Kyoda. I'm Chelsea Daniels and this is the Front Page, a daily podcast presented by the New Zealand Herald. Marsden Point operated as New Zealand's only oil refinery for nearly sixty years. At its peak in the eighties, it employed around seventeen hundred people. When it was closed in twenty twenty two, nearly two hundred and forty people lost their jobs. Run by Channel Infrastructure, the site now operates as New Zealand's largest fuel's import terminal, storing and distributing forty percent
of the country's fuel. In recent weeks, a slew of ministers have visited the site, with New Zealand first in particular floating the idea of introducing our first Special Economic Zone to help pump invent into the site and life back into the Northland economy. Later, Channel Infrastructure CEO Rob Buchanan takes us through the future of Marsden Point, but first on the front Page, Massy University Emeritus Professor of Sustainable Energy and Climate Mitigation Ralph Simms joins us to
discuss the site's past and potential. First off, Ralph pretend I've never heard of Marsden Point before.
Can you tell me what is it?
Right?
Well, Marsden Point is an oil refinery located up in Northland and it was established in nineteen sixty four because we were bringing petrol and diesel into New Zealand already refined, thought it was cheaper have we brought in crude oil and then produced our own fuel products and that worked well. For quite some time we were producing maybe half of
New Zealand's demands of petrol, diesel and aviation fuel. A refinery takes crude oil, which is a very complex chemical if you like, and it varies from place to place, so a refinery breaks it down into useful products and petrol.
Diesel the obvious ones.
Aviation fuel, jet fuel is called also kerosene, other products chemical use as well, and also bitchamin is this stuff left over which of course we seal our roads with, so that all comes from an oil refinery.
And so it hasn't been used as a refinery of course since it closed down in twenty twenty two. In the mid nineteen eighties, though, the refinery substantially expanded and upgraded to allow for increased production. Extra tanksity supplies and environmental treatment units were added. Along with a one hundred and seventy kilometer Marsden Point to Auckland pipeline. Now it's safe to say, hey, that the eighties were really its boom time.
That's right, because it was expanded. A hydrocracker was installed, which was quite innovative at the time to get more diesel out of a barrel of oil. You can only get so much petrol, so much diesel, so much of the other products, and the hydrocracker was to say, let's get more diesel out because of our diesel demand, agricultural demands, trucks, etc. So this was a project. It was owned by the
New Zealand refining companies. It was Shell that the oil company that first thought about it, and then they went into partnership with all the other oil companies in New Zealand and set up the business. And so then they thought they'd expand and then mister Muldoon came along with his think big project, so he thought that was a good idea. Through money at it and then it took five.
Six years nineteen eighty six.
It finally opened because there were strikes and there were delays and there was over a budget, and then eventually the government did a secret deal with the oil companies to buy it to pay for all the changes that had occurred, and that meant that we were then able to produce about seventy percent of our total fuel demand. We were still importing Sundays or some In course in the nineteen seventies there were the oil shocks.
Around the world and we were having.
Carliss days and rationing diesel, etc.
Because there just simply wasn't enough that the.
Refinery could produce because of the oil supply, but also buying imported products, and so that was another reason to give it a boost in the eighties. Interestingly, New Zealand by that time was exploring and producing oil and gas. Oil was what's called a light sweet crude and it
didn't match the refinery processing characteristics. Most of our crude oil that we extracted was sent off to a refinery in Australia and we were producing we were importing this medium sour crude from other parts of the world, Saudi Arabia and United Arab Emirates and wherever, and so that was unfortunate really because we were still relying on imported product and a small percentage, very small percentage of our our own crude oil would be blended in with the
imported stuff, but not enough to make us self sufficient.
Right over withster Peters. That from the person who agreed secretly to close down one of the three big industries in this country, namely Marson Point. Never told the workers, never told the unions, never told anybody up north, No COVID it did And she laughs this critical componatory, she laughs about this accused of me going secretly to the Prime minister. No, all twenty cabinet ministers were required to write to the Primise with their ideas. That's what I did.
So don't believe the media crap and hype that somehow we did something special and there isn't appalling their debuty prime Minister has been caught talking to the Prime Minister. Only Labor could think there's something wrong.
Looking back, do you think that there were any missed opportunities to integrate I guess more sustainable practices into Marsden Points refining activities.
Yes, well, there was a lot of debated discussion about exactly what production it should achieve from an economic sustainability point of view. If we'd have gone to one hundred percent refining and if anything had gone wrong then that would have been a risk. The economic balance, as I understand it, was that we would produce two thirds or so of our own fuels, but still have some reliance on imported fuels, which gives some flexibility reduces the risk.
