Upskilling for Productivity Southern Institute of Technology July 2009

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2  Overview of Solid Energy  Energy Market  Lignite conversion project  Productivity/transformation Outline

3 Solid Energy A Diversified Energy Company Rotowaro Opencast 1.9 mtpa 06/07 Thermal Coal Customers: Genesis, NZ Steel, Small industrial Stockton Opencast 2.1 mtpa 06/07 Coking coal Customers: Export, Holcim Cement Spring Creek Underground (JV) 0.8 mtpa 07/08 Semi coking / Thermal coal Customers: Export, Industrial Huntly East Underground 0.43 mtpa 07/08 Thermal coal (used for steel making) Customers: NZ Steel, Small industrial Lyttelton Port of Christchurch Supply Chain Partner Export 2.0 mtpa 07/08 Switch Solar, Pellet hardware, integrated energy solutions Customers: Industrial, Household Nature’s Flame 20ktpa 07/08 Biomass Customers: Industrial, Household CSG Project development Newvale Opencast 0.2 mtpa 07/08 Lignite coal Customers: Industrial, Household Biodiesel New Zealand 1mlpa 07/08 Bio Diesel Customers: Small commercial

Outline NZ Energy Market - Over 50% is imported … Quick Facts  75% of energy consumption is non- electricity  56% of energy consumed is imported (oil and coal)  25% of energy consumed is renewable

5 2,078 Mt 380 Mt 983 Mt 9,392 Mt 2,722 Mt … NZ has significant indigenous energy resources…  NZ globally significant coal resources  2 nd highest resource per capita  15Bt (~200,000PJ) ~50 Maui gas fields  Small middle eastern oil state  80% in Southland and Otago -But lower rank … including Coal…  Renewable – Hydro, wind, geothermal  Fossil fuel – Natural gas

…Conversion technology needed to bring energy to market…

Solid Energy Lignite Project  Resource access -Reviewed all key lignite resources -Selected Mataura/Croydon as the key area of interest -Secured land and resource primarily through acquisition (1.4 Bt lignite secured)  Resource proving -Drilling exploration programmes advanced resource knowledge

…concept studies highlighted transport fuels, fertilizer and electricity most prospective…

9 Focused on Transport Fuel Production  Feed stock -Up to 15Mtpa of lignite  Plant -Sized to displace imported refined diesel 30 – 40,000bbl/day (1.5-2BLpa) -75% Diesel, 25% Naptha( ~50% of NZ diesel consumption) -High quality product – zero sulphur, high cetane  Carbon Management -Portfolio approach to carbon management -Carbon Capture & Storage (CCS) assessments -Other offsets available  Distribution -Pipe line to Port  Capital -~NZ$10B capital cost

Carbon Management Planning Biomass and Municipal waste other renewable feedstock Renewable power import Optimise CTL technology and design CTL plant Bio- sequestration Geological Sequestration (CCS) Global off- sets/credits Other direct off-set opportunities

 Project still a great ‘option’ for New Zealand to progress  Comprehensive investigations ongoing  Next 18 months -Continue exploration on lignite resources -Complete conversion technology studies -Further investigate carbon management solutions -Complete ‘pre-feasibility’ study Next Steps

 Access to skilled people is a development constraint  Solid Energy has experienced issues in current business -Lack of NZ based skills -Internationally competitive market (Skill shortage) -NZ learning programmes  Effectively bringing 2 significant projects into the region -Mining (up to 15Mt)  Geologists, hydro-geologist, hydrologists, mining engineers, environmental scientists, mine operators etc. -Plant operations (30 – 40kbbl/day)  Chemical engineers, process engineers, electrical engineers, petroleum engineers, research scientists, all trades, construction etc Upskilling for productivity

 This is a new industry, not new project  Taranaki petroleum experience  Extensive skills programmes required to support development of this industry -Tailored tertiary programmes -Post graduate study/research opportunities -Training and certification of staff and contractors -Creation of research centres  Note: Limited requirement for upskilling prior to commitment to progressing into feasibility Upskilling for productivity