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Rural and Regional Affairs and Transport References Committee
DEPARTMENT OF PRIMARY INDUSTRIES AND ENERGY
Program 1—Sustainable development of primary and energy resources
- Committee Name
Rural and Regional Affairs and Transport References Committee
DEPARTMENT OF PRIMARY INDUSTRIES AND ENERGY
Program 1—Sustainable development of primary and energy resources
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Table Of ContentsPrevious Fragment Next Fragment
Rural and Regional Affairs and Transport References Committee
- Start of Business
DEPARTMENT OF PRIMARY INDUSTRIES AND ENERGY
Program 1—Sustainable development of primary and energy resources
- Subprogram 1.7—Fisheries
- Subprogram 1.8—Petroleum
- Subprogram 1.9—Coal and minerals industries
- Subprogram 1.10—Energy
- Subprogram 1.11—Portfolio management and policy
- Subprogram 1.12—Geoscience research and mapping
- Subprogram 1.13—Agricultural and Resource Economic Research
- Subprogram 1.14—Resource sciences research
- Program 1—Sustainable development of primary and energy resources
Content WindowRural and Regional Affairs and Transport References Committee - 11/06/98 - DEPARTMENT OF PRIMARY INDUSTRIES AND ENERGY - Program 1—Sustainable development of primary and energy resources - Subprogram 1.8—Petroleum
CHAIR —Welcome, gentlemen.
Senator ALLISON —I would like to pursue some questions relating to shale oil mining tenements on the Queensland coast. Can I ask you whether petroleum excise has been waived for any mining companies in that region?
Senator Parer —Sand mines do not come under this portfolio, but there might be someone who can answer it.
Mr Pickering —Perhaps I could provide some clarification. In 1991 the government made a provision that the first 600,000 barrels per year of petroleum product excise on gasoline would be exempt from product excise—
Senator ALLISON —Sorry, would you mind giving me those figures again?
Mr Pickering —The first 600,000 barrels per year of gasoline would be exempt from excise to the year 2005.
Senator ALLISON —Is that a blanket exemption? Is anyone entitled to that exemption?
Mr Pickering —It is for any production of gasoline from shale oil. At this stage it has not been utilised.
Senator ALLISON —What about petroleum products?
Mr Pickering —That is the gasoline, Senator.
Senator ALLISON —I thought gas was gas and petroleum was petroleum.
Mr Pickering —No, sorry—gasoline, petrol, unleaded and leaded petrol, refined.
Senator ALLISON —So the products that come from shale oil are also—
Mr Pickering —It only applies to the petrol as I understand it. If there are other products from the shale oil—
Senator ALLISON —Such as?
Mr Pickering —I am not an expert in refinery operations so I am not sure what would come from the naphtha which would be produced but there may well be other products such as aviation turbine fuel or something like that, or diesel, that would not get that exemption, as I understand it. The exemption applies to petrol, gasoline.
Senator ALLISON —You said that no[hyphen]one has taken up this—by the way, when was that exemption given?
Mr Pickering —That exemption was introduced in 1991. It has not been utilised as yet.
Senator ALLISON —What is the process for utilising it? What has to happen?
Senator Parer —Produce oil.
Senator ALLISON —Is there some preliminary process that needs to be gone through? Does the mining company need to inform the government that they will apply for it?
Mr Pickering —A regulation has been put into the relevant customs legislation to enable that exemption to be utilised when gasoline is first produced from shale oil.
Senator ALLISON —A regulation has to be introduced?
Mr Pickering —A regulation has been introduced, as I understand it.
Senator ALLISON —I am still not clear about the process.
Mr Pickering —I am not sure. I would have to take that on notice, or it might be a question for the customs agency to deal with.
Senator ALLISON —That first 600,000 barrels is the figure regardless of the total size of the field? Does this apply to a small field as well as a large one? Does it make any difference?
Mr Pickering —No, I understand it is the first 600,000 barrels from that project.
Senator ALLISON —What is that worth in terms of the excise? What is the excise?
Mr Pickering —The excise currently on unleaded petrol is 43c approximately—
Senator ALLISON —Per barrel?