I guess that was the main reason for not going to a full large refinery. But of course that was one of the reasons why it did close down in twenty twenty two, because it's a relatively small refinery on a global basis, and the cost of oil shipping it's a long way to come, and the value of the products was such that it was actually thought cheaper to import refined products from Singapore and other Asian countries rather
than carry on with refining here. And of course by that time it was some of it was forty to fifty year years old, and these chemical engineering production processes equipment doesn't last forever, so there was quite a maintenance operation going on. So in the end, from an economic sustainability point of view, they decided maybe we would shut
it down and import refined products. And that's another issue, because it was decided not to mothball the plant, which means to sort of shut it down, but put grease on it and paint it and protect it so that it could be used again. It was just decommissioned. It
was just shut down and that was it. So parts of it have gone rusty and parts of it have been sold off, and there's more other bits that are possibly going to be sold from what I understand how the government, I think Minister Shane Jones has been thinking of re commissioning the refinery, but it would be very difficult and very expensive to do, so there has been
a report to assess whether that's feasible or not. The idea of being that in this day and age, with all the geopolitical unrest and such like, we would have more security if we produced more of our own fuels, but that's unlikely to happen, I think. I think to the cost it would be billions of dollars to renovate it.
In terms of the chat about making the area of Marsden Point a special economic zone, how does that sit with you, Ralph?
Yeah, well, again it's the company that's come up with this concept and Minister Shane Jones has said, oh, this could be a good idea, so he's got involved there a bit to what decree, I don't know, but basically it's saying, well, we've got all these resources, all these facilities,
how can we best utilize them? And so extra storage is one they've talked about producing green hydrogen, which is different hydrogen that comes from methane from natural gas, releases emissions into the atmosphere carbon dioxide as part of the producing hydrogen. Whereas green hydrogen, if you've got renewable electricity to electrolyze the water and produce the hydrogen, then there's no carbon emissions coming from that. They've there's a possibility
of doing that. Hydrogen as a fuel is debatable in many ways at the moment, whether it be for cars or trucks or planes. Technically possible, but is it energy efficient to use all that electricity to produce hydrogen, store the hydrogen to turn the hydrogen back into electricity, or maybe use electricity directly for a car Obviously idiots makes more sense than for an aeroplane, but green hydrogen is
a possible product that they could use. They could also produce biofuels, their liquid fuels that could replace spetrol and diesel. The IATA, the International Air Transport Association of All Airlines. Air New Zealand being a strong member, has from some years looked at sustainable aviation fuels and they've been analyzing this to a great degree. United Era of Emirates I've been involved with a little bit and they've been very strongly supporting this and advocating for the concept, even though
they produce oil themselves. The IARTA have got nine different technologies that they can that they've approved in order to make these jetpul and one of them is through using green hydrogen.
Another one, which.
Channel Infrastructure is now looking at in association with Zealand and Scion, which was Forest Research Institute, is to convert woody biomass waste from the forest, so you take out the logs and then you're left with all the slash, which is quite controversial at the moment and in Sweden and the Austriaan whatever. And I've been advocating here for many years too. We should be using that to chip it up and turn.
It into heat and power. We can turn it into.
Electricity and it's very viable and it makes good sense and it's low carbon.
But it's expensive though. Ralph is that where the special economic zone can come in, we can get some overseas investors in to invest in things like that.
That's exactly right.
I mean it's been done for heat and power for decades in many countries, so it's not expensive.
If you've got the system in place, it can be competitive.
But if you've got going to sustainable aviation fuels, it's a bigger process. It's a refining process, if you like, of the woody biomass into liquid biofuels. And that's where the economic zone could attract these investors for sure, which of course is what government's got in mind as being
a good incentive to do so. And so the process there or lansa Tech is a company which is involved, which was originated in New Zealand some twenty years or more ago from a PhD study which was looking at bacteria to take emissions from steel mills and turn them into ethanol, which is a liquid fuel.
You can run petrol cars on ethanol.
And that developed into a company and then that went international.
They've still got a research office in Auckland.
It was New Zealand innovation at its best and they are now looking at jet fuels as a subsidiary company of Lanthotech and Scion's been looking at producing ethanol from woody biomass for decades and it's not I mean, when I was producing biodiesel in nineteen seventies, Forest Research Institute was looking at ethanol from woodchips and after twenty or thirty years they sort of gave up. So it is
a challenge, but there's more development going on now. So this is where this consortium is thinking that ideally Marsden Point could be a world's leading center for producing sustainable aviation fuels. What the volume is that they can produce is probably enough for New Zealand, but on a global capacity, it's a real challenge through substitute avgas aviation fuel for sustainable aviation fuels.
