More Coal To Liquids (and Urea) In Australia  

The Australian has an article on a new proposed coal to liquids plant in Australia, near the Monash Energy project. This one aims to produce urea as well as diesel, and hopes to try and sequester the CO2 produced in Bass Strait gas fields (making the large assumption that BHP will let them) - $2bn plan to 'fuel petroleum needs'.

The entrepreneur behind the project, Allan Blood, said Victoria's reserves of brown coal had enormous potential for fertiliser and oil production. The plant would generate 1.2million tonnes a year of urea and all the CO2 produced would be stored in reservoirs that once contained natural gas in Bass Strait.

The plant, expected to be operational by 2012, has the backing of several London-based equity funds. Joint-venture discussions with several major chemical companies have begun. The project will require 1000 workers to produce urea through a gasification process similar to the one used in the first stage of producing oil from coal.

Mr Blood was the brains behind a $5 billion coal-to-oil project in the Latrobe Valley that was bought by Shell and Anglo American. It is designed to produce 70,000 barrels of oil a day. The Australian Energy Corporation chairman said the tremendous amount of energy trapped in brown coal - coupled with gasification and geosequestration technology - provided a clean source of a range of hydrocarbons.

"There's no reason why Australia could not be totally self sustainable in petroleum products, or any other chemical product such as urea, from coal," he said. "We have got all the coal in the world here for goodness sake. It becomes the highest-quality fuel or diesel imaginable. Sasol in South Africa have been doing it since 1968, making 150,000 barrels a day."

Turning coal into diesel goes back to World War II, when besieged Germany used it to supplement its dwindling oil supplies. South Africa is by far the biggest user of the technology in what is a hangover from apartheid days when the country was concerned it would be locked out of world oil markets. However, it hasn't been widely taken up despite the wide geographic spread of coal reserves, largely because it is expensive.

It also produces significantly more carbon than traditional petrol-diesel production and has been described as one of the most environmentally unfriendly means of producing oil.

Australia imports 550,000 barrels a day of oil and 1.3 million tonnes, or $300 million worth, of urea for fertiliser each year. The urea comes from the Middle East.

Gasification works by treating coal at very high temperature with a controlled amount of oxygen to produce a gas that can be converted to diesel. Nitrogen is added towards the end of the process to make urea. Mr Blood said once the reaction was established, it was self-propelling and the CO2 generated was easy to trap and then store.