New Zealand may become a fuel exporter

Press, 12 April 1979, Page 12

New Zealand may become a fuel exporter

Two significant points emerged from a seminar on energy farming held at Ashburton last week. New Zealand may become an exporter of liquid fuels as well as a producer for its own needs and in this process it may look for supplies from natural gas. farm crops and coal — not just one source.

The Minister of Energy, Mr Birch, addressed the meeting and was frequently drawn into discussions at question time following the set addresses. In his address Mr Birch said that recent studies and assessments had shown that New Zealand was in the happy position of having an abundance of essential forms of energy, with the one major exception of liquid fuels. As the seminar developed the Minister came under some pressure to agree to pilot trials involving the growing of fodder beet to produce ethanol for use as fuel. He said that he was being asked why the Government did not accept ethanol from fodder beet as a viable option, but he did not think that the answer was as simple as that. The Minister said that in the Liquid Fuels Trust. Board they had a very competent team of experts. whom he believed would recommend to Gove r n m e n t this year the establishment of a plant to produce methanol from Maui natural gas, and this he said would involve the production of methanol at rates very much cheaper than he had heard earlier that evening — he was referring to figures for ethanol from fodder beet and methanol from straws given by Dr W. A. N. Brown, a senior research economist at Lincoln College. Mr Birch said he believed that they also had to go a stage further with Maui gas and produce liquid crude, and for that to be viable they had to think in terms of also supplying liquid fuels to the international market. The view was held that such fuels would in due course become competitive on world markets. The oil producers had produced what they called the “white wedge” theory that a gap would start to develop later in the 1980 s between the supply of and demand for liquid fuels. It seemed to him that the country which was able to organise itself to develop an export industry based on competitively priced liquid fuels would be in a strong position to fill that demand/supply gap at that time. He said that they did not want to put all of their eggs in one basket and this was desirable also from a regional development point of view. New Zealand had enormous coal resources and the extent of the recoverable coal fields was now being measured. There was the possibility of also producing liquid fuel from that source. “I have got a feeling that there will be a place for energy farming,” said Mr Birch. “It will not happen overnight. It is something that will develop and extend as we gain confidence in processing the type of crops and in cur ability to use the fuel at home and to export it. “I think we have got to look at this thing from the point of view of developing an export product,”

Mr Birch said later. “If we do thai conflict between Maui gas, coal and energy farming will not exist. It is likely that we can produce liquid fuel from all of these at competitive prices.” In answering a question about the life and extent of the Maui gas field, Mr Birch said that if they were to produce enough methanol for a 15 per cent blend with gasoline and also have available methanol for export they were still thinking about using less than half of the total gas flow from the field. The field would last for 30 years and perhaps much longer. For that sort of plant Mr Birch said that the cost would be about $.500M and for the production of fuel from Southland lignite coal they would be getting into something of the order of S2OOOM, and in either of these cases they would need foreign technology and also foreign capital. He assured the seminar, however, that there were no negotiations going on at present about this sort of money, but he added that it would give an opportunity to build a sounder economic base for the country through reducing the fluctuations associated with primary produce markets. Unless there was a reasonable level of economic growth in the country he said that it would not be possible to overcome the unemployment problems and provide the opportunities for young New Zealanders. Referring to the likely methanol plant to use Maui gas, Mr Birch said it was important that they should move in that direction to reduce the country's dependence on Arab oil sources. The sort of plant that was developed would depend on the type of industry that was brought together. In a private enterprise economy Mr Birch urged on his listeners interested in energy farming that they should get alongside commercial interests — manufacturers or oil companies etc — to develop the growing of crops, their processing and the marketing of the end