But it's technically possible to do.
And even you can term municipal solid waste instead of going into a landfill, you can turn that into sustainable fuels as well. So there's great hope, great potential there, but there is a challenge a on the chemistry beyond the costs. See on having a regular supply, where would all the wood chips come from? How do they get to the refinery? Coastal shipping might be the answer to that and rail as well that they've got to be delivered there in large volumes, but it's certainly worth looking at.
Thanks for joining us, Ralph. The privately owned Marsden Point was New Zealand's only fuel refinery until it was decommissioned in twenty twenty two to become an import only fuel terminal under the name Channel Infrastructure. CEO Rob Buchanan is with us now to take us through what the future holds. Rob, how much fuel flows through Marsden Point at the moment and where does it all go?
Yeah, so it's around three billion or over three billion liters a year of fuel that goes through the Marsten Point import terminal system. And just to give you a thumbnail sketch of how that works, our customers earth ships at Marsden Point where their product is stored either petro diesel and jet and a significant number of tanks that we've got back three hundred million liters of storage on site.
Most product is ship down the pipeline to Auckland where it is then distributed either to the Auckland and why Cano region or in the case of jet, direct to Auckland Airport and a small amounts are taken off at our site to truckloading facility for distribution into Northland.
How might Marsden Point adapt towards I suppose a renewable energy or sustainability in the future.
Great question. So there's a couple of things there.
I think the first for us is, you know, we think that the future for decarbonization of aviation is sustainable aviation fuel, which is dropping, which is to say that it can flow through our infrastructure today. So as then industry transitions from fossil jets to sustainable aviation fuel over the next twenty thirty years, you know that product can come straight through the masson Point I Bort terminal system
like it can today. One of the unique features of our location and master point, and actually it's function in our history, is we've got a very large landholding which is consented for at least the next thirty five years anyway for fuels manufacture. And so one of the significant opportunities that we're exploring is renewable fuels manufacture on our site as.
Well and all the infrastructures there for that. Or do you need significant investment from government or say elsewhere under a special economic zone, say.
Well, to be clear, we're not looking for investment from government, so just to put that one to bead, but otherwise the answer is yes to both. So yes, there is a significant amount of infrastructure there by virtue of a range of decommissioned refinery assets and refined product tanks which are available for fuel storage and then the pipeline which can ship that product to Auckland or indeed the gen where it can be put into a boat and distributed elsewhere.
But also there is a significant amount of investment that would be required by our partners ultimately to bring renewable fuels manufacture to master points. So one of the projects that we're working on with a consortium of international investors is indeed repurposing some of the old refinery assets for bio fuels production in New Zealand.
What's the goal with that?
So when we talk about biofuels, what would that then be used for?
Yeah, So in relation to that particular project, in particular, the main areas of focus renewable diesel or an alternative to diesel, and obviously sustainable aviation fuel And just to speak to both of those clearly, there is a pathway for decarbonization of light transport and evs and adoption will go up and down over time, but ultimately you know that pathway is there. I think that the pathway for
heavy transport. And if you think about tractors on farms getting milk from remote locations in New Zealand to manufacturing sites, getting our products to export markets and getting them in a boat and shipping them overseas, that's where renew diesel is an opportunity to decarbonize that particular part of the supply chain. The opportunity and aviation, as I spoke to before, is sustainable aviation fuel.
In terms of sustainable aviation fuel, though, does the whole world have to get on board for it to work?
Well, that's actually a great question. And so you know that the most important point about sustainable aviation fuel is that it's dropping. So where it wouldn't work is if we couldn't use that fuel an existing jet turbine technology today.
So you know the most important thing is that it's dropping.
You can blend it with jet today and it can go straight into the aircraft that any Zealand for example, is fly around New Zealand or overseas, and so that means that we don't have to wait for technology changes at aircraft level, which I think, let's space, it would take decades. We can actually get into the piece of work now, and various countries are taking different or making that adoption at different speeds. Certainly, you know Europe is
going faster than many other places. But actually some of the major trading partners in Asia have sustainble aviation fuel targets as well, like Japan.
And why isn't it happening you know, tomorrow then? Or does it cost a lot of money? I know that the recommissioning project was costed out at about four point nine billion to seven point three billion. That was if we made Marsden Point an oil refinery against say, obviously that's a pipe dream, and that's probably are you are you confident to say that that's actually never going to happen.