Mr Pickering —No, per litre.
Senator ALLISON —How much would it be on 600,000 barrels?
Mr Pickering —Approximately $42 million per year.
Senator ALLISON —Minister, perhaps I could ask you: do you intend to change this exemption at all?
Senator Parer —No, we do not. If I can take you back a bit, this oil shale has been on the books for over 20 years. The deposits have been known. The major deposit which is currently the basis of a pilot plant is at Port Curtis. Have you ever been to Port Curtis?
Senator ALLISON —Not Port Curtis, no.
Senator Parer —I will tell you where Port Curtis is. It is smack almost in the middle of the Gladstone harbour which is probably one of the biggest ports in Australia in regard to bulk—
Senator ALLISON —I am familiar with Gladstone.
—Port Curtis is Gladstone. And the project was always going to happen. What has occurred in recent times is that the so[hyphen]called oil shale twins have brought into them a company called Suncor which have had a long history of mining tar sands. The process is different. It is a dry process. It is not the same as doing tar sands. They are in the process of building a $250 million pilot plant which I think is looking at about 4,600 barrels of oil a day.
The technology is in its infancy. If it is successful it will mean that we will have a major project for providing oil into Australia and if that does happen you are looking at very big investments—billions—with the anticipated output for the full[hyphen]scale project at about 86,000 barrels a day. That is where it sits.
One of the things I would have to say to you, Senator, is that I am a little bit surprised at you because you are usually pretty straight down the middle. But I saw your press release that came out the other day which has in it what I could only term some pretty outrageous statements and I just wonder—
Senator ALLISON —Yes, Minister?
Senator Parer —It is unusual for you to do that.
Senator ALLISON —I have got some more questions about the excise. I am happy to go on with that.
Senator Parer —One of the things you have got in it here is talk about mining or drilling on the reef—and my position is exactly the same as the Prime Minister's and exactly the same as Senator Hill's: there will not be any mining or oil exploration on the barrier reef. But then you go on to say:
. . . our information is that the potential of these reefs—
and you are talking about coral reefs—
to be appraised is actually being driven through the Federal Minister for Resources.
That is an outrageous statement.
Senator ALLISON —I am sure you will tell me, Minister, whether it is being driven by you or not.
Senator Parer —When you say `our information', where is your information coming from?
Senator ALLISON —Perhaps we will get to that.
Senator Parer —I would like you to answer it. You put these press releases out with attachments to them and it is just patently not true.
Senator ALLISON —I am glad to hear that, Minister. That is reassuring.
Senator Parer —Then you go on to say:
There is no doubt they wanted to keep this quiet until after the Qld and Federal elections.
That is nonsense. It is fairies at the bottom of the garden.
Senator ALLISON —Can I ask you minister, just getting back to this excise, what is the purpose of that exemption? What is the rationale behind it?
Senator Parer —You have a resource that for 20 years or more has been marginal—and, I might say, that this is still marginal. Last year at the energy ministers' conference, I went to visit Suncor in Canada and had a look at their operations. Basically, they indicated to me that from a financial perspective they would be better off expanding their operation for their tar sands at Athabasca in Canada. But they felt that, of all the shale deposits around the world, this had the potential to be one for the future and that they would—
Senator ALLISON —Is this Athabasca or the Queensland coast?
Senator Parer —The Stuart deposit at Port Curtis. Therefore they would be prepared to take the risk and put the money into it. It is an alternative form of oil. This country relies on oil. I know the views you have on alternative energy, some of which I do not disagree with, although I do on some of the more bizarre, outrageous—
Senator ALLISON —Yes, but what is the purpose of the exemption? That is what I am asking.
Senator Parer —It is to make it economic.
Senator ALLISON —So it would be fair to say that this exemption is to encourage mining. That is what you are saying, is it not?
Senator Parer —Of course, yes. The same as there is no excise on ethanol.
Senator ALLISON —Yes, that is right. What sort of contact has your government had—you have already talked about Stuart—with other shale mines so far in terms of tenements?
Senator Parer —Personally, I have had none. I do not know if anyone else has. No, none.
