Solid Energy hot on coal

A successful Waikato coal-seam gas project which supplies enough energy for more than 500 homes showed how New Zealand is "now the lucky country" for its energy resources, Solid Energy chief executive Don Elder says.

Speaking at the state-owned company's maiden annual meeting in Auckland yesterday, Dr Elder dodged the sniping remarks of protesting environmentalists by talking up New Zealand as perfectly placed to exploit growing demand for coal.

The coal-seam gas scheme was the first of its type in New Zealand.

The scheme was adding up to one megawatt of electricity to the national grid. "Our resources in the Waikato are potentially as big as Kupe gas field and could provide up to 10 per cent of New Zealand's gas supply," Dr Elder said.

Gas from Solid Energy's four Huntly wells contain only 1 per cent carbon dioxide and 98 per cent energy-rich methane. The gas has a lower carbon footprint than conventionally produced natural gas, which up till now was New Zealand's cleanest thermal power source, Dr Elder said.

Gas flow from a 32-hectare section of the Huntly coalfield has the potential to power up to 1000 homes, but it is not yet known if the local network connection can accept that much electricity.

"This energy is being generated in a rural environment, surrounded by cattle - it's not the sort of place you'd expect to be producing power - but we're working with WEL Networks to increase what we can put into the grid from that location," he said.

A decision on further expansion will be made early 2009.

The pilot scheme - part of expansion into new and renewable energies - was developed through a joint venture with United States oil and gas company Resource Development Technologies.

Coal seam gas already provides between 15 per cent and 20 per cent of gas supply in the US and Australia's eastern states, with the figure climbing to 70 per cent for Queensland.

It can be used for industrial energy, electricity production and can be injected into gas transmission systems to supplement gas resources. It also has potential as a top quality gas feedstock for other users.

The company says its energy production could more than double within a decade, and its revenue will triple if planned forays into new and renewable energies are successful.

Revenue from export and New Zealand coal sales was already expected to reach $1 billion in the current year after record international coal price settlements.

The company, meanwhile, championed New Zealand's "unique position" as a coal-rich country, with growing demand among emerging economies such as India tripling the price of hard coking coal, used for steel making.

"We have more coal resource energy per capita than Saudi Arabia has oil," Dr Elder said. "In a world of increasing demand, and increasingly constrained supply of energy, New Zealand is now the lucky country."

Solid Energy chairman John Palmer says the company is so well positioned to exploit current energy needs that the board expects dividend and dividend provisions to exceed $100 million in the current year.

The figure would dwarf the $34.4 million dividend paid to the Government for the year to June 2008.

- © Fairfax NZ News