Spitfire Oil has produced the first oil from its new test reactor, designed to convert low grade coal to oil – a milestone for Western Australian (WA) technology development. This result brings one step closer the possibility of converting Spitfire’s current resource of 500 million tonnes of lignite at Salmon Gums into at least 200 million barrels of oil.

The Company expects to produce up to 20,000 barrels of oil per day from WA’s first low carbon footprint coal-to-liquids business, once the process technology is scaled to commercial levels.

“At 7.3 million barrels of oil per year, our proposed production facilities at Salmon Gums would make a significant contribution to Australia’s energy security and to employment and economic development in the Kalgoorlie-Esperance region,” said Spitfire’s Chairman Mr Mladen Ninkov. “At this rate, Spitfire will be producing over 150% of recent Western Australia onshore liquid hydrocarbon production and 6% of Western Australia’s total liquids production. The current resource of 500 million tonnes of lignite at Salmon Gums would also yield at least 200 million barrels of oil over its 25 year life, thereby increasing Western Australia’s current liquid hydrocarbon reserves by 20%.

“In addition to the energy security and trade benefits of substituting domestic for imported oil, Spitfire will be developing a home grown environmentally friendly Western Australian technology and knowhow, rather than purchasing technology licences from overseas. Ultimately, after having demonstrated the process in WA, we expect that subsequent overseas implementation of the technology would generate further benefit to the State.”

The Company has already invested nearly A$10 million in Western Australia through its technology development and drilling programs, including more than A$1 million spent on environmental studies.

“The common technology currently being used around the world to convert coal into oil is very energy intensive, producing very high levels of greenhouse gas emissions, and consuming large quantities of fresh water,” explains Spitfire’s CEO Mr Thyl Kint, referring to the method of gasifying coal and applying the Fischer-Tropsch process – best known for its application in South Africa.

“We have contracted with Curtin University of Technology in Western Australia to develop a pyrolysis process that operates at lower temperatures, resulting in a much lower carbon footprint.

“The pyrolysis process is not new, as it is a variation of the coal coking process which has been used for over 100 years and which is known to extract oils and gasses from coals,” Mr Kint said. “However, the major driver for further developing this technology for the purpose of producing oil from coal is to minimise the greenhouse gas emissions. We intend for our whole operation to be environmentally responsible. The technology we are developing will be compact with an environmental footprint that is much smaller than that of the much more complex conventional process. The low carbon emissions are a necessity as the Salmon Gums to Esperance region is geologically underlain by an extensive granite basement which precludes carbon sequestration.

“To place things in perspective, production of a barrel of useable fuel by the conventional gasification plus Fisher-Tropsch process would generate emissions four times higher than our pyrolysis process. In the context of the proposed Australian carbon Emissions Trading Scheme, at a price of A$25 per tonne of CO2, our process would incur a cost of about A$4.1 per barrel of produced oil whilst the more conventional process would incur a cost in excess of A$16.6 per barrel. In the absence of a nearby sequestration site, the scale of the greenhouse gas emissions from the conventional process also means that other offsets, such as tree planting, would be impractical.

Tags: Spitfire Oil Limited