Latrobe flagged as site for conversion - Business - Business - theage.com.au

PROSPECTS for the Latrobe Valley to host a $5 billion synthetic diesel and electricity project have improved greatly.
Oil colossus Shell has thrown its financial muscle and technological edge behind the Monash energy project near Traralgon in an alliance with the project promoter, the South African mining giant Anglo American.
Shell and Anglo have formed the global alliance to pursue "clean", coal-converting energy opportunities and have nominated the Monash project as their leading candidate.
Formation of the alliance comes ahead of an expected mid-year decision to first build a $300-$400 million demonstration for the Monash project. It is promoted as "clean" energy because carbon dioxide emissions are to be captured for injection into exhausted Bass Strait gas reservoirs.
The demonstration plant would help to commercialise technology that would produce low-emission diesel and electricity from brown coal. Anglo holds a brown coal exploration licence that sits next to the conventional Loy Yang power station. It straddles the Hyland Highway, 200 kilometres east of Melbourne.
If the process is viable, a $5 billion energy complex could be built within a decade. Its diesel and other liquids production of more than 60,000 barrels a day would be bigger than the fast-falling liquids production from the Exxon Mobil/BHP Billiton Bass Strait oil and gas fields of 50,000 barrels a day.
The Monash project envisages a new coalmine, drying and gasification plant, carbon dioxide capture and storage, and a gas-to-liquids plant with associated power generation.
The global alliance between Shell and Anglo aims to "utilise the extensive coal reserves of Anglo American and combine its mining capabilities with Shell's leading-edge technologies".
"The objective is to extract, gasify and then convert coal into chemicals, hydrogen, power, liquid hydrocarbons and other uses," the companies said.
"Burning the synthesis gas generated by the gasification of coal emits significantly lower quantities of greenhouse gases and pollutants than traditional coal burning and is the cleanest way to harness the energy potential of coal — the world's dominant fuel source," they said.
Anglo muscled into the Latrobe Valley in 2004 when it took control of the Monash project by spending $52 million to buy the 80 per cent of Australian Power and Energy Ltd that it did not already own. That followed its initial acquisition of a 20 per cent interest in April 2003.
Geosequestration — the capture and storage of carbon dioxide gases in underground reservoirs, like those planned in the Monash project — is being banked on by the coal industry and the Federal Government to reduce Australia's emissions of greenhouse gas by as much as 70 per cent.
That sort of potential is regarded by the industry and the Federal Government as Australia's best response to the greenhouse problem in preference to the introduction of a carbon tax-trading scheme.