Solid Energy, better known as the country’s biggest coal producer, aims through its subsidiary Biodiesel NZ to produce 70m litres of high-specification biodiesel by 2012. Currently it processes used cooking oil, collected from large commercial operators, as feedstock but believes in the future NZ-grown oilseed rape will become the primary feedstock. In August 2007 a trial planting of about 700 hectares was sown in a variety of soil types and locations in the South Island. “We used conventionally-developed European oilseed rape varieties and while the overall harvest was in line with expected yields, some combinations of soil and seed variety produced exceptional results. The volume and quality of oil extracted from this trial is encouraging and, as a result, lease and contract arrangements were made with South Island landowners for about 5000 hectares of autumn-sown crop.”

The SOE says, used rotationally, a break crop on cropping land or as part of a stock farm’s normal pasture renewal programme, oilseed rape helps improve grain yields for the food sector. The oil extraction by-product, a high-energy meal, can also replace imported stock food supplements. Planning for construction of an oil extraction and bio-diesel production plant at Rolleston, which will eventually be able to produce 70m litres a year is well advanced. In the past year Solid Energy expanded and improved its used-oil collection network, establishing depots in Auckland and Taupo, and forming alliances with suppliers in the food service industry. Among other prospects Solid Energy says its new-energy business is developing a range of clean coal technologies, including the extraction of high-quality natural gas from coal seams, and coal gasification.

Solid Energy thinks it is likely oil prices will continue to rise over the long term because of supply constraints. Since 1999, the price of oil has gone up five-fold, and has quadrupled since 2002. Its previous projections for oil to be in the $US100 to $US200 a barrel range by 2013 and $US150 to $US300 a barrel with extreme volatility are already looking realistic but probably far too low. “All this creates risks and opportunities, and options other than oil come into stark relief as they did during previous oil shocks. The difference is this time the ’shock’ is likely to be permanent.”

Solid Energy says it has been anticipating this potential radical shift and has been actively investing in alternative sources of energy. This is an evolution of the $100m research and development programme begun five years ago which has already delivered several new areas of business for the company. As international demand continues to put pressure on world transport fuel markets, Solid Energy’s lignite resources in Southland provide an opportunity to develop a secure local supply, through a world-scale coal-to-liquid-fuels project. “Our proposals for a coal-to-liquid-fuel plant will be coupled with a comprehensive plan to manage the associated carbon footprint.”

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