New Zealand's energy 'backstop'

In geological terms, lignite 1 is a 'young' fossil fuel. A soft brownish-black rock - the stage between peat and sub-bituminous coal - it is considered a low-quality form of coal, producing high carbon dioxide (CO2) emissions on combustion per unit of energy generated.

Lignite is mined for use in industry around the world - mostly for steam-electric power generation. Twelve per cent of Germany's 2 energy and 27 per cent of its electricity, and 50 per cent of Greece's 3 electricity needs, are reported to come from lignite. 

In Australia, where it's known as Victorian brown coal, it supplies 92 per cent of electricity generated in Victoria State.

Lignite is New Zealand's 4 largest in-ground energy source. Surveys in the late 1960s and early 1970s established there are about 10 billion tonnes of recoverable lignite in Otago and Southland. That constitutes about 75,000 petajoules (PJ) of energy. For comparison, the Maui gas field, a world-class field, originally contained 4500 PJ.

Low-level mining of lignite has been undertaken in New Zealand for many years. Currently there are two mines in Southland producing about 100,000 tonnes a year for use to augment other coals in some local industries such as dairy processing and drying of timber.

The potential for larger-scale use of lignite in New Zealand has been explored. In the late 1970s and early 1980s a government entity, the Liquid Fuels Trust Board, researched its conversion into products such as methanol for use as transport fuel. More recently former SOE Solid Energy investigated lignite mining in Southland but the project was dropped in 2013, as commodity prices dropped.

Lignite's high CO2 emissions on combustion has led to significant concerns about any proposed increase in its use, including a 2010 report by New Zealand's Parliamentary Commissioner for the Environment.

Given current comparatively low oil prices and the development of new extractive technologies, Straterra chief executive Chris Baker says any further serious consideration of lignite as a major energy source is likely to be decades in the future.

"The driver for developing such a significant energy resource would be the price of fossil fuels and oil," Mr Baker says.

"Oil is currently relatively cheap, there are huge amounts of energy available in the US and, if you look at fracking and drilling technology, we now have other resources that can be accessed. That supply and demand equation means there is little prospect of high-level oil prices in the medium term that would drive development of New Zealand lignite."

Even so, Mr Baker, and chemical engineer and consultant George Hooper, who has carried out extensive research on lignite and Victorian brown coal, both believe New Zealand should invest in the development of carbon capture and sequestration / storage (CCS) technologies.

"In the future, if the price of oil was to rise significantly, then projects such as lignite could be back on the table," says Mr Baker. "But any proposal to develop New Zealand's lignite resource would have to include capture of CO2 - the Solid Energy project always incorporated capturing CO2.

"The debate about fossil fuels is usually to just stop using them - requiring changing behaviours, internationally, including in developing countries. Another option is to continue to develop and refine renewable sources of energy along with decarbonising non-renewable sources."

CCS technologies involve capturing the CO2 from the processes in industrial plants and transporting it, usually by pipelines, to be pumped into underground storage - such as porous rock formations in depleted oil and gas reservoirs or deep saline aquifers.

Dr Hooper is a senior consultant focusing on front-end conception engineering 7 for major resource projects. 

He says that even when serious consideration has been given to wider use of lignite in New Zealand it was only as a potential source of fuel and chemical feedstock.

"Lignite has only ever been New Zealand's backstop energy option," says Dr Hooper. "It was investigated as a possible means to meet transport fuel requirements when there was the expectation that no further natural gas would be discovered after Maui.

"There has never been any real discussion about using it for power generation. For that, we have other resources; it is difficult to transport other than short distances, and it is in the wrong place for thermal power stations - so it's purely for local use unless you put it into a different form such as briquettes or methanol."

Dr Hooper says that lignite still represents New Zealand's single most significant proven energy source.

"Its importance is not in the here and now but for what could happen in the future. Maybe in 20, 30 or 50 years' time, if we do not find more natural gas, do we import LPG or do we look at gasifying coal and lignite?

"If we are going to think about using lignite in the future, it would be for chemicals or fuels manufacture through the gasification route rather than combustion 8.

"That is a more efficient closed system, unlike combustion which is an open system. There are no direct emissions into the atmosphere apart from some ash and unburnt carbon associated with the ash. In producing the fuels, there is a surplus of CO2 emitted but this is in a form suitable for direct CCS. 

"CCS is now a mature technology made possible by the new catalyst advances in gasification technology driven by responses to decreasing oil. It has not been done in New Zealand and so is quite unknown here but it has been used successfully for many years at industrial plants in other parts of the world. It meets the highest environmental standards. Gasification techniques are used by Shell, Siemens, Lurgi and Sasol.

"Today's societies rely on secure and affordable sources of energy for processing and getting our produce to markets. If oil were to reach the $NZ80 a barrel mark at today's prices, that technology would become economical."