(EnergyAsia, May 6 2011, Friday) — Altona Energy said its proposed US$3.5 billion coal-to-liquids and power plant in the Arckaringa Basin would provide long-term fuel security for South Australia state.
 
Speaking at the recent Paydirt 2011 South Australian Resources & Energy Investment Conference in Adelaide, Altona executive director Peter Fagiano said the project could also augment existing grid electrical supply to meet the state’s growing power demand.

He said: “The project’s planned diesel production meets the forecasts demand for South Australia up until at least 2030, easing the pressure on South Australia which currently relies on international imports and “out-of-the-state” supply of transportation fuels.

“As such, South Australia is subject to price volatility for its fuels due to fluctuating crude oil price, freight costs and foreign exchange rates and additionally has exposure to security of supply due to factors such as politics in the Middle East and North Africa.”

Mr Fagiano said Arckaringa coal-based fuels will help the state overcome the uncertainty of diesel fuel supply.

“This provides ‘homeland security of supply’ and competitive supply – as the cost of production sits at around US$53 per barrel of diesel (33 cents a litre) based on current plant costings.” he said.

“Today, international crude oil prices sit in excess of US$110 per barrel to which you would normally add another $15 to $20 per barrel to allow for refining costs to produce diesel plus transport. OPEC is forecasting that crude oil prices will settle at between US$80 to US$90 per barrel.”

“Based on these economics, the development of the Arckaringa project looks attractive both in the medium and long term.”

The Altona project draws upon coal reserves estimated at 7.8 billion tonnes of which 1.3 billion tonnes is complaint with Australia’s JORC standard. It will process 10 million tonnes of coal a year to produce 10 million barrels of diesel and naphtha products while exporting 4.5 million megawatts of electricity.

The coal-to-liquids and power plant components are estimated to cost nearly US$3 billion with mine facilities adding US$535 million to the cost while generating an estimated US$1 billion a year.