L&M studies feasibility of South Island gasification plant

L&M Group is planning a feasibility study next year into a proposal for an estimated $6 billion petrochemical plant in Otago or Southland.

The regions contain up to 12 billion tonnes of the low grade coal lignite, which could yield a barrel of diesel for every tonne of lignite processed.

Exploration company L&M is completing initial analysis on three of five permitted areas it holds at Kaitangata in South Otago, Hawkdun, in Central Otago, and Ashers-Waituna in Southland, including test drilling in preparation to begin the feasibility study.

L&M managing director Greg Hogan emphasised the initial studies were a long way from turning lignite into diesel, petrol, aviation gas or methanol, but he was adamant a southern petrochemical plant could be operating by 2012, The Otago Daily Times reported today.

The figure of $6 billion for a petrochemical coal gasification plant was based on estimates from around the world, where there were 130 gasification plants operating and producing more than 40,000MW of energy annually, Mr Hogan said.

L&M intended to take the results of its feasibility study to the Government, to clarify regulatory requirements, and would most likely seek offshore financing for a gasification plant.

The company wanted to identify which of its three permitted areas would be best to develop, estimating the lifespan of any single operation would be a minimum 20 to 30 years.

Mr Hogan estimated 50,000 tonnes of lignite could be processed a day with a guideline production of about 50,000 barrels of diesel a day -- totalling about 18 million tonnes of lignite a year.

Initially, L&M was concentrating on diesel production, because of the high grade which could be produced, and then the other fuels, all of which had huge potential as export earners, he said.

Mr Hogan said the lignite was generally in easily accessible places, in seams 10m thick.

Last month, coal producer Solid Energy purchased farms and lifestyle blocks surrounding its former lignite mine near Mataura , in Southland, containing an estimated 2.1 million tonnes.

In the short term, trials were under way for burning the coal as an energy source but Solid Energy was also investigating a gasification plant for coal-to-diesel production.

- NZPA