The $54 million project has been initiated by Queensland’s Petro Fuel & Lubricants and the Queensland Fuel group (QFG), both of which supply fuel under an agreement with Caltex.
The establishment of the locally owned bio-refinery will let fuel distributors become producers, able to supply to Caltex and other fuel suppliers wishing to offer 10% blends of ethanol, used to reduce carbon dioxide emissions in vehicles.
The consortium has founded Dalby Bio-Refinery Ltd to run the site. Petro Fuel and QFG will be obliged to purchase a portion of the ethanol produced at the site, but the refinery can also supply other distributors.
Petro Fuel director Chris Harrison said the Dalby Bio-Refinery had participated in “earnest discussions” with all of the major oil companies with a view to supplying domestic ethanol, and was also looking forward to becoming involved in emissions trading schemes in the future.
Harrison, one of the driving forces behind the ethanol initiative and now also a director of Dalby Bio-Refinery Ltd, started working on the refinery immediately after the release of the Federal Government Fuel Policy in September 2001.
With the Government’s recent decision to approve fuel blends containing up to 10% ethanol, Harrison said Australian industry would have to position itself quickly or risk losing the potential bio-fuel industry to overseas competitors.
“In real terms, there’s very little ethanol manufactured in Australia and if we don’t get a few more projects moving quickly with the traction that we’re starting to get in the market, we could have a supply problem,” Harrison said.
“My concern is that overseas in places like China, America and Brazil, they have such a head start on the technology and production of ethanol, unless we had this geographic advantage, we would really struggle to compete.”
The Dalby Bio-Refinery has been designed with an initial capacity of 40 million litres of ethanol a year, increasing to 80 million litres once fully operational.
Harrison said the Dalby Bio-Refinery would produce ethanol from sorghum currently sold as feed for cattle.
“There are some niche markets for sorghum, but most of it goes to the feedbox,” he said.
“We believe we’ve got a sort of natural hedge there, because the byproduct of the ethanol we produce – called distiller’s grains – is very high in protein, reasonable high-energy stock feed.”
“I think one small plant in Dalby is… well… it’s like that saying, ‘One small step for mankind’,” Harrison said.
“Hopefully, we’ll provide an impetus so we’ll see other projects going forward so we’ll get renewable fuels – not only ethanol, but biodiesel – to a proportion of the Australian fuel mix to the point where it will actually make a difference.”
Deputy premier and minister for state development, trade and innovation Anna Bligh said the Dalby Bio-Refinery would give a “huge boost” to the domestic ethanol industry and that the State Government was “determined the ethanol industry will be a success in Queensland."
She suggested Queensland’s sorghum producers investigate the possibility of investing in the Dalby Bio-Refinery, using a model that has so far proven to be effective in North American projects.
The refinery is expected to be operational by mid-2007 and has been privately funded by Dalby Bio-Refinery's banking partner NM Rothschild and Sons.
Suncorp Metway will provide the plant's working capital requirements.
