Phillip HOPKINS
A MAJOR consortium has abandoned a $2 billion project to make fertiliser from Latrobe Valley’ brown coal, blaming the state government and AGL for the loss of an industry that could have helped solve Australia’s fuel and fertiliser shortage long-term and created thousands of jobs in the Valley.
The Minister for Energy and Climate Change, Lily D’Ambrosio, was singled out for criticism.
This comes as Australian farmers are facing a crisis due to the shortages of diesel and fertiliser arising from the Iran war.
Allan Blood, the executive director and founder of Victorian Hydrogen & Ammonia Industries Ltd (VHAI), has been working on the Latrobe Valley project for 20 years, but has become so frustrated with AGL and the Government, he has moved his $2b urea fertiliser project to New Zealand. VHAI is an unlisted public company with large world investment funds as shareholders.
Mr Blood, who has been involved in coal gasification for more than 30 years, blames a combination of AGL and the state government for the decision to drop the project, which he could prove with documentation.
“AGL let lapse a signed agreement we had with them and then tried to replace it with two nebulous agreements that meant nothing. Basically, they have refused to supply coal to third party projects,” he told Gippsland Farmer.
“We have spent $40-50 million in the Valley and nothing to show for it. We are sick of it and were welcomed in NZ with open arms. We would have much rather have done the project here.”
The Latrobe fertiliser project was granted the Flynn coal field, which is contiguous with the Loy Yang coal – effectively a continuation of the Loy Yang coal mine, which is owned by AGL. “We were going to make 530,000 tonnes of urea for use by Victorian agriculture. We had a 25-year agreement signed to deliver urea to the farmers,” he said.
Due to the crisis from the war in the Middle East, the farmers now had no urea. “If they get it, it’s too expensive to be economic. They have got no diesel; they could have had diesel and petrol.”
AGL indicated to Gippsland Farmer that it was not in discussions with Mr Blood and could not comment on his business operations.
Mr Blood said the attitude of the current Government was in absolute contrast to that of the Bracks and Brumby Labor Government.
“They had a plan to develop the coal in the Latrobe Valley, with low emissions major projects. That’s why we came here – we were invited, the current Premier, Jacinta Allan, who was Regional Development Minister, launched the project,” he said.
Missed industry opportunity
“Now the current government, through Lily D’Ambrosio, is anti-coal, regardless of the environmental and economic outcomes. Our project was not just net zero, we had negative net zero emissions, as was shown by an independent CSIRO study.
“Lily D’Ambrosio, it seems, does not like carbon capture and storage, (CCS) does not believe in it. She is flying in the face of global science and flying in the face of the Paris Agreement, which spelt out that CCS was necessary for the world to reduce its emissions,” he said.
Mr Blood told Gippsland Farmer that “anything you make from oil and gas you can make from coal”.
“The technology goes back to pre-WWII when the Germans pioneered the process. Their diesel and aviation fuel came from coal,” he said.
“This state has billions and billions of tonnes and reserves, it could have billions and billions of barrels of oil equivalent. The coal is so chemically suited, using the same coal gasification process used to make urea fertiliser, the Valley could also make vast quantities of diesel, petrol and aviation fuel, plus every chemical you want that’s made from gas, such as plastics. There could be mega-industries in the Latrobe Valley and Victoria has the offshore CCS facilities – it could all be done with net zero emissions, all of it. It’s the most perfect place on the planet to build these projects.”
Mr Blood said the state government had co-funded offshore sequestration through CarbonNet – and “yet stands in its way.”
“CarbonNet will fizzle on the vine unless they do something.”
Mr Blood said the energy content in the Latrobe Valley resource was greater than the entire energy content of the North-West Shelf gas projects.
“We have moved our project to NZ, where the government is welcoming and we will export back to Victoria. We have been driven offshore, we will manufacture offshore and export back here,” he said.
“NZ has lignite (brown coal) in the South Island, similar to Victoria, but has nowhere near as much. Their government asked me over there years and years ago to look at it; we always knew it was there. It’s nowhere near the quality of the LV coal, but it will do the job.”
Mr Blood said his project could use waste heat in the gasification process to produce electricity – green electricity. In contrast, “no one talks about what offshore wind is going to cost in terms of the consumer”.
“The price of electricity is never mentioned in their publications; it’s going to be astronomic, and it’s not the fact that the wind is free; it’s the installed cost, they’ve got to get a return,” he said.
“Japan is now blending ammonia with coal to reduce emissions. We have to make ammonia on the way to making urea. Our project would go ‘hydrogen, ammonia, urea’. Ammonia will become in demand, it’s becoming the global fuel of choice for the global maritime industry, so Victoria will need ammonia for bunkering for ships.
“All the ammonia eastern Australia should want can be made in the Latrobe Valley. That’s another big one where the government has its head in the sand. Frankly, I don’t think they have the technical scientific ability to understand simple engineering.”
Mr Blood said his company won the Bracks/Brumby tender and spent about $30 million on engineering a 65,000 bbls (barrels of oil or liquid hydrocarbon, with each barrel containing about 140 litres) per day in a coal-to-gas-to-liquids plant to produce diesel. The waste heat being used to produce 800MW of zero emissions base load power that would have entered the grid at Loy Yang, he said.
“Our company was subsequently taken over by Anglo American, who had an agreement with Shell and so we were out of it. They subsequently spent another $100 million on it before walking away because they were intending to use Shell’s gas-to-liquids technology. Shell was building a gas to liquids plant in Qatar at the time and its cost had blown out from $5billion to $19 billion,” he said.
“We were not intending to go down that technology route. Our 65,000 bbls per day then would have been about 75 per cent of Victoria’s needs back then and there was no reason why the plant could not have been bigger.”
Mr Blood said Anglo American wanted to take us over because the successful tender included the Flynn coal field. “It contained a total resource of 32 billion tonnes and the conversion rate of coal to diesel – 1.0 tonnes to 0.75 bbls of diesel – would produce 24 billion bbls of diesel, which would make it one of the world’s great oil-equivalent resources,” he said.
“This plus the remaining coal in the Loy Yang mine of about four to five billion tonnes would solve Australia’s liquid fuel problems forever.”
Previous government documents have shown the lignite resources in the Latrobe Valley and Gippsland total more than 200 billion tonnes.
Mr Blood said a statement that his company could run dual NZ and Latrobe Valley urea plants was wrong. “That is not going to happen. We will ship to Geelong (for refining) from NZ for a similar price that we could have railed it for from Morwell and know that we will not have the problem of regular rail outages due to poor maintenance and very slow repair times, like days and weeks and not hours as happens on the private rail lines operated in WA and Queensland by the large mining companies and whose lines carry multiples more tonnage,” he said.
“In addition, we can ship to all eastern Australian ports including Geelong and not be limited to railing just to Geelong.”
Mr Blood said the other thing that annoys him is the program of AGL and the Government to fill that Loy Yang mine with water. “There are billions of tonnes of reserves left; they will sterilise that resource forever. That’s a crime,” he said.
