The
lignites of Otago and Southland offer a potentially viable future feedstock for
electricity production and possible conversion to petrochemicals or liquid
fuels. The deposits, when combined, represent New Zealand's
largest energy inventory; equivalent to about 74 000 petajoules - or
approximately 35 times current natural gas reserves. Too often dismissed as
irrelevant to New
Zealand's energy future because of adverse
perceptions of the value of low rank coals, the strategic value of this resource
is in fact huge.

Investigations of the
lignites extend back over more than 50 years (LFTB various, CRL Energy Ltd).
Whilst it is not the intention of this paper to review this work, these
investigations have confirmed the suitability of the resource as a feedstock for
thermochemical conversion. Current estimates of South
Island lignite mining costs are NZ$1.0 - 3.0/GJ (Natusch 2005),
making these resources amongst the most competitively-priced energy sources
available world-wide.

This
value, however, will only be captured if we as a country begin to envisage a
world-scale, long-life, integrated and multi-faceted development sized to supply
world markets for chemicals or fuels. Recent CAE studies (Hooper and Riddolls,
2005) have emphasised the vital importance of ensuring that any exploitation of
this resource maximises their value to New Zealand. The question that thus
must be applied is how might large-scale utilisation of the resource fit with
New
Zealand's primary energy supply, and its
potential for the export of high-value commodities.

From
the broader perspective of New Zealand's total energy supply
equation we need to examine other supply options beyond just the generation of
electricity. We face in this country a situation wherein almost all our liquid
fuels feedstock has to be imported with projections for an increasing dependence
on imported oil. In addition NZ has a natural gas reserves-to-production ratio
of less than ten years, and dwindling supply from local production. Without
further natural gas discoveries, New Zealand has only a window of
approximately five years before we will need to commit to imported LNG or some
other thermal fuels option.

In
other words, New
Zealand is facing an uncertain future unless we
can restore energy inventories to cover an adequate strategic reserve capacity
as well as enable long-term investment in alternative sources. Within this
context the South Island lignite resources are
thus deserving of more attention. The extent of the resource is well known, its
suitability for conversion reasonably assessed, and its magnitude such that
there is little doubt that lignite conversion could adequately meet NZ's future
energy needs for many years out.

This
paper reviews coal gasification technology, its application to lignite and the
possibilities for future development of the lignite resources. It is argued that
the strategic imperative for this country is to secure the lignite resources as
a primary energy source for this country well into the latter half of this
century.