Coal producer to investigate South Island CO2 storage potential
Coal producer, Solid Energy is to survey potential land-based carbon dioxide (CO2) storage sites in Otago and Southland,
a project that is part of a 20-year, $100 million investment the company is making in clean coal technology.
The first stage of the survey, to be carried out over the next six months, will involve detailed geological and data
analysis. If and when potential sites are identified, the company expects to move to a detailed drilling programme to
investigate potential structures in more depth under appropriate resource consents.
The initial project will be undertaken using expertise developed through the Australian-based Cooperative Research
Centre for Greenhouse Gas Technologies (CO2CRC), in which Solid Energy is a participant. Future research will involve
New Zealand scientists.
Solid Energy Chief Executive Officer, Dr Don Elder says: “Internationally the coal industry is investing significantly
in developing and introducing clean coal technologies that will improve the efficiency of burning coal and reduce
emissions from coal-fired power stations and industry.
“Solid Energy is leading the way in developing these technologies to support New Zealand’s sustainable energy future in
a world facing more scarce and expensive energy, while simultaneously seeking to reduce CO2 emissions. Solid Energy
probably has the largest single New Zealand commitment to these solutions as part of our $100 million, 20-year
technology research and development programme. This includes a leading role in developing carbon capture and storage
(sequestration), seen internationally as a key option, for New Zealand conditions.”
Internationally carbon capture and storage (CCS) is expected to play a key role in helping to meet the challenge of
climate change, given that the world will continue to be dependent on fossil fuels for some time to come yet. As the
name suggests, CCS is comprised of two distinct parts; the capture of CO2 at the point it is generated, and the storage
of the captured gas.
Technologies for CO2 capture are well established and have been successfully used for many years as part of everyday
industrial processes, for example in the production of ammonia, and to provide CO2 for use in the food and beverage
industry. The petroleum industry routinely separates excess CO2 from raw natural gas before transporting it to market by
pipeline. When coal or lignite is gasified to produce chemicals or fuels, CO2 capture is an integral part of the
process. Likewise, the injection of CO2 underground has been carried out safely for decades by the oil and gas industry
as part of the process of enhanced oil recovery. The geological storage of CO2 offers huge potential for the permanent
storage of large volumes of CO2 as an alternative to emitting it as a greenhouse gas.
With thousands of scientists working on this technology worldwide, the engineering has come a long way in just a few
years and development will continue to accelerate. Scientists predict that carbon capture and storage will be an
operational part of CO2 producing industries in the next five to eight years.
Solid Energy is a founding shareholder, with several Australian coal, oil and gas majors in a CO2CRC-related company
formed to operate Australasia’s first project to trial CO2 storage technology in the onshore Otway Basin of western
Victoria. The trial is due to start before the end of 2006 and will involve about 40 Australian and overseas
Dr Elder says: “New Zealand has vast opportunities for underground storage of CO2, including in depleted gas reservoirs
and in deep coal seams. If we are to exploit our huge lignite reserves, we must work to address the challenge of CO2. We
will be able to build on the considerable experience of the international oil industry, which has used CO2 injection
into geological formations for many years to help recover oil and gas from hydrocarbon reservoirs. For example, about 1
billion tonnes of CO2 is estimated to have been injected to date for enhanced oil recovery in the United States alone
and this is equivalent to New Zealand’s entire annual CO2 emissions for 25-30 years.”
Solid Energy is developing a number of research and development programmes to specifically address the viability of
applying clean coal technologies in New Zealand and in the development of alternative fuels. This includes new
coal-based energy sources, such as coal seam gas which it is currently piloting in the Waikato, and the further
development of biomass for industrial and commercial energy.
“We are committed to a range of research and practical projects to reduce the environmental impacts of coal use to allow
it to continue to support the country’s economic prosperity in a sustainable manner and while we transition to renewable
energy forms. We believe the $100 million investment is one of the largest such programmes ever announced by a
comparable company in New Zealand.”
One of the major Australian research initiatives is the coal industry’s COAL21 research fund of A$300 million over five
years, based on an industry levy of up to A$0.20/tonne of black coal per annum. By comparison, Solid Energy’s commitment
of $5 million per annum over 20 years represents NZ$1.00/tonne, five times more than the Australian fund.