Fuel plans on wrong road says expert

Press, 3 February 1983, Page 1

Fuel plans on wrong road says expert

NZPA staff, correspondent Houston New Zealand has been bamboozled into a system it does not need with the gas to gasoline plant at Motunui. an American energy consultant told an international conference.

Mr Pincas Jawetz. an applied physical chemist who has performed oil shale studies in Spain. Israel and the United States, was speaking at an energy-sources technology conference attended by more than 1000 delegates' from 23 countries.

Mr Jawetz visited New Zealand last year to see the gas - to - methane - to - gasoline project at Motunui being undertaken by the Government and the Mobil Corporation and also the stand-alone methanol plant near Waitara. He talked to the Minister of Energy. Mr Birch, and to public servants and scientists.

His detailed paper yesterday was headed: "Natural gas-based energy systems — how New Zealand decided to act not in its own best interest."

He told delegates that New Zealand should have opted to halt the Motunui plant at the methanol stage and converted the nation’s vehicles to run on compressed natural gas in the North Island and a gasoline-methanol blend — and ultimately pure methanol — in the South Island. This meant that when the gas ran out the vehicles would keep running on methanol, ethanol, and fuel gases produced from biomass, coal, and peat.

“Instead. New Zealand seems to opt temporarily for a wasteful use of the natural gas. This route leads to a 25 per cent use. approximately, of potential transportation fuel use of the gas while still perpetuating New Zealand's dependency on imported crude."

Mr Jawetz said that the more international bankers analysed the scheme the less enthusiastic they became when they realised that it was possible New Zealand might opt after all for using the methanol and C.N.G., “thus leaving a white elephant that started as a SUS2BO million bargain and ended up as a SUS2 billion project". “Sure, it will be possible to produce synthetic gasoline in the M.T.G. (methanol-to-gas) process, but the economics will be based on the squandering of the natural gas resource and bankers may have second thoughts for the case that the financing of such a project is being guaranteed by the project itself and by promised financial

manipulations which may be abolished by a future government."

The negotiations to finance the project went on for a long, long time. Mr Jawetz said, and the banks had not been prepared to sign anything without a SUSSOO million stand-by to improve the equity position "which one could say was ridiculously low."

The original intention of having a consortium of seven banks to finance the plant had to be changed to a point where 40 banks were spreading the risk. Mr Jawetz said that he had tried to find out how much money Citibank, heading the consortium, was putting up. but was rebuffed. With such deals the leading bank usually placed a fullpage "tombstone" advert isment in a newspaper to announce the successful syndication. but Citibank had not done that in this case. New Zealand's offshore debt at March 31. 1982 — $U53263 million, or about SUSIOS2 per head of population — was just about as high as the capital debt of Argentina. With the expansion of the Marsden Point oil refinery at Whangarei, the chances were that because of the refining mix. New Zealand would have to continue to import oil for diesel fuel while exporting gasoline at a low price.

He also expressed doubts about the profitability of exporting methanol, in view of the world over-supply. Many New Zealanders concerned with the project were now having second thoughts about it. and Mr Jawetz read a letter to delegates from an unnamed public servant to whom he had sent a copy of his paper. He showed delegates a graph where he linked a falloff in conversions to C.N.G. to the National Party's victory in the last elections, which Jte said made ordinary New Zealanders realise that synthetic gasoline would be produced and that there was no point losing boot space and range.

Japanese cars were 73 per cent of new registrations in New Zealand, however, and the Japanese would make anything if they had a guaranteed market of 25.000 vehicles. This meant that the boot space would not be lost, because the cars would be made to measure for C.N.G.. and he believed that American manufacturers would follow suit.

Mr Jawetz showed figures produced by the Department of Scientific and Industrial Research agajnst his own calculations. For synthetic gasoline, the D.S.I.R. figures show a 49 per cent use of Maui gas,, whereas Mr Jawetz calculates that only 25.8 per cent would be used, with the remaining 74.2 per cent wasted. The D.S.I.R. figures do show a much higher use of

the Maui gas to make hydrated methanol, however — 67 per cent against Mr Jawetz’s 36 per cent. Compressed natural gas is calculated at near 100 per cent use, and Mr Jawetz also calculated a figure for a 5 per cent methanol-95 per. cent gasoline mix (the

D.S.I.R. had no figures for . this) showing a 100 per cent *' use of the Maui gas for the methanol because, although 40 per cent of the gas was lost in production of the methanol, one litre of methanol would replace at least 1.8 litres of gasoline.

“New Zealand, being a set of two islands with very little traffic from the outside, could have switched to a transportation system based on C.N.G. and methanol with an intermediary stage that uses the existing Whangarei refinery, without changes, and methanol for an octane

enhancer. “Such a policy, besides having environmental benefits is- economically sounder in the long range as it allows for a much larger energy efficiency for the natural gas resource and it prepares the economy for an eventual

switch to other than natural gas sources of fuel gas and alcohols.

“New Zealand has large potential for the production of biomass and has as well coal and peat deposits that ,will eventually form the basis for an industrialisation of the South Island. “The elimination of the dependence on a petroleum system and the development of an indigenous industry are, reasonably, the real long-range interests of New Zealand.”