Senator ALLISON —Apart from the Stuart, you are not familiar with any other developments?
Senator Parer —No.
Senator ALLISON —What about the Condor and the Rundle proposals?
Senator Parer —Rundle, if my memory is correct and I stand to be corrected, is owned by Southern Pacific and the other partner. The proposal at this stage is for the pilot plant at the Stuart deposit. These are leases that are issued by the Queensland government; they are onshore and they are renewed by the Queensland government.
Senator ALLISON —The federal government has no involvement at all?
Senator Parer —Not really, no.
Senator ALLISON —So these could go ahead without your knowledge even?
Senator Parer —We would be appraised of it because of our project facilitation branch.
Senator ALLISON —What are the federal government's obligations, if any?
Mr Payne —If I could intervene there; one involvement for the federal government is the foreign investment approval process which was a factor for Stuart because Suncor is a foreign company. Apart from that, I am not aware of any other Commonwealth approvals that have been involved to this stage with that project or the others.
Senator ALLISON —What acts prevail over this activity? Are you saying it is none at all and that your department is not involved in any way?
Mr Payne —Yes. That is correct. There is nothing for our portfolio. These projects would not be subject to the Petroleum (Submerged Lands) Act, which is the main petroleum development legislation that our portfolio is responsible for.
Senator ALLISON —Apart from the excise, are there any subsidies, federal grants or any financial involvement by the federal government?
Senator Parer —Not to my knowledge.
Senator ALLISON —Not in the Stuart?
Senator Parer —Not to my knowledge, but someone else might help.
Mr Banfield —Not to my knowledge, but I could not rule out that there might be some R&D component to it. I am certainly not aware of the detail of that, if that is the case.
Senator ALLISON —Is there somebody here who would know that?
Mr Banfield —We could check whether there is any other federal involvement, but certainly not within the responsibility of this portfolio.
Senator Parer —Certainly not within this portfolio.
Senator ALLISON —So if this were R&D, you would expect there to be R&D for the pilot project?
Mr Banfield —You asked whether there was any Commonwealth involvement. I said to my knowledge the answer is no, but I cannot rule out that there might not be some R&D component or some other similar sort of assistance. Again, I do not know, so I really would not want to comment on that.
Senator ALLISON —Does that come under energy or geographical research and mapping?
Senator Parer —It is not within this portfolio at all. If there was an R&D component, it would be in DIST.
Senator ALLISON —It is fairly surprising, if there was R&D involved in petroleum exploration, that your department would not know anything about it, isn't it? I find that a bit difficult to accept. I have heard the answer; that is a comment.
CHAIR —This is all hypothetical and the best thing to do is to write to the appropriate minister and ask him the question. Then you can get the answer.
Senator Parer —I would say it has got what we call a major project facilitation status.
Senator ALLISON —And what does that mean?
Senator Parer —It does have major project facilitation status. Mr Banfield will explain that to you.
Mr Banfield —The project does have major project facilitation status under an arrangement which has been ongoing for some time. The government grants major projects facilitation status. This is a joint cooperative arrangement between the minister for industry and the Minister for Resources and Energy in the context of resources and energy projects.
The aim is to facilitate approvals processes for major projects. There are certain criteria in terms of the qualification for major project facilitation status, but to my knowledge we have not been requested to undertake any facilitation activities on behalf of the Stuart oil shale project at this stage.
Senator ALLISON —You are telling the committee that because that is the way that your portfolio gets involved in R&D. This is not related to Stuart.
Senator Parer —No. It is not R&D.
Mr Banfield —No. It is not R&D. This is project facilitation. There is a range of R&D programs which the government has which covers the broad suite of agriculture and resources and energy, through to and including things like the CSIRO which the Commonwealth funds. As the minister indicated, this portfolio is not directly involved in R&D support for the Stuart oil shale project.
Senator ALLISON —I am still not quite understanding why you mentioned the major project facilitation status.
Mr Banfield —You asked whether there was any government support. What we are explaining is that, under an initiative of the government, major projects can seek major project facilitation status from the government, which is designed to facilitate and streamline any approvals processes that might be required and to encourage the early development of projects.
