being a large industrial consented site, with deep water port access, large electricity and gas connections and a very capable workforce.

"We want to explore what the best opportunities are for the site as we move forward, whether it's the import or export of energy, its production or storage. And whatever form that fuel or energy might be in the future from biofuels, sustainable aviation fuel, hydrogen, LNG and electricity. At this point we are focused on identifying all of the opportunities."