Syngas Ltd, which is also exploring the possibility of producing synthetic diesel fuel from brown coal deposits near Port Clinton, has been working with farmers from the Yorke Peninsula Alkaline Soils Group (YPASG) for 18 months.

This work has centred on establishing the sustainable potential for an organic raw material, known as biomass — in this instance, chaff and residual straw produced as a by-product of annual wheat and barley crops.

Syngas has also assessed options for collection and transport for processing of large quantities of biomass, and it plans to further investigate the potential for growing dedicated biomass crops in marginal areas where they would not compete with commercial or food crops.

Initially, Syngas was exploring using biomass as a supplementary raw material for its proposed Clinton coal-to-liquid project, to reduce that project’s carbon footprint (biomass energy sources are considered carbon neutral because the only emission is carbon dioxide the biomass absorbed from the atmosphere during its growth cycle).

Separate project

However, Syngas is now proposing to investigate biomass to liquid (BTL) as a separate project.

In a statement to the Australian Stock Exchange (ASX) on January 28, Syngas managing director, Merrill Gray, said: “The Clinton project will continue to be developed in parallel with a BTL project.”

Syngas announced in the statement it had signed a second agreement with US company, Rentech, to jointly assess the development of a separate BTL project.

In November, Syngas signed an agreement with Rentech for joint work on the Clinton project.

Rentech holds the rights to two of the proprietary processes involved in converting biomass and coal into liquid fuels. It is developing a biomass project in Rialto, California, to produce synthetic fuels and generate electricity from late 2012.

The Rialto project is expected to become the design basis for a Syngas BTL project.

In its report to the stock exchange, Syngas stated it had completed an independent review of the potential sustainable biomass available in the Yorke Peninsula and Mid North crop reporting districts.

If half the crop farmers participated, about 1.3 million tonnes of biomass a year could be available within 100 kilometres of its Clinton project, the report said.

Syngas estimates it would need about 400,000 tonnes of biomass a year for a potential BTL project and stated that it plans to “work with local crop farmers towards securing firm supply arrangement ... under suitable commercial terms”.

The second agreement with Rentech was one of four new memorandums of understanding between Syngas and specialist organisations, announced in late January and early this month, as part of the on-going Clinton project feasibility study.

Engineering feasibility package

Oil and gas process technology company UOP, part of the US-based Honeywell International conglomerate, has been engaged to complete an engineering feasibility package on the Clinton Project.

Syngas plans to use UOP equipment in conjunction with Rentech processes to produce fuel grade ultra-clean diesel and naphtha.

Melbourne-based electrical design and construction specialist, Vemteck Pty Ltd has been engaged to assess the potential for excess electricity from the Clinton project’s power generator to be sold into the national grid.

Syngas proposes to generate its own power, with peak production of 114 megawatts, using heat from the conversion to fuel process.

Vemteck will also advise on grid connection infrastructure and on relocating existing power lines where they cross areas proposed to be strip mined for coal.

GreenPower retailer and carbon credits trader, Sydney-based COzero, has been engaged to assess the commercial potential of carbon credit trading for the Clinton project and potential BTL project.

“Carbon credits generated from Syngas’ projects are a potential source of revenue and could add significantly to the projects’ economics,” a company report to the ASX stated.

The short straw could pay off

Money for straw: Yorke Peninsula Alkaline Soils Group chairman, Dylan Schulz, believes the proposal to produce diesel fuel from straw is potentially “very exciting” for Yorke Peninsula farmers.

Mr Schulz is chairman of the Yorke Peninsula Alkaline Soils Group which has been working with Syngas on aspects of the project.

“While it’s early days yet and I’m not going to hold my breath until I see some concrete figures, it (biomass-to-liquid project) certainly has the potential to be very exciting,” Mr Schulz said. “We have been talking big tonnages (of straw).”

However, ultimately, the price Syngas was prepared to pay farmers for straw would determine whether they would participate, he said.

“The price is going to dictate whether it is a goer or not.

“Straw is a by-product of the annual harvest, it’s not a waste product, there is certainly a value to it.

“There are already some markets for straw, but they tend to be small in volume. If this goes ahead it will be a much larger market and a potential additional source of income for farmers.”

Mr Schulz said the discussions with Syngas so far had centred on sustainability and what percentage of stubble needed to be retained on farm to maintain soil health and prevent erosion, and what was surplus to those requirements.

“We’ve also done a little bit of work on looking at cost-effective methods of (straw) collection and transportation,” he said.