Senator ALLISON —It is to encourage or at least facilitate the approvals process. What sort of approvals?
Mr Banfield —There are a variety. Again, I am talking in the generic and not specifically in relation to Stuart shale oil. There can be environmental approvals, issues of foreign investment and a whole range of Commonwealth approvals which might be required where the Commonwealth can play a constructive role in encouraging the early development of projects. What we do is coordinate and facilitate, but it does not necessarily involve any Commonwealth funds.
Senator ALLISON —What sorts of projects have been through this facilitation process recently?
Mr Banfield —The program has been ongoing for some years. It has been revamped by the government. You might be aware that the Prime Minister appointed Mr Bob Mansfield to facilitate major projects of national importance. There are several arms to the approach, if you like. Mr Mansfield, in conjunction with Senator Parer and Minister Moore, is working on several projects. In parallel with that the Department of Industry, Science and Tourism and this department is working to facilitate—
Senator ALLISON —So which are they?
Mr Banfield —Which projects?
Senator ALLISON —Yes. What are the most recent? Can you give me some examples?
Mr Banfield —Again, I would not want to be definitive, but I can give you a couple of examples. In the case of the exercise that Mr Mansfield is undertaking, it is the proposed expansion of the North West Shelf, the proposed Gorgon project. He is also actively involved in the proposed gas pipeline from Papua New Guinea down to Gladstone. Comalco has proposed an alumina refinery at Gladstone. That sort of project.
Senator ALLISON —Any related to petroleum exploration?
Mr Banfield —The North West Shelf and Gorgon.
Senator ALLISON —What is Gorgon? Can you explain what it is?
Mr Banfield —Gorgon is a proposed liquefied natural gas development located geographically near the North West Shelf based on a similar proposal to extract the gas offshore, convert it into liquefied natural gas and export it.
Senator ALLISON —But Mr Mansfield has not been involved in any shale oil mining proposals?
Mr Banfield —To my knowledge, no.
Senator ALLISON —I am not quite sure what this facilitation process involves. Is it a fast tracking? How does it work? Why is it that it is necessary for those projects that you have mentioned to go through this process? Don't we have normal processes? What is so special about these that Mr Mansfield needs to be involved in them?
Mr Banfield —Very briefly, the intention is to provide a whole of project focus on these very large projects. Historically, if several approvals were required extending across several departments—for example, an environmental approval, a foreign investment approval or something perhaps to do with Aboriginal or native title issues—there is a potential for each issue to be considered in isolation.
The net result was that the approvals process was not necessarily well coordinated. There were inevitably delays to the approvals process, which effectively meant that major projects which can provide significant benefits to the economy were not getting up and running as quickly as the government would hope.
Senator Parer —A good example would be the Chevron gas pipeline out of PNG, which involves discussions with the PNG government, the Queensland government and the companies. That also involves legislative changes and things like that which need to be addressed. It needs to be addressed promptly for it to be achievable.
The other plus is the very fact of government giving project facilitation. It is important to them from the point of view of buyers. So, if you give project facilitation to a project like Gorgon, this sends out proper signals to the Koreans, the Japanese and others in their efforts to purchase LNG from a greenhouse perspective among other things in a very competitive world out there. It has the imprimatur of the government on it.
Senator ALLISON —Mr Mansfield is a consultant to the Prime Minister's office, is that right?
Senator Parer —He works out the Prime Minister's office, yes.
Senator ALLISON —Is he employed by the Prime Minister's office? Who is he directly responsible to?
Senator Parer —The Prime Minister. We work as a whole of government approach. It is a three[hyphen]way arrangement, apart from reporting direct to the Prime Minister, between Mr Mansfield, Minister Moore and me.
Senator ALLISON —Is there a minimum or a maximum size of a project before it is designated as a major project facilitation status? What gives it that status? How big do you have to be?
