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Ashby Consultants LtdMining to Keep the Home Fires Burning – NZ’s Energy in the 21st Century
Mining to Keep the Home Fires Burning
- NZ's Energy in the 21st Century
Ashby Consultants LtdMining to Keep the Home Fires Burning – NZ’s Energy in the 21st Century 2
NZ has enjoyed some of the cheapest energy of any OECD country over the past decades:
Cheap Maui GasPlentiful hydro
0 2 4 6 8 10 12 14 16 18 20 22 24 26 28 30 32 34 36 38 40
JapanNetherlands
GermanyItaly
United KingdomFrance
SwedenUSA
New Zealand AustraliaCanada
Residential Cost NZ cents/kWh 1998
.
Ashby Consultants LtdMining to Keep the Home Fires Burning – NZ’s Energy in the 21st Century 4
NZ is Facing an Energy Crunch! -resulting from:
Demise of Maui Gas
Ashby Consultants LtdMining to Keep the Home Fires Burning – NZ’s Energy in the 21st Century 5
NZ is Facing an Energy Crunch! -resulting from:
Demise of Maui Gas Oil at $US60/bbl and beyond
Jun-68 Feb-82 Oct-95 Jul-2009 Mar-20230
50
100
150
Price U
S$ / b
bl
Price of Crude Oil
Ashby Consultants LtdMining to Keep the Home Fires Burning – NZ’s Energy in the 21st Century 6
Oil beyond US$60/bbl?
11-Jun-68 18-Feb-82 28-Oct-95 06-Jul-2009 15-Mar-2023
$0.00
$10.00
$20.00
$30.00
Pri
ce N
Z$
/GJ
OIL: International Crude
COAL: Australia OECD Export FOB
COAL: Estimated = Oil / 3.8
OIL: Projected Growth Curve 7% pa
COAL: Projected Growth Curve 7% pa
COAL: Newcastle Spot FOB
International Price of Crude Oil & Steaming CoalActual and Projected at +8%pa
Ashby Consultants LtdMining to Keep the Home Fires Burning – NZ’s Energy in the 21st Century 7
NZ is Facing an Energy Crunch! -resulting from:
Demise of Maui Gas Oil at $US60/bbl and beyond Hydro capacity being pushed
Ashby Consultants LtdMining to Keep the Home Fires Burning – NZ’s Energy in the 21st Century 8
NZ is Facing an Energy Crunch! -resulting from:
Demise of Maui Gas Oil at $US60/bbl and beyond Hydro capacity being pushed Insufficient Capital Investment
Electricity consumption in New Zealand, 1947–2002
Source: New Zealand Official Yearbook, 1947–2002
Ashby Consultants LtdMining to Keep the Home Fires Burning – NZ’s Energy in the 21st Century 9
NZ is Facing an Energy Crunch! -
resulting from:
Demise of Maui Gas Oil at $US60/bbl and beyond Hydro capacity being pushed Insufficient Capital Investment Distorted thinking
Ashby Consultants LtdMining to Keep the Home Fires Burning – NZ’s Energy in the 21st Century 10
Distorted thinking:
Results from poor or lacking information We will find more cheap gas - convert it to electricity rather than
reticulate it Gas is clean -perhaps comparatively but still a fossil fuel that
produces GHG Coal is dirty - coal is a fossil fuel along with gas and oil LNG will save us NIMBY and BANANA No nukes – the dangers of not going nuclear Green Alternatives will save us Hot air: Wind will save us Groupthink?
Ashby Consultants LtdMining to Keep the Home Fires Burning – NZ’s Energy in the 21st Century 11
Wind will save us:
Ashby Consultants LtdMining to Keep the Home Fires Burning – NZ’s Energy in the 21st Century 13
The Outcomes:
Price increasesShortages
Ashby Consultants LtdMining to Keep the Home Fires Burning – NZ’s Energy in the 21st Century 14
The Outcomes:
brown outs
Ashby Consultants LtdMining to Keep the Home Fires Burning – NZ’s Energy in the 21st Century 15
The Outcomes:
price increasesShortages brown outsblack outs
Ashby Consultants LtdMining to Keep the Home Fires Burning – NZ’s Energy in the 21st Century 16
Focused thinking
Ashby Consultants LtdMining to Keep the Home Fires Burning – NZ’s Energy in the 21st Century 17
The Outcomes:
Price increasesShortagesRecession
Ashby Consultants LtdMining to Keep the Home Fires Burning – NZ’s Energy in the 21st Century 18
NZ’s Energy Sources
0
100
200
300
400
500
600
700
800
1975 1980 1985 1990 1995 2000
0.0
0.5
1.0
1.5
2.0
Other RenewgeothermalHydroGas ex P'ChemDomestic OilImported OilCoal (net)Real GDP Index (rhs)
Primary Energy Supply - PJ
Source: Energy Data File, MED
Ashby Consultants LtdMining to Keep the Home Fires Burning – NZ’s Energy in the 21st Century 19
What has lead to the crunch?Oil:
Oil at $US60/bbl and beyond depletion of world reservesprofligate useemerging consumers
Ashby Consultants LtdMining to Keep the Home Fires Burning – NZ’s Energy in the 21st Century 20
What has lead to the crunch?Maui Gas:
Too cheap Take or pay - Methanex 20% - Electricity Generation 40% - Huntly coal mine mouth generator run on 70% gas!!!
