A Sherwood
Consultant, Lower Hutt

…Background
…Objectives
…Management and Operation
…Funding and Expenditure
…Achievements
…Coal Resources in the Next Millenium
…References

Background…

The New Zealand Coal Resources Survey (NZCRS) was the largest mineral exploration programme ever carried out in New Zealand, conceived in an economic climate of centralised government planning, 'Think Big' and an energy crisis. The programme began in 1975 when government approved the expenditure of $1.92 million over three years to drill 320 holes in the Waikato with the objective of proving 100 Mt of coal to fuel two 1000 MW power stations in the south Auckland area. This was to be in addition to the coal resources required for the Huntly No.1 Thermal Power Station. Treasury strongly supported the programme on the understanding it would enable the introduction of nuclear power to be deferred, a scenario which was being considered to meet the apparently insatiable demands of the power planners of the day. In 1976, Cabinet agreed with a Treasury recommendation that the Mines Department develop a continuous coal exploration programme based on an annual budget of $750 000, and a five year programme was approved which began with exploration of the South Island lignites. In 1977 a ten-year, $13 million exploration programme was approved to explore and measure the coal resources of the North Island. In 1979 the two programmes were rationalised into one, known as the New Zealand Coal Resources Survey.

Mines Division, by then part of the Ministry of Energy, continued to argue that continued coal exploration was necessary for energy planning and national and regional development, stating in 1979 that "the best utilisation of our coal resources cannot be planned without adequate knowledge of the location, quality, quantity and mining cost of the resource."

While the NZCRS continued into the 1980s, government considered ending the programme on several occasions as the energy crisis disappeared and prices of liquid fuels slumped, 'Think Big' fell into disrepute, and the Labour Government developed market-oriented policies which were not sympathetic towards the view that resource assessment programmes should be conducted by government.

Objectives…

The NZCRS was conceived as a continuous programme to upgrade estimates of coal resources to a minimum level of probability, the indicated category. The survey was initially envisaged as a resource-proving exercise, and little emphasis was given during the early stages to determining recoverable reserves of coal.


The objectives of the programme were to:

• explore and report on all New Zealand's major coal resources
  
• classify those resources in terms of geological resources, technically mineable coal, utilisation potential, and environmental development constraints
  
• publish results in order to stimulate the development of the coal mining industry in New Zealand as a source of indigenous energy and an export earner
  
• foster good resource management by making information available for policy making and energy planning at national and regional level
  

The NZCRS had five components:

• exploration and geological resource assessment
  
• preliminary mining feasibility studies
  
• environmental constraints assessment
  
• coal properties and use assessment
  
• classification of resources
  

Management and Operation…

The NZCRS was controlled by the Mines Department under the stewardship of Ian Dick, then the Secretary for Mines. The programme was executed in different ways in different areas using a mix of government agencies and private consultants which changed as the programme evolved. In the Waikato and Northland, NZ Geological Survey (DSIR) provided the main geological input to exploration, with drilling operations supported by State Coal Mines personnel. In Taranaki, most of the exploration was carried out by a consultant. In the South Island, exploration on the West Coast and in Southland and Otago was carried out almost entirely by consultants with NZ Geological Survey advising on exploration in some areas and in others running a virtually independent geological assessment of the drilling information. NZCRS mining studies were carried out by consultants.

Geophysics Division of DSIR played a key role in developing the use of geophysical methods in the NZCRS, perhaps most importantly their trials and advice gave Mines Division the confidence to use contractors for seismic surveys and downhole logging almost on a routine basis. The NZCRS also stimulated an interest in coal by the universities, mainly in coal properties and depositional controls.

Exploration was carried out in Northland, Waikato, Taranaki, Greymouth, Buller, Canterbury, Central Otago, Kaitangata, Eastern Southland and Ohai. Some 1800 holes were drilled, more than half of which were in the Waikato. NZCRS mining studies were undertaken in the Maramarua, Kawahia, Mokau, Greymouth and Buller coalfields. While they were not part of the Coal Resources Survey, the mining studies carried out by the Liquid Fuels Trust Board on the South Island lignites and by State Coal Mines at Ohinewai in the Waikato stemmed directly from NZCRS exploration.

Funding and Expenditure…

While the main funding impetus was through Mines Department, the DSIR also funded a significant part of the programme, particularly NZ Geological Survey expenditure. From 1982, DSIR expenses that were directly concerned with exploration were met by Mines Division as part of NZCRS expenditure.

The cost of the programme depends on what is included, and in any case is not easy to calculate with changes in the way in which government agencies were structured and expenditure was accounted for during the course of the programme. Direct expenditure by Mines Department and its successor, Ministry of Energy, was about $35 million.

Achievements…

The major achievements of the NZCRS were to establish and document the country's coal resources with a confidence that is not widely appreciated. The country now knows where it has coal resources and, just as usefully, where it does not. The programme established resources of some 14 300 Mt of coal for an expenditure of about $35 million or less than 2.5 cents per tonne. Furthermore, the geological setting, coal quality and broad mining constraints are in the main well known.