Mr Banfield —Historically, there were three. When the project operated within the purview of the industry department, there were three key criteria: firstly, investment in excess of $50 million had to be involved; secondly, Commonwealth approvals were required; and, thirdly, it had to be deemed to be commercially feasible, viable. In the project facilitation division within DPIE, we have not taken such an approach. We facilitate projects where we think there is a useful role that we can perform. We do not have within our division specific benchmarks where projects qualify or otherwise.
Senator Parer —Just as a demarcation for you, the agreement reached between Minister Moore and me is that we look after, say, mining projects up to a metal stage, and any other projects regarding industry are the responsibility of the department of industry. The other thing is that Mr Banfield also has project facilitation, which looks at all projects and it may not necessarily be major project facilitation. Where people want to come and discuss the development of a new project, if they think it is beneficial, they will come and see Mr Banfield.
Senator ALLISON —So the investment needs to be $50 million. Is the Stuart pilot project $50 million?
Senator Parer —It is $250 million.
Senator ALLISON —So that would qualify, presumably.
Senator Parer —Yes.
Senator ALLISON —But are we certain that that has not been designated as one of these projects?
Senator Parer —Not from Mr Mansfield.
Senator ALLISON —Is there another facilitator.
Senator Parer —This is what they call major project facilitation, which has got status.
Senator ALLISON —So what does the status mean, if Mr Mansfield is not involved?
Mr Banfield —Briefly, Mr Mansfield can only physically deal with a limited number of projects. He is not supported by a large bureaucracy so he takes the very major projects, which have national catalytic benefits. Putting that aside, there are a range of projects, including the Stuart oil shale project, which can qualify for major project status and where, at a departmental level, action is taken to facilitate the approvals process, in consultation with the ministers, of course.
Senator ALLISON —So it would qualify or it has qualified? I am still not sure.
Mr Banfield —It has qualified.
Senator ALLISON —So it has this status.
Mr Banfield —It has this status.
Senator ALLISON —In the case of Stuart, what does that mean? Who is facilitating the process? Who is assisting to get this through?
Mr Banfield —It rests with the project facilitation division.
Senator ALLISON —Is that in your department?
Mr Banfield —Yes.
Senator ALLISON —Is there somebody here, a representative from that division?
Mr Banfield —Yes, there is. But to my knowledge, and Mr Burns might like to add to what I say, we have not been requested to actively get involved in the project at this stage. We operate on the basis that there is a service that we provide if companies wish to avail themselves of it. If they are happy with the way things are progressing, we do not wish to create a role for ourselves where there is not necessarily one for us. Mr Burns might like to add to that.
Mr Burns —We have only taken over responsibility for this project since there has been a resolution of demarcation issues between the Department of Industry, Science and Tourism and ourselves, which the minister just referred to.
Senator ALLISON —How long ago was that?
Mr Burns —Three or four months ago we formally took over responsibility for that project from DIST. Since we have taken over responsibility we haven't had any contact with the company, and the company hasn't approached us. What the company would have received originally was a letter from Minister Moore granting that status. That status would have entitled that company to avail themselves of the services of DIST at that particular time to organise meetings with other relevant departments to pursue issues such as environmental approvals. But, as I understand it, there have been no requirements for that in recent times.
Senator ALLISON —Hasn't the pilot project commenced?
Mr Burns —If the project has commenced, there are obviously no more approvals to be involved. In fact, we are in the process of formulating letters to write out to companies to ask them if they still require MPF status. Stuart will get one of those letters. If all their approvals are completed, there is no reason why they would still have that status. But we are going through a stocktaking process at present to see if they should still be there.
Senator ALLISON —So which other shale oil mines will be involved in this stocktaking process? Who else are you writing to?
Mr Burns —There are no other shale oil mines involved because we are only writing to those companies which have this MPF status, and Stuart is the only one that has it.
Senator ALLISON —So the Condor or Rundle mines are not in that category?
Mr Burns —No.
Senator ALLISON —Is that just because it is too early on in the process?
Mr Burns —Companies have to request that status. It is not just given out. If the companies haven't requested it and put up a case for it, there is no reason why they would have it.
