$5 billion coal to diesel complex

A $5 billion complex to convert Victoria's brown coal to 60,000 barrels of diesel a day looks closer to reality after Shell took an investment.As oil and energy companies recognise the shortage of the future isn't oil in the ground so much as transport liquid fuels (petrol, diesel, avgas), there's a rush to invest in coal or gas to oil projects.One of the world's biggest potential sites is Victoria's Latrobe Valley where easy to access brown coal makes, apparently, good feedstock to make diesel.Shell's announcment that it will invest with the coal deposit's owner Anglo Amrican (which has experience of coal to fuel plants in South Africa), highlights the trend fo oil companies to join such projects overseas.Boith parties sugested that the Latrobe Valley project could be up and running in a decade.Later this year Shell and Anglo will decide whether to go ahead with a $300 million plus pilot plant. The major output of the plant would be low emssion diesel fuel. Carbon Dioxide and other emissions would be extracted from the fuel and 'buried' on the mine site near Traralgon, rather than being enmitted through vehicle tailpipes.The final project, if it goes ahead, would produce more oil equivalent than the Bass Strait oil fields, now in decline.Early stiudies suggest the plant could be viable if oil is above US$40 a barrel. But there are plenty of plants, including the shale to oil plant Mobil Exxon once invested in near Gladstone in central Queensland, which are testament to the difficulty of converting a solid mass of coal into a liquid fuel, even at today's high oil prices.