Jeremy Hutton: Milford Asset Management Equities Analyst on the biorefinery to be built at Marsden Point

A proposal to re-develop Marsden Point's decommissioned refinery is being considered.

Channel Infrastructure NZ recently entered a conditional agreement with Seadra Energy to create a bio-refinery at the Northland site. 

Seadra would purchase it for about $53-million and use some existing, decommissioned assets like tankage and jetties.

Milford Asset Management's Jeremy Hutton unpacks what this could look like.

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Episode Transcript

Speaker 1 (00:00):
Twenty three past six on newstalk ZEDB before seven o'clock,
we will tell you about the government's new push to
get counsels to do more building inspections remotely but in
renewable fuels. News. Channel Infrastructure has announced a potential biorefinery
at Marsden Point. Jeremy Hutton from Milford Asset Management is
with usnawagaday. Jeremy, Hi, Jack, Yeah, talk to us about this.

Speaker 2 (00:23):
Channel Infrastructure, which is now a fuel importer and a
fuel storage provider based at the old New Zealand refinery site,
announced this biorefinery project yesterday. So a consortium of international
companies are looking at developing this site and they're looking
to produce some sustainable aviation fuel for Australian airline contests.

(00:43):
There are a few others in the consortium, Renover and
Keen Energy. They're both experts and building renewable fuel projects
around the world, and an z is likely involved to
produce the finance as well. But effectively, what they're trying
to do is utilize some of the old decommissioned refinery
assets and produce sustainable aviation fuel, which is very exciting

(01:05):
and quite a good use of the old TETs. But
there are still a few unknowns like whether the biofuel
be used locally or concerts will want to ship it
back to Australia. But investors really like this announcement and
they sent the Sheare price up almost ten percent yesterday.

Speaker 1 (01:19):
Yeah, that's amazing. So how does Channel bring in revenue
from this? How does the process actually work?

Speaker 2 (01:27):
Yeah? So remember Channel is an infrastructure provider now only,
and the revenue it earns from this and other projects
are quite similar effectively renting out their storage units, companies
using their land for rents and the use of their
pipeline and their jetties as well. And this creates a
really steady and predictable revenue stream which certain investors will

(01:48):
really really like. But there is an upside for Channel
when this project displays it. They've got a lot of
land and a lot of that's consented, which, let's face it,
is very important these days. They've got the concent to
effectively expand more future energy and more future fuels on
the site and they're calling it the MARSS and Energy Precinct.

(02:09):
Now for the local communities, this is really good news
as well. There's potentially a lot of a lot more
local manufacturing and heavy industry's jobs returning and almost a
reindustrialization coming back to New Zealand with a linkage to
more sustainable fuels. Is it.

Speaker 1 (02:24):
What's next to the project and the Channel infrastructure?

Speaker 2 (02:27):
Yeah, I note that the project is still conditional, but
it's gone a long way, but they're still financing to
organize and they're aiming to push go on this construction
in the second half of next year. The Channel's also
got some further plans afoot. They've got an invest today
wind up later this month which will dealve into this
energy precinct a bit more. But from this news, I
think it's clear that international companies that are focused on

(02:50):
this area globally of renewable fuels are very attracted to
the Mars and Point site. You've got Ossi Energy, Giant,
Fortished View also looking hard. But with the quantests and
the sustainable aviation fuel projects, the future is potentially very
promising up here.

Speaker 1 (03:07):
Any idea, Jeremy, when they might actually be producing this
sustainable fuel or this biofuel.

Speaker 2 (03:16):
Yeah, hopefully pretty soon. They're doing a lot of testing,
still in a lot of internal work with this consortium,
but yeah, construction starting second half of next year, and
hopefully not too long after they're producing.

Speaker 1 (03:29):
Yeah, no, very good. Hey, thanks, Jeremy, appreciate it. For
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