Z Energy has announced it intends to invest $21 million in a domestic biodiesel manufacturing plant to be built in Auckland and the associated infrastructure in Auckland and Mount Maunganui.
The investment will be made over the 2015 financial year and will see Z Energy producing 20 million litres of sustainable biodiesel per annum. The biodiesel will be manufactured from inedible tallow feedstock and will satisfy New Zealand and European fuel specifications.
Chief executive Mike Bennetts says the Z Board has approved the project, subject to the completion of regulatory and resource consenting – including approvals from competitor companies to construct a blending facility at the Wiri fuel terminal – and the finalisation of key contracts.
Bennetts says the company has had conversations with a number of core commercial customers who have expressed commitments to take volume from Z’s initial production.
“We expect strong customer support for a high-quality, genuinely sustainable biodiesel and indeed our decision to proceed is at least partially based on these indications of support.”
He says Z’s biodiesel would be manufactured from a by-product of New Zealand’s agriculture industry, would create local jobs and would enable customers to choose a diesel option that lowers their carbon footprint and produces cleaner emissions.
“I want to be clear that the economics around biofuels remain very challenging and we have worked this project non-stop for four years to get to this point. We believe we have the knowledge and capability to manage the various operating and financial risks while offering our customers a quality product at a similar price to mineral diesel,” said Mike.
Bennetts says initial production would likely be allocated to commercial customers who would typically use the biodiesel in B5 to B20 (five to 20% biodiesel to mineral diesel) blends in heavy vehicles but the company expected to also supply upper North Island retail sites with a B5 biodiesel blend.
“We didn’t enter this industry to be just another oil company and we are advantaged in that we have the flexibility and the scope to look at non fossil fuel options.
Bennetts says the option existed to double the plant’s production to 40 million litres of pure biodiesel quite quickly if consumer demand and the economics supported it.
