Secret to cheap petrol is coal

A $5 BILLION proposal to turn some of Victoria's abundant brown coal into diesel moved a step closer after the State Government revealed it was about to grant a mining licence to the company behind the project.
Energy Minister Theo Theophanous told The Sunday Age that the project aimed to produce about 60,000 barrels a day of high-quality diesel fuel at a much lower cost than present world prices.
He said an announcement on a mining licence for Monash Energy was likely to be made before the November 25 state election.
The mining licence approval would include details of the total investment and when the plant would be operational.
The first stage, which will cost between $300 million and $400 million, would be a demonstration plant that could be up and running in six years.
The entire project should be operational in 10 years.
The project has the backing of Shell and the big mining company Anglo American.
A key aspect of the project, promoted as "clean energy", would be the minimising of greenhouse gas emissions by separating the carbon dioxide from the brown coal and storing it underground — a project known as geosequestration.
About $1.5 billion of the $5 billion project would be spent on the geosequestration process, Mr Theophanous said.
The project would be one of the world's biggest carbon dioxide capture and storage projects, with the gas stored deep underground in the offshore oil and gas fields in the Gippsland Basin.
Mr Theophanous told The Sunday Age that a trial geosequestration project near Warrnambool had received $4 million in State Government money and would likely begin depositing carbon dioxide underground next year.
"We have to find out — does it work and how safe is it?" he said. It would be selfish to not worry about global warming, leaving it to our children.
Victoria is estimated to have about 500 years of brown coal reserves in the Latrobe Valley.
Mr Theophanous said that if geosequestration was successful, Victoria could cut to "close to zero" the emissions from new brown coal power stations in the future.
He said Victoria would need a new base-load power station in the next decade, but he did not expect the geosequestration technology to be ready until the power station after next.
Mr Theophanous said it would also be unlikely the geosequestration technology would have much impact on emissions from Victoria's existing power stations.
Peter Cook, chief executive of the company CO2CRC, which is behind the geosequestration trial at Nirranda, near Warrnambool, said its success was "absolutely crucial" to the future of the Monash Energy coal-to-diesel project.
Dr Cook said there had been keen interest in the geosequestration trial from around the world.
He said representatives from other countries and the International Energy Agency would be in Melbourne next month to examine the geosequestration trial.
He said they would look at how the carbon could be monitored once it was stored underground.
The project is expected to be the first geosequestration trial in Australia when up and running next year.
Opposition Leader Ted Baillieu said he supported any project that tackled carbon dioxide emissions at their source.
But a Greenpeace energy campaigner, Mark Wakeham, said geosequestration was untried and expensive.
"We don't know whether the CO 2 can be stored for the long term," he said.