product. The .Government's role, he said, was to support research and development and to bring parties together and to encourage the new industry. The well-known commentator on farming affairs, Mr Roland Clark, of Staveley, commented that Federated Farmers should bring together farmers’, oil companies and technologists without delay. Earlier he had urged that rather than carrying sheep to produce products to export overseas at considerable cost and under considerable difficulties to earn the income to buyenergy in the form of fuels, it made good sense and was much more efficient to use the land to grow energy here. Mr Clark said that the Minister without delay should be asking farmers to grow so many acres of fodder beet or trees to provide the material for trials in the production of fuels. He said that apart from the saving in foreign exchange that would result from local production of energy, New Zealand would be in a safer position, more self contained, not subject to industrial problems associated with the movement of products, less subject to imported inflation, and there would be a reversal of the drift from the country to the cities with processing plants being established all over the country. In a lighter vein, he suggested that as a consequence waterside workers and their wives might be moved into the country as married couples on farms. New Zealand might become an energy-rich nation, he said. The former principal of Lincoln College, Sir Malcolm Burns, who presided over the meeting, said at the close he believed that there was a reasonable case for the establishment of a pilot plant for production of ethanol from fodder beet. "I believe lhat it is something that warrants fully investigating,” he added. Dr Brown said that production of ethanol from fodder beet was only one of the options that was open for fuel production and was not necessarily the best one but appeared to be one of the better options. At this stage he said that there was a need for ■such a pilot plant — one with a capacity of 20 oven dried tonnes per day costing SI.4M — that would provide technical information on processing, information at farm level and in the areas of transportation and distribution, and also on effluent prob-

lems associated with the industry. Dr Brown was also backed up in this bv Dr Brian Earl, of Canterbury University, who said that the Government should give some priority to this. Speaking on' alcohol transportation fuels, Dr Brown said that ethanol could be produced from beet with the sugar being extracted from the beet and fermented and then the ethanol distilled off from it, or methanol from straw residues or from wood residues resulting from gasifying them with oxygen. Referring to an ethanol plant located in either Canterbury or Southland, Dr Brown said that it might be of 200 oven dried tonnes per day capacity costing S7M. Some 3000 ha of beet would be needed to supply it and on the basis of 5 h'a being in beet per 100 ha this would mean that the beet would have to be drawn from an area of about 62,000 ha, but within a radius of only about 14 km of the factory. The beet would yield about 120 tonnes per ha of wet material or at 18 per cent dry matter about 21 tonnes of dm per ha. At 10 to 13 per cent of sugar in relation to wet material this would amount to about 14 tonnes per ha. In contrast io fodder beet Dr Brown said that sugar beet would produce only nine tonnes of sugar. The production from such a plant would be 29M litres of ethanol, which would provide enough for a 15 per cent blend for the Christchurch pool. To supply such a blend for the whole of the South Island about four or five such plants would be needed. For a blend the cost would be 17c per litre petrol equivalent and use pure 21.5 c. This compared with 14.7 c per litre for imported refined fuel now and 12.8 c per litre for fuel out of Marsden Point, so that at the moment it was a higher cost alternative. The return to the farmer would he about S3OO per ha, which a farmer in the audience commented later would be very close to making it an alternative for use of arable land today. Turning to the use of straw for methanol production. Dr Brown said it was a technology that had not yet been tried on a commercial basis. For a 500 tonne per day oven dried plant he said that the cost would be S3SM. The straw would have to be collected from all over Mid-Canterbury and

ss far afield as the Waitaki district. Production would be just under 100 M litres or enough to provide a 15 per cent blend in the whole of the South Island. In looking at the effect of using land with ethanol production in view on foreign exchange Dr Brown produced figures to show that the saving in expenditure on imported fuel was considerably greater than the export earnings foregone. Sir Malcolm Burns toid the seminar that he was one who believed that oil would eventually be found in this country. “If we can get oil we will have a degree of freedom that we do not now enjoy,” he added. Dr J. H. (John) Troughton assistant director of research for the Ministry of Agriculture, said that it was vitally necessary that the possibilities for energy farming, use of coal and natural gas should be integrated, but this was not easy to do and might not be resolved quickly. However, Mr Birch said he was very mindful of the importance of developing an energy strategy and also of the need to keep it flexible and appropriate to New Zealand’s needs. A first energy strategy was to be published by his ministry by the end of this year. A report on energy farming was currently being prepared by the New Zealand Energy Research and Development Committee and was ex-

pected to be available next month. This would discuss the economics of energy farming, the range of plant species which appeared attractive, the distribution and use of alternative fuels and the environmental and social impacts of energy farming. As soon as the report was available he intended to bring together in his office all those parties interested including Energy, the Department of Scientific and Industrial Research, the New Zealand Energy Research and Development Committee, the Liquid Fuels Trust Board, universities, lhe farming sector and commercial interests to discuss what action was needed. Dr D. J. (David) Stewart, a research scientist at the Ministry of Agriculture’s Invermay research centre in Otago, said that it was typical for the scientists to come up with ideas, but it was the farmer who was eventually expected to do the job and it was necessary to know his reaction.