Solid basis for CO2 storage looks to lignite opportunities

New Zealand 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, NZ$100 million investment the company is making in clean coal technology. Over the next six months, in the first stage of the survey, the company will carry 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 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.”

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. 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. 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 researchers.

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.” He cited the example of 1,000 Mt of CO2 estimated to have been injected to date for enhanced oil recovery in the USA 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 NZ$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/t/y of black coal.  By comparison, Solid Energy’s commitment of $5 million/y over 20 years represents NZ$1.00/t, five times more than the Australian fund.