THE PRESS TUESDAY, APRIL 1, 1980. Methanol plant decision

Press, 1 April 1980, Page 16

THE PRESS TUESDAY, APRIL 1, 1980. Methanol plant decision

In choosing the smaller of the two proposed projects to produce methanol, the Government has been guided by caution. Some of the methanol will be used in the Mobil process to produce synthetic petrol. In this decision, too, the Government has been guided by caution—this time on the future of the motor industry. The Government has chosen the State-owned Petrocorp and the Alberta Gas and Chemical Company to build the methanol plant; Petrocorp has had its technical and management capabilities questioned by many people qualified to judge; Alberta Gas has not built plants outside Canada. The Government cannot therefore be described as being cautious in this part of its decision.

In adopting the Mobil process for the first commercial production of synthetic petrol in the world, the Government may be on safe grounds. Even if the decisions work out well, it remains possible that New Zealand will have to make more decisions later, and could have saved itself trouble and a few hundred million dollars by making the decisions now. The question is whether New Zealand should be bold and take risks in finding methanol sales overseas and in relying on automotive developments, or whether options should be kept open after taking mini--mum steps towards self reliance in transport fuels. •

All the reasons for choosing the proposal from Petrocorp'and Alberta Gas instead of the larger plant proposed by the consortium of BP, Fletcher Holdings, and the Challenge Corporation have not been disclosed. The Prime Minister, Mr Muldoon, said that the greater risk of finding overseas markets for methanol from the proposed 2000-tonnes-a-day plant instead of the Petrocorp 1200-tonnes-a-day plant was possibly the final factor in the Government’s decision. He also said that the time of construction of the smaller plant was in its favour. His confidence on the construction time seems'surprising' Earlier estimates gave 33 months as the construction time for both.

Alberta Gas is building a plant to produce 1200 tonnes a day in Canada. Professor A. M. Kennedy, president of the Institution of Engineers, recently warned against supposing that transposing drawings from one place to another, particularly in different countries, could be without problems. The technology of the two proposals is the same, though Alberta Gas has yet to obtain the rights - from 1.C.1. BP has done a very thorough study of the site for its proposal. This is not so with Alberta Gas. Common sense would seem to suggest that the PetrocorpAlberta Gas. proposal would take at least as long, probably longer, to come to fruition. ’?,>lf the Government is right in suspecting ; that export markets for meth-

anol may be hard to find, it may be on good ground in choosing the smaller plant Yet a number of factors seem uncertain. The demand for methanol would seem reasonable for a few years ahead, though that demand may be filled by plants that are being planned elsewhere. There may not be a longterm export market. Yet the decision is also a decision about the future of the world motor industry. Are conventional petrol engines going to be the standard in the future? Will alcoholbased engines gradually take over? The more imaginative answer would be that engines will be designed or adapted to bum alcohols such as methanol. In that event the larger methanol plant would bring New Zealand closer to selfsufficiency in transport fuel. The conservative choice may not have been the wisest; but it is the less rigorous one in assembling capital to build plants.

Possibly something of the different philosophies of the future car engine is to be seen in the approaches of Mobil and BP. Mobil has its synthetic petrol process and now has the opportunity to use it on a commercial scale* In doing so it will prolong the life, in New Zealand at any rate, of the conventional petrol engine.

All of the major oil companies are looking for a broader base for their activities because some members of the Organisation of Petroleum Exporting Countries are squeezing them out of their traditional roles. BP has been hit harder than most in seeing its traditional supplies of oil dry up. It may be looking harder at alcohol fuels than some of the other companies. If it wants to keep a finger in the methanol pie, so to speak, it might be attentive to the suggestion by the Prime Minister that, should the consortium want to be involved in the methanorjplant it could come along to talk. BP is more likely, however, to sit back to watch developments, which not only BP suspect might entail some rearrangements within Petrocorp itself.

One of the difficulties in grasping the problems of the development of New Zealand’s energy resources is the staggering amounts of money required. The Petrocorp plan is for a plant of $l3O million—the Mobil process another few hundred million. Yet all of this has to be set against the bill for imported oil of about $l2OO million for this year. Plants which cost a few hundred million might justify their existence within a few years, even if there is no further use for them. If alcohols such as methanol are the fuels of the future, the decision to have a synthetic petrol plant now will have got the country through the period until the alcoholburning cars are available. After that, the country may need to build another methanol plant because the first one was not big enough, and probably at very much higher cost.