Senator ALLISON —Minister, you are familiar with the location of the Condor, Stuart and Rundle mines, of course. These are on the coast of North Queensland and in central Queensland. Is it a fact that each of these mining tenements is on the coast? Can you tell me which of those mining tenements goes down into the world heritage property area?
Senator Parer —I did see a press release put out today by the Australian Conservation Foundation with a map that I find unintelligible, but that is not surprising. The issue of mining tenements on shore out to the low water mark is the prerogative of the Queensland government. Many of these tenements, whether they are leases or whatever they are—I presume they are leases—have been in existence for many years. I understand that the Queensland government did renew some of those leases, which they do after a period of 20-odd years or so. The only involvement that we would have in it would be—it would be an involvement really by the Minister for the Environment; and I understand that you probably questioned him at some length in the estimates, and I didn't read that—where there would be any problems in regard to the reef. The Prime Minister, Senator Hill, me and, I might say, the mining industry, have indicated that they will not drill for oil or anything like that on the barrier reef. That position has not changed. This is why I take objection to the throw-away lines being put out by you in an election campaign in Queensland, obviously to try to beat up something that isn't there.
One remark you made was: `Money has also been allocated in the federal budget to assess off-shore oil potential.' The imputation there is that we have put money aside to drill in or around the environs of the barrier reef. Nothing could be more wrong. When I saw those remarks, I checked with AGSO to see whether they were doing any work. I didn't expect them to be, because the work we are talking about is the continental shelf type work for prospective areas that we then use for pre-competitive bidding.
Senator ALLISON —Minister, do we have AGSO—
Senator Parer —AGSO will come along and they can tell you themselves.
Senator ALLISON —I have some questions on that, Minister.
Senator Parer —My understanding is that they have not done any work up there in any capacity, and they do geological work in a lot of areas and have done since 1990.
Senator ALLISON —I would like to ask some specific questions about that when we come to it.
Senator Parer —You put these statements out; you need to justify them.
Senator ALLISON —I would really like to—
CHAIR —Let the minister finish his answer.
Senator Parer —You say:
. . . our information is that the potential of these reefs to be appraised is actually being driven through the Federal Minister for Resources.
I would like to know where you got that information? If it is not correct, would you please correct it?
Senator ALLISON —I would be happy to correct it if you can give me that reassurance.
Senator Parer —I want to know. You said:
. . . our information is that the potential of these reefs to be appraised is actually being driven through the Federal Minister for Resources.
That is, for drilling in the barrier reef.
Senator ALLISON —The Minister for the Environment in answer to my questions the other day seemed quite enthusiastic about the prospect.
Senator Parer —I am enthusiastic about the development of the oil shale deposits. But what you are talking about here is a thing called a `Townsville trough' on the Capricorn Basin, and you are saying that the potential for these reefs to be appraised is being driven by the minister. I want to know where that information came from because wherever it came from you are being told a bare[hyphen]faced lie.
Senator ALLISON —If you are happy to reassure me that none of that is correct—
Senator Parer —No. I am asking you, when you put out a press release you say, `our information'—
Senator ALLISON —As I understand it, estimates is not about you asking me questions. I am happy to come to that question a little later. I am sure you will be able to fill us in much more—
Senator Parer —It does destroy your credibility when you put out that stuff.
Senator ALLISON —I think not. Getting back to the question of the shale oil tenements, you have said that you would not be interested in supporting a proposal which had the likelihood of damaging the Great Barrier Reef. You hinted a little earlier about the process involved in shale oil mining and processing for oil extraction. Can you outline the process which is being conducted for the pilot study at Stuart? As I understand it, this process is not a dry one.
Senator Parer —On the model of the pilot plant that I saw—and someone else here can add to the technical side if you are interested—there is a massive retort. Shale is shale. It is basically inert. The oil is locked up in shale unless you heat it up to a temperature of about 500 degrees. Shale, by its very nature, also has the capacity to burn because it has a carbon content. Once they get the process going, it is a big retort. It goes up to 500 degrees and then it becomes almost self[hyphen]perpetuating because the heat generated from the burning of the carbon actually releases the oil and you then have the shale less the oil. That really is a simple description of what I saw on the model of the pilot plant. Someone else might like to add to it, but that is my understanding of it. There are no heavy metal concentrates, such as cadmium or mercury. Shale is a pretty inert sort of material. You do not release anything unless you heat it up and get the oil out of it.
