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Tuesday, October 19, 2010

Mining group believes in tooth fairy -- "New Zealand cushioned against oil shocks"

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Straterra, a body representing mining companies has said, "New Zealand is in an excellent position to withstand any future oil shocks, thanks in particular to our lignite and geothermal resources". Straterra was commenting on the Parliament's research unit report called "The Next Oil Shock".  The Report says major international organisations are warning of another supply crunch as soon as 2012.

What planet are these guys on ? Let's be clear -- geo-thermal energy produces electricity. It cannot power New Zealand's internal transport system - or carry our imports and exports -- 99% of which relies on liquid fuels. If our transport systems cannot run efficiently the economy heads south into recession.

Pinning your hopes on electric cars? There are currently just 27 electric cars registered in NZ. Even if we were to build 50 million electric cars per year starting right now, it would be ten years before half the cars in the world had been replaced. And this does not even factor in the implied massive upgrades to the electrical grid and power stations, or the lithium needed for car batteries (peak lithium?) .

It is perhaps understandable that the general public is confused about various types of energy. But Straterra knows damn well that geothermal resources cannot cushion New Zealand from liquid fuel oil shocks. This is misinformation on a grand scale.

Staterra's other touted "solution" -- converting dirty lignite coal to fuel, similarly has zero chance of cushioning New Zealand from an oil shock expected within 2-5 years. It is a complete fabrication to say that it will.

The graph is from Don Elder's (CEO of Solid Energy) presentation to the Petroleum Conference. It shows that even with the rose tinted glasses firmly in place Elder is saying no unconventional fuel will be produced from lignite in Southland until at least 2015, and then only at a trickle and making up a minuscule part of our liquid fuel needs. Meanwhile the Parliamentary report says an oil supply crunch and petrol price hike may come as soon as 2012. And these are only projections from Elder. The lignite to fuel technology is still in the pre-feasibility stage. There is no guarantee that the technology will work, that it will receive multi-billion-dollar investment, when the world is in recession, or that it will receive the required environmental consents.

Elder's projections already seem highly optimistic. In May 2010 with much fanfare, Solid Energy announced plans with Australian company Ignite Energy Resources Pty to install a trial lignite to fuel plant in New Zealand. But those negotiations have already turned sour and Solid Energy has been unable to conclude a final licence agreement with Ignite.

The reality is much different from the rose tinted projections from Straterra. Geothermal energy and lignite has zero chance of cushioning New Zealand from the next oil shock.

Note : The Parliamentary report said:-
  • major international organisations are warning of another supply crunch as soon as 2012.
  • The world may be entering an era defined by relatively short periods of economic growth terminating in oil price spikes and recession.
  • New Zealand is not immune to the consequences of this situation. In fact, its dependency on bulk exports and tourism makes New Zealand very vulnerable to oil shocks.


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