Ashby Consultants LtdMining to Keep the Home Fires Burning – NZ’s Energy in the 21st Century 21
What has lead to the crunch? Electricity capacity:
Hydro capacity being pushed to limit Insufficient investment in new generation Current economic model failing (SOE’s) Lack of responsibility for security of supply No independent generators Thermal coal supply inflexible 1.25 Million tpa import to Huntly!!
Ashby Consultants LtdMining to Keep the Home Fires Burning – NZ’s Energy in the 21st Century 22
What can NZ do? Gas
price properly develop / find morereticulate and use directly
Ashby Consultants LtdMining to Keep the Home Fires Burning – NZ’s Energy in the 21st Century 23
What about Coal?
0
1
2
3
4
5
Aus
NZ
RSAFSovU US Ger
Polandworld China Rest
World Coal Reserves (tonnes/capita)
Coa
l Res
erve
s (t
onne
s/ca
pita
)
3924 2178 1115 902 850 837 503 150 90 35
World Coal Reserves Per Capita
0
5
10
15
20Aus
RSA PolandUS Ger
FSovU China NZ world Rest
World Coal Production 2002 (tonnes/capita)
Coa
l Pro
duct
ion
2002
(to
nnes
/cap
ita)
17.3 5.1 4.4 3.4 2.7 1.8 1.2 1.0 0.8 0.3
World Coal Production Per Capita
Ashby Consultants LtdMining to Keep the Home Fires Burning – NZ’s Energy in the 21st Century 24
Coal
Coal kick started the industrial revolution
- It can provide the transition to post oil and gas
Ashby Consultants LtdMining to Keep the Home Fires Burning – NZ’s Energy in the 21st Century 25
NZ Coalfields
Sub Bituminous 870Mt (18,000PJ)Bituminous 340Mt (9,000PJ) Lignite 7500Mt (110,000PJ)
(NZ Consumption 750PJ/yr 2007)
Ashby Consultants LtdMining to Keep the Home Fires Burning – NZ’s Energy in the 21st Century 26
What about the Cost of Coal?Estimated Cost of Mining North Island Thermal Coal
Cost *NZ2006$
Rotowaro Callaghans OC 3.7$/GJ
Rotowaro Pukemiro OC 3.9$/GJ
Mokau OC 4.3$/GJ *
Maramarua OC 4.5$/GJ
Huntly West UG 5.2$/GJ
Ohinewai OC 5.4$/GJ
Maramarua UG 5.8$/GJ
Kawhia East UG 5.9$/GJ
Kawhia West UG 6.3$/GJ
Mokau UG 7.0$/GJ
Tihiroa UG 7.1$/GJ
Note * Estimated average discounted cost NZ$2006 of mining coal at a rate of 800,00tpa for at least 10 years, to mine gate after tax , excluding GST at a discount rate of 10%OC- opencast UG – underground
Ashby Consultants LtdMining to Keep the Home Fires Burning – NZ’s Energy in the 21st Century 27
What about Pollution?Coal as a Fuel or as a Raw Material
Don’t burn coal – refine it
C + H2O + heat = CO + H2
Ashby Consultants LtdMining to Keep the Home Fires Burning – NZ’s Energy in the 21st Century 28
Fossil Fuels Price and Carbon Content
(per GigaJoule)
Coal Crude Oil Natural Gas
Price NZ$/ GJ 5 18 1242% 150% 100%
Carbon Kg / GJ 25 20 14
179% 143% 100%
Ashby Consultants LtdMining to Keep the Home Fires Burning – NZ’s Energy in the 21st Century 29
Global Warming - A theory
Global or Urban warming!
Effects:
1841 Ross
Benchmark:
Ashby Consultants LtdMining to Keep the Home Fires Burning – NZ’s Energy in the 21st Century 30
What about Environmental Costs?2004 Cost of Generating UK Electricity from various fuels and new plant NZ¢/kWh
Nuclear Gas CCGT
Coal Pulverised
Coal Fluidised Bed
WindOnshore
WindOffshore
Basic Cost 6.6 6.3 7.1 7.4 10.6 15.7
With CO2 $315/t * - 9.7 14.3 14.6 - -
With CO2 $15/t (JPA)
- 6.4 7.5 7.8 - -
With Back-up - - - - 15.4 20.6
Note NZ$=.35GBP, * A very high CO2 tax had been assumed in original workSource: The Costs of Generating Electricity, Royal Academy of Engineering, 2004
Ashby Consultants LtdMining to Keep the Home Fires Burning – NZ’s Energy in the 21st Century 31
What can we as Mining Professionals do?
Encourage responsible investment in energyPromote informed decision makingEncourage new techniques for utilising our natural resources including coal
Ashby Consultants LtdMining to Keep the Home Fires Burning – NZ’s Energy in the 21st Century 32
What can we in NZ do?
Become better informedConservelobby for shrewd use and investmentLifestyleBe more efficient - insulate - heat pumps - gas for heating - solar space heating or water heating
Ashby Consultants LtdMining to Keep the Home Fires Burning – NZ’s Energy in the 21st Century 33
Solar