Yeah, Well, I think the government a significant piece of work on the recommissioning of the refinery and found that it was infeasible ultimately, so you know, it was permanently decommissioned and our position hasn't changed on that. I think
that's the same aviation fuel piece. I probably distinguished between the opportunity to manufacture it and onw Zealand at Master Point, which we think is a fantastic opportunity, and the fact that it can actually be brought into New Zealand by a boat today and distribute it through our supply chain. But you've landed on one of the key issues for adoption. There's nothing cheap about decarbanization. We've seen it in the electricity sector and that transition to renewal electricity.
And the impact that that's hand.
On electricity prices, and it's the same with the same aviation fuel. It's as that technology gains traction and increasing scale is built around the world and the manufacturer of the sable aviation fuel, then the costs can come down. But right now it's significantly more expensive than fossil jet today, so the impact on is ultimately born by airlines or customers for making that choice around substitution in between fossil jets and statele aviation field.
Our investigating the re establishment of Marsden Point refinery. Sadly we are left to gather the results of an awful decision made over the last two years, and it's driven served by a mixture of wokeism, a mixture of naivety and an unwillingness to accept with our gas, with our fuel, the nation will collapse. With New Zealand first in charge of such an initiative, our resilience will prosper.
What's the future look like for Marsden Point, say in the next ten years and then twenty years and so forth.
Yeah, Well, we put out I think, as you know, the Marten Point Energy Precinct, which is our vision the future at that site, and I'd summarize to you it in a couple of ways. You know, we see it as over the next ten to fifteen years as a
massive opportunity for energy security for New Zealand. And by that I mean we've got the ability to store more fuel, we've got the bility to manufacture biofuels at Marston Point, noting that the feedstock for biofuels is domestic, so we aren't subject to the geopolitical risks that come with international shipping. And we are also working on some energy firming opportunities as well, like peak electricity peaking and the like, And so we think it's a real opportunity for an energy security.
Play in New for New Zealand.
In a world which is quickly becoming more geopolitically contested, and we think it's a massive opportunity for Northland if the Energy Precinct is built out. Just to how we think it could be over the next ten, fifteen, twenty years, it's twenty thousand construction jobs, it's twelve hundred jobs on an ongoing basis, it's a quarter of a billion dollars
contribution to New zealergyp. You know, it's a massive opportunity for New ZEALANDIC And if you think about some of the the industrialization they were seeing around us with manufacturing closing high energy prices, we've got the opportunity and to lean into solving a couple of those things with the Energy Precinct.
And in order for all of those things to happen seamlessly, do we need a special Economic Zone?
Well, I think the SEZ, which you know the Associate Minister for Energy announced back in February as something that government was considering, is I think something that would speed up the development of the Energy Precinct. So when we talk to international investors and international capital providers, you know they've got the choice to put the capital and their
IP and many locations around the world. We think master points particularly unique location, but that especially kind of like zone provides that.
Long term government endorsement or this being a place.
For energy security type projects, that international investors can feel comfortable and safe about deploying capital into this area and recovering that capital and returns which are very long dated.
And is anything happening at all? Our ministers just flocking to Marsden Point to have a look around all of a sudden, You've had three in the last few weeks.
Yeah, Look, we've got stuff happening right now.
So we're in the process of building what will be or converting an old crud teak from the refinery turned to what will be New Zealand's equal largest jet tech form of our customers and energy and that that tank SIT's next to the other largest tank jet tank in New Zealand and.
So that's being developed at the moment.
It's got a number of innovations which will help provide additional product quality, which is obviously credibly important for a
product like jet. We've actually commenced construction for a new Bitchamen import terminal for one of our new customers, Higgins, and so that's going to involve building a new Bitchumen import line onto our wool for jety storage and distribution facility, and noting the government's policy around roads at national significance and the fact that they're looking at significant investment in roading.
In Auckland and north of Auckland.
The next nearest Bitchmen import terminal is in port A Tower, Honor, so you know it will be an incredibly important and valuable a set for the delivery of those things. So no, absolutely, we're kind of full flight right now, get it on with.
Some of these things.
Thanks for joining us, Rob, Thank you very much. That's it for this episode of The Front Page. You can read more about today's stories and extensive news coverage at enzdherld dot co dot nz. The Front Page is produced by Jane Ye and Richard Martin, who is also our editor. I'm Chelsea Daniels. Subscribe to The Front Page on iHeartRadio or wherever you get your podcasts, and tune in tomorrow for another look behind the headlines.