The principal discoveries were:

• two large deposits of opencast and underground mineable sub-bituminous coal resources in the Waikato, including what is probably the most attractive big block of opencastable coal left in the North Island
  
• a large resource of deep sub-bituminous coal in the Waikato which is currently being investigated for extraction of coal bed methane
  
• a large resource of opencast and underground mineable sub-bituminous coal in Taranaki
  
• a large resource of bituminous coal in the Greymouth Coalfield, the largest block of which is currently being developed for export
  
• a large resource of high quality bituminous coal in the Buller Coalfield, in addition to the known resources which were systematically re-evaluated by the NZCRS. These resources are currently being mined for export
  
• a world-ranked lignite resource in Central Otago and Eastern Southland which has the potential to sustain a high proportion of New Zealand's energy needs if necessary

The documentation of these resources includes a library of resource assessment and mining feasibility reports, a computerised National Coal Resources Database containing over 10 000 drillhole records, and a core and coal sample library, all curated by Crown Minerals, Ministry of Commerce. In addition, the NZ Geological Survey published geological monographs and resource maps (Kirk 1988, Isaac 1990) on Waikato and Eastern Southland coalfields which were a principal raison d'être for its involvement in the programme.

The programme developed a high level of NZ-based expertise in coalfield assessment. Some of the technical work on studying coal properties, developing computerised techniques for analysing geophysical downhole logs, and understanding depositional coals on coal seam formation, was of world class.

The objectives of the programme were mostly met. Certainly, the coal resources of the country were fairly thoroughly explored and the results well documented. Coal quantities are generally well understood in terms of coal-in-ground and technically mineable coal, and the present national inventory of coal resources (Barry et al. 1994) using the classification system developed by Sherwood (1987) is a major outcome of government investment in the NZCRS. The objective of stimulating the development of the coal mining industry in New Zealand continues to be met as commercial opportunities are taken on the information base generated by the NZCRS. Whether good resource manage-ment practise takes place in an economic climate now very different to the centralised energy planning and development in which the NZCRS was conceived remains to be seen.

Coal Resources in the Next Millennium…

With great changes in the role of government and the economic management of New Zealand since the inception of the NZCRS programme, and the passing of nearly a decade since it was completed, the outcomes have to some extent been submerged by events. In fact, its achievements can hardly be overstated. Few countries in the world have such confident knowledge of their coal resources as New Zealand. At the time of central government-led planning, the Mines Department took the long view that knowing the country's coal resources was of economic and strategic benefit. Current market-driven economics would have taken the view that the market will take opportunities as they arise and there is no benefit in knowing what resources are available until there is a market requirement. What the NZCRS provided is a springboard for market opportunity, but more importantly, a long-term hedge against changes in economic and political direction. Private enterprise would never carry out exploration on a scale remotely close to the NZCRS programme.

The role that the development of coal resources will have in the New Zealand energy budget in the future cannot be predicted. In the short term, there may be little change, although there have been considerable recent fluctuations in the amount of coal used for electricity generation, and the continuing reforms of the electricity sector could see further changes in coal demand. In the medium term, a great deal depends on continuity of gas supplies, currently dominated by Maui production. What is certain is that the status quo will not prevail indefinitely. At present the coal industry is dominated by Solid Energy's operations which have a strong export component in the current climate of falling world coal prices. There is potential for considerable changes in production, both for export and domestic markets, although high underground mining costs are a significant constraint. As a result of the NZCRS, market opportunities can be much more readily assessed in terms of resource availability. More importantly, New Zealand can count on its coal resources if it has to.

References…

Extensive referencing is not given in this article, although some key references are given. Readers are referred to a published New Zealand coal bibliography (Boulton 1987) and the computerised bibliography and library of unpublished NZCRS reports maintained by Crown Minerals, Ministry of Commerce, including the detailed account of Taylor (1997) from which this article is partly derived; to the most recent published summary of New Zealand coal resources (Barry et al. 1994); to the series of published NZCRS summary reports, also available from Crown Minerals, Ministry of Commerce; and to the coalfield publications available from the Institute of Geological and Nuclear Sciences.

Barry, J.M., Duff, S.W., Macfarlane, D.A.B. 1994. Coal resources of New Zealand. Resource information report 16. Energy and Resources Division, Ministry of Commerce.
Boulton, G. 1987. Coal bibliography. Coal geology technical report 1. Resource management and mining, Ministry of Energy.
Isaac, M. 1990. Lignite resources of Eastern Southland. NZ Geological Survey miscellaneous series map 20.
Kirk, P.A. 1988. Waikato Coal Region coalfields and resources NZ Geological Survey miscellaneous series map 17.
Sherwood, A.M. 1987. Classification of coal resource quantities in New Zealand. Coal geology technical report 2. Resource Management and Mining, Ministry of Energy.
Taylor, P.C. 1997. The New Zealand Coal Resources Survey programme 1976-89. Unpublished report, Ministry of Commerce.

Used with permission of Crown Minerals, Ministry of Commerce www.crownminerals.govt.nz