Fertiliser plant proposal just the beginning for Solid Energy

Friday 25th September 2009

Solid Energy's plan for a joint venture using South Island lignite coal to make urea-based fertiliser with the Ravensdown cooperative is an opening salvo in a much bigger plan to bring large-scale coal gasification technology to New Zealand.

With more than eight billion tonnes of high carbon, hard-to-transport coal trapped in Southland deposits, Solid Energy says the urea plant could be the foundation of a New Zealand capability in coal gasification technology, which could also be used to produce diesel domestically.

Both the urea and diesel proposals have the potential to knock billions of dollars off the country's current account deficit with the rest of the world, and play to the Key Government's emerging strategy for more aggressive exploitation of New Zealand's mineral wealth.

Both are managed by Solid Energy's recently formed "new energy" team, which is also exploring coal seam gas extraction, an increasingly common source of lower carbon energy mined from underground gas fields without major environmental disruption at ground level.

Solid Energy CEO, Don Elder, an influential figure behind the minerals agenda says in the statement announcing the Ravensdown joint study that "producing urea from our vast lignite resources is a prime example of how New Zealand can capitalise on our position as one of the richest countries in the world in natural resources per capita".

New Zealand currently imports 500,000 tonnes of nitrogen-based urea fertilisers annually for use in pastoral farming, and the proposed plant could make the country self-sufficient in urea needs, while producing up to 750,000 tonnes annually for export.

Domestic production would also help insulate farmers from big swings in urea prices, which oscillated between US$250 a tonne and US$800 a tonne in the last year, and would eliminate exchange rate risk that increases price volatility in New Zealand.

While urea is a potentially high value product to come from lignite gasification, it is by no means the only product that could be produced from what would effectively create a source of natural gas supply for the South Island.

The processes involved in making urea first convert coal into synthetic natural gas in a process that favours the chemically active lignite resource, which is unsuited to burning for electricity production and degrades quickly when transported any distance.

Diesel and other transport fuels could potentially be produced from such gas supplies, and syngas could potentially fire electricity and co-generation industrial processes.

"Developing a urea plant in advance of constructing a lignite-to-diesel plant would allow New Zealand to have advanced gasificationi industry competency and capabilities iin place at an earlier stage, to substantially facilitate further and larger developments," says Elder.

"The two developments could take place in parallel and form the basis of a 'syngas park', supplying syngas to multiple downstream aplications including diesel and urea."

The main obstacle to developing Southland lignite has been its high carbon intensity, and Sustainability Council chair Simon Terry has criticised the urea proposal because nitrogen-based fertiliser already have a major impact on national greenhouse gas emissions and freshwater quality degradation.

Nitrogen comprises around half the total GHG emissions from agriculture, with the sector itself contributing half of all New Zealand's emissions. The use of nitrification inhibitors has been identified as a major opportunity to reduce both waterway pollution and GHG emissions.

However, Solid Energy says it expects any lignite-to-urea plant to be "fully carbon compliant from day one", with work under way to investigate carbon capture, sequestration, and biofeedstock options for controlling emissions from the gasification process.

Businesswire.co.nz

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