The AEC Latrobe Urea Project

Cutting-edge clean coal technology meeting Australias farming needs

Urea Fertiliser
What is urea fertiliser?
Urea fertiliser is a crucial element in plant formation for Australias broad acre farming and horticultural production urea is the primary source of nitrogen for crop nutrition. Australian farmers currently use approximately 1,330,000 tonnes of urea fertiliser each year.

What does this mean for Australia?

With the increase in demand for urea around the world and rising global gas prices Australian farmers are likely to face increasing supply and cost issues in the near future unless alternative supply sources are created. By producing such an important commodity locally supply security is increased and the associated jobs, added value and tax revenue remains in Australia.

Where and how is urea fertiliser produced?

Australia does not currently produce urea fertiliser in signicant quantities, with only a small amount being manufactured domestically at a plant in Brisbane. Major producers of urea fertiliser around the world include China and North America and countries in the Middle East and the Black Sea regions. The majority of urea fertiliser used in Australia is imported from the Middle East. Most of the urea fertiliser in the world is produced using natural gas as feedstock.

Why do we need an alternative feedstock to natural gas?

The global demand for gas is increasing due to both its exibility as a fuel and lower carbon footprint. At the same time rising global oil prices are underpinning increases in the cost of all major energy sources, including, particularly, gas.

What is the alternative feedstock to gas?

An alterative feedstock for urea is Victorian brown coal, an abundant resource at a fraction of the global cost of natural gas. Gasication of coal to produce urea is a globally proven technology. The extension of this process to Latrobe Valley brown coal will be guaranteed by experienced European based technology companies.

Why is the demand for urea increasing?

The worlds population is growing, dietary patterns are changing and major population countries are increasingly industrialising, all of which puts pressure on the supply of arable land. Countries worldwide are under pressure to produce a greater yield of agricultural production per hectare to keep up with demand. Biofuel production is also driving demand for arable land to produce high yielding crops. As a result there is a rising global demand for urea fertiliser.

The AEC Latrobe Urea Project

What is the Latrobe Urea Project?
The $2 billion AEC Latrobe Project will manufacture urea in Australia using the abundant brown coal from Victorias Latrobe Valley. The plant will be built adjacent to the Loy Yang Power Plant near Traralgon and will utilise surplus coal from the existing Loy Yang mine. Construction will commence in 2009, with plans for the plant to be operational by 2012.

How will the brown coal be supplied to the urea plant?

Victorias Latrobe Valley has 53 billion tonnes of economic brown coal. The assured supply of brown coal from the existing Loy Yang mine provides a level of certainty and ongoing low cost viability to the AEC Latrobe Urea Project that is not available to many gas-fed urea plants. Surplus brown coal not being utilised by the Loy Yang power station will be supplied to the AEC Latrobe Urea Project through a cooperative arrangement with power station owners Great Energy Alliance Corp (GEAC).

How much urea fertiliser will the plant produce?

The AEC Latrobe Project will produce 1.2 million tonnes of urea fertiliser per year.

How is coal made into urea?

The AEC Latrobe Urea Project will dry brown coal and process it through a gasier to produce gas. This gas is reacted with water to produce hydrogen and further reacted with nitrogen drawn from the atmosphere to produce ammonia. The ammonia will be mixed with carbon dioxide to produce liquid urea. This liquid will then be cooled and granulated to create urea fertiliser.

How will the new plant affect Australias current import and export of urea?
By producing urea domestically the AEC Latrobe Urea project will replace approximately $300 million of current urea imports and also generate an additional $300 million of urea exports per year. It is proposed that up to 50 per cent of the urea produced by the plant will be exported.

When does the project commence?

Construction of the AEC Latrobe Urea project plant is due to commence in late 2009 and plans to be operational in 2012.

Benefits to the Environment

How does the AEC Latrobe Urea Project plan to generate its own power?
The second stage of the AEC Latrobe Urea Project production plant will include Australias rst near-zero emission coal power plant . Excess gases produced for the urea production will be fed back into an onsite power generator, which will allow the plant to operate self sufciently. Surplus power not used by the plant will be directed back into the local grid to top-up Victorias energy supplies.

Benefits to the Latrobe Valley

How will the AEC Latrobe Urea Project impact the Latrobe Valley?
This $2 billion project will generate major investment in the Latrobe Valley and create vast opportunities for jobs and training. During the construction phase the project will create 1000 jobs. Once operational, the plant will employ 180 permanent staff. Throughout both phases further jobs will be created in the region in supporting industries such as transport, maintenance and services.

How will the plant be carbon-neutral?

Through geosequestration, also known as carbon capture and storage (CCS), CO2 can be liqueed and pumped into deep saline aquifers and depleted gas and oil reservoirs. The AEC Latrobe Urea Project will be designed and constructed to access future CCS infrastructure and place the carbon dioxide deep underground. As a result, the AEC Latrobe Urea Projects carbon emissions will become near zero.

What other broader benefits can be expected?

The AEC Latrobe Urea Project will provide a catalyst for a renaissance in the development of industries exploiting the Latrobe Valleys brown coal reserves and lead to the demand for a revitalised heavy engineering capacity. It will also lead to the reinvigoration of rail infrastructure in south eastern Australia. High volumes of urea fertiliser will need to be transported by rail and this has the potential to change the cost structure for rail movement in rural areas.

Benefits to Australian Farmers

How will the project benefit farmers?
Thanks to the AEC Latrobe Urea Project, Australian farmers will have a guaranteed home grown supply of urea fertiliser for the rst time. Australian farmers currently rely on imported urea fertiliser to meet their needs. With the world facing increasing uncertainty over energy supply local production of important, energy intensive commodities, such as urea, removes this risk. The AEC Latrobe Urea project will produce urea fertiliser in such volumes that Australian farmers will have a regular supply available to meet seasonal demand. With the increased pressure to utilise land more efciently to produce greater yield, Australian farmers will have access to high quality urea product that will enable them to meet growing demand.

Contact details: Paul Duckett General Manager Operational Development Australian Energy Company Limited (AEC) 6 Powlett St, East Melbourne, Victoria 3002, Australia Tel: +61 3 9415 7844 Email: pduckett@ausenergyco.com.au www.ausenergyco.com.au