Late last year Solid Energy confirmed it was investigating a NZ$1 billion project to convert the lignite into liquid fuels for a variety of possible end uses – while the Christchurch-based L&M Group said it was carrying out pre-feasibility studies into the economics of several billion-dollar projects.
This week, L&M Group managing director Greg Hogan told EnergyReview.net his company had just started the pre-feasibility studies and expected to have them completed by the end of 2006.
“We are investigatng some large, long-term projects that have the potential to be very significant in terms of the New Zealand economy and landscape,” he said.
Hogan said two possible projects were valued at about US$4 billion each, while a third was slightly smaller.
Although he declined to give many details, Hogan did say one project involved producing significant quantities of diesel, up to 50,000 barrels per day, synthesised from lignite using the Fisher-Troph process, for perhaps 20 years or longer.
L&M would seek investment partners if the pre-feasibility studies proved positive, he added.
The group was also undertaking environmental studies, doing further drilling, coal quality determination, and assessing the mining potential of lignite .
L&M currently has five South Island lignite exploration permits, covering 210 square kilometres, and it has identified recoverable resources of about 2 billion tonnes.
New Zealand’s lignite reserves are possibly the country’s most strategic future energy resource, containing some 100,000 petajoules, or about 30 times the energy content of the original Maui gas field.
“I am confident that lignite, with its high quality properties, including low sulphur and low ash, will play a strategic role in New Zealand’s energy future,” Hogan said.
L&M also has five coal exploration permits and applications covering 272 square kilometres in Southland and the North Island’s Waikato regions. It has identified resources of 125 million tonnes of coal and is carrying out geological studies, fieldwork, further drilling, and coal quality assessments in order to update current resource estimates.
Solid Energy spokesperson Vicki Blyth said Solid Energy had started some preliminary work, but that it would be at least a year before there were any definite results.
Any lignite-to-liquid fuels project could include the production of synthetic fuels such methanol or ammonia, through converting the carbon in lignite to carbon monoxide and hydrogren. Other uses could be electricity generation and co-generation facilities for industry, she added.
The Southland-Central Otago lignite represents over 80% of all New Zealand’s coal resources, with in-ground reserves at around 11 billion tonnes, of which 7 billion are estimated to be recoverable. Solid Energy has rights to over 3.4 billion tonnes.