Senator ALLISON —Does it have to be crushed first?
Senator Parer —Yes.
Senator ALLISON —Crushed and then brought to 500 or 600 degrees?
Senator Parer —Yes.
Senator ALLISON —Then what happens after that?
Dr Lambert —The process we are talking about is basically a dry retorting. The end product is a crude oil equivalent and that is condensed from the 500 degrees to the crude oil. The residual product is a gravel[hyphen]like silica and clay which are put back into the open pit from which the original mining took place. They have already done trials on refilling and rehabilitation of a small pit in the area very successfully.
Senator ALLISON —How is the material cooled down?
Dr Lambert —There are cooling towers.
Senator ALLISON —Is it a dry process?
Dr Lambert —No, they are water cooling towers, but it is a minimal use of water.
Senator ALLISON —In what sense is it dry? Why do you say it is dry?
Dr Lambert —Basically, there are wet ways of extracting oil and there are dry retorting processes.
Senator ALLISON —Through steam or something, is it?
Dr Lambert —The processes that have been trialled overseas are often much more intensive in their use of water. This process was adapted from a Canadian process and a demonstration plant is currently being built, as the minister said. If that demonstration plant is successful, then the project is a goer. If that demonstration plant is not successful, the project is simply not a goer.
Senator ALLISON —So the wet process is one using steam and this does not use steam?
Dr Lambert —No, it does not.
Senator ALLISON —But that is what you refer to as a wet process—steam?
Dr Lambert —Yes. I do not know the details. There are a whole range of possible processes on which I am not expert. But this particular process is what is referred to as `dry retorting'. As the minister said, oil is extracted and there is still some residual organic matter in the shale which is used in heating the retort.
Senator ALLISON —So the preference for a dry system is that you do not need as much in terms of water resources. Is that the main reason?
Dr Lambert —That is right.
Senator ALLISON —With this dry system there is still a need for water in the cooling process?
Dr Lambert —Of course.
Senator ALLISON —What happens to that water?
Dr Lambert —It is recycled on the site.
Senator ALLISON —Is there any need for dams for containment of water?
Dr Lambert —There are no tailings dams involved at all.
Senator ALLISON —So the water is recycled endlessly, is it?
Dr Lambert —In the plant, yes.
Senator ALLISON —Does it end up having any contaminants?
Dr Lambert —No. It has no significant levels of contaminant. Of course, when you have water in contact with metal and other products, you will pick up minor amounts, but it meets—
Senator ALLISON —Minor amounts of what?
Dr Lambert —Iron, manganese, sulfate. There are a range of things that will potentially be picked up, but all of those are present in the natural ground water.
Senator ALLISON —Presumably, you cannot go on recycling the same water. How do you extract this material from it?
Dr Lambert —This is cooling water. We are not extracting with it. We are condensing the heated—
Senator ALLISON —Some materials pass into the water. How do you get rid of those materials, or do you not bother? For how long can you recycle the same lot of water?
Dr Lambert —They are at such low levels that, effectively, one does not ever have to remove them. If there is to be water at any stage released from this project, it will have to meet the licence conditions for that. They would not be permitted to release water that was dangerous.
Senator ALLISON —They have to have licence conditions to release water?
Dr Lambert —Basically, we are talking about a plant. If it does have to release water for any reason, there would be limits put on the composition of the water that could be released. It would have to be below specified levels of any potential toxic substances. It would not be allowed to be released if it exceeded those levels.
Senator ALLISON —Are there any other shale oil mining operations using this process, or is this a first for Australia?
Senator Parer —This is a new process. It was developed by Suncor. It is not the same process as the tar sands process; it is a different one. It is a pilot plant.
Dr Lambert —It is a demonstration plant based on the technology that has been developed in Alberta.
Senator ALLISON —So this pilot plant will allow an assessment of the water use for likely contaminants? Is that the purpose of the pilot plant, or is that just to assess viability? Will your department get involved in assessing the worth of this process?
