Speaking to the annual power conference in Auckland, Solid Energy CEO Dr Don Elder said the company's project currently under development would lead it to more than double its total energy production within a decade.

The tagged capital expenditure will be split about equally between its traditional coal mining business and its new energy developments, which have already evolved from the company’s $100 million research and development program, commenced in 2003.

Elder stressed the importance of looking to our indigenous energy sources.

“Last year the International Energy Agency sent out a warning to member states including New Zealand. It predicted surging demand for oil over the next decade, of supply constraints, and consequent upward pressure on energy prices,” he said.

“Oil is today sitting at $100 a barrel. We have to ask ourselves – what if it hits $150 or $200 in the next five years? This is now more than likely. That would mean $3 to $4 a litre for petrol and $2 to $3 a litre for diesel, compared to $1.75 and $1.25 today – prices that are already causing pain for many businesses and households.

“And we have to ask ourselves what other costs and risks we might also have to face if we continue to have total reliance on imported oil. The danger of being vulnerable to – or worse – drawn into conflicts in distant countries to protect oil supplies for the western world could increase sharply.”

Solid Energy produces more than 130 petajoules of energy annually – nearly equivalent to the country’s entire annual consumption of electricity – earning about $600 million of revenue per annum.

Elder told the conference that within a decade he expected this to nearly quadruple, including another $500 million alone from Solid Energy’s investments in renewables – biomass and biodiesel.

Besides numerous projects in biomass, Solid Energy is also developing some “very exciting opportunities” with coal gas.

“The first is a coal seam gas project in the Waikato, extracting methane trapped in coal seams deep underground. Four appraisal wells have been sunk, and we are flaring gas right now to test flow rates,” Elder said.

“We expect to make a decision later this year about the commercial viability of the project. Potentially we’re sitting on a resource of up to 300 petajoules, as big as the Kupe gas field.

“The second area we’re developing is underground coal gasification (UCG). This involves the controlled gasification of confined pockets of very deep underground coal.

“The ‘syngas’ that is produced is piped to the surface and can be converted into a wide variety of products such as electricity, fertiliser, liquid fuels, natural gas and hydrogen."

Elder said Solid Energy was supported by the leading global technology provider in UCG, and has been working closely for three years with other international companies.

“Because it is so deep underground and air supply is controlled and limited, the coal is gasified rather than burnt. To shut the process down once you’ve extracted all the gas, you simply stop injecting air,” he said.

“Interestingly, we are building on a successful UCG trial run by the Electricity Corporation in the early 1990s – but, with cheap Maui gas, additional gas from UCG was not required back then.

“UCG projects have been successfully undertaken in the former Soviet Union, Australia and South Africa, and we have access to the latest technology. We are currently progressing our plans for our initial pilot development.”

Elder told the conference that, in addition to all these projects, Solid Energy was progressing its Southland coal-to-liquid fuels project.

There were a number of options potentially available to manage the carbon dioxide (CO2) emissions from a lignite-based project, including carbon capture and storage, he said.

In April, one of the world’s most advanced carbon capture and storage projects – the Otway CO2 injection and sequestration project in Western Victoria, Australia – will pass a major milestone.

“In April, injection of 100,000 tonnes of CO2 underground to a depth of 2000 metres will start,” Elder said.

“The project incorporates a gas production well, injection and monitoring wells and a visitors centre.”