Dr Lambert —It is a commercial operation. It is trying to see whether it can extract the oil material from the shale in a way that is going to make it a commercially viable operation. It is the key step that has to be conducted before the company knows whether any of these shale oil deposits can be developed.
Senator ALLISON —The Great Barrier Reef Marine Park Authority has expressed a fairly high level of concern about shale oil processing on the Queensland coast because of likely damage to the reef. Do you not think that the federal government should show more than a passing interest in the process in terms of its environmental outcomes?
Senator Parer —I think that aspect of it, as regards the Great Barrier Reef Park Authority, was covered by Senator Hill in the estimates. We do not run the whole of Australia, as you are aware. There are requirements in Queensland and they are very stringent requirements.
Senator ALLISON —The purpose of my asking you, Minister, is to find out what involvement your department has. You have assured me on several occasions already this morning that you would not allow anything which would damage the reef. I need to know to what degree your department is serious about this.
Senator Parer —You are taking that to extremes. We do not have any involvement in that aspect of it.
Senator ALLISON —But you have just assured me that you would not allow anything to go on if it would be damaging.
Senator Parer —I have made a remark that we—when I say `we', it is the Prime Minister, the Minister for the Environment, me, industry itself—have no intention of mining or oil drilling on the barrier reef. But when it comes to protection matters, for example, the Great Barrier Reef Marine Park Authority, that becomes the prerogative of Senator Hill.
Senator ALLISON —But, Minister, you have told me that this is a dry process and so it is not a threat. It is much improved on a wet process.
Senator Parer —We are giving you the information we have on how this pilot plant is to be built. But what it is all about really is determining whether a pilot plant can be developed into a full[hyphen]scale plant.
Senator ALLISON —I suppose so. I would like to be assured, Minister, that your assessment of the pilot plant is not simply whether it is viable.
Senator Parer —We are not assessing the pilot plant.
Senator ALLISON —Obviously. I am not sure then how you can be so reassuring. You have some enthusiasm for this process, but a reluctance, apparently, to know too much about it.
Senator Parer —That is a bald statement.
Senator ALLISON —I invite you to expand on that, Minister. You have said that you do not know much more about it. You do not essentially want to be involved, that it is not your role, that this is something that is up to—
Senator Parer —No. You are coming from a different angle. We do not have a resource at this stage. Until something is economically viable, it is not a resource. But there are large[hyphen]scale reserves of oil shale up in that part of Queensland. Apparently, from the advice that I have been given by people like Suncor, it probably is one of the better oil shale reserves around the world. They are looking at it from a pilot plant point of view which, if successful, will add significantly to Australia's reserves of oil. That is my interest in it.
Senator ALLISON —So you would be fairly enthusiastic about getting this shale oil mining going?
Senator Parer —Very, and so should everyone in Australia. You do not want to rely on some other country down the track for your supplies of essential liquid fuels.
Senator ALLISON —You have encouraged these mining companies? What has been your role in—
Senator Parer —They have been to see us. They have explained the process. I had a look at the model of the pilot plant. I took the opportunity in Canada last year to visit the company that is becoming involved with Southern Pacific and Central Pacific, and I met Sir Ian Macfarlane.
Senator ALLISON —You do not think that there are any risks at all, even though some of these tenements go into the world heritage property?
Senator Parer —Not the Stuart oil shale—the one we are talking about. That does not go into the world heritage area.
Senator ALLISON —It goes into the Great Barrier Reef world heritage property, as I understand it. I have a map here that shows this.
Dr Lambert —I can provide some information on that. There have been longstanding exploration leases which do, as you say, go into that area. The only mineral development licence that has been issued is over Stuart. It is entirely on land and is outside the world heritage property. That is the only valid mineral development licence.
The Stuart project was subjected to an environmental impact assessment, which picked up all of the issues to do with the demonstration plant, and the water. All of these issues were aired back in 1993. That is why the development is continuing on that Stuart valid lease. There are applications which largely cover the old exploration licences. They are applications for mineral development licences which are larger than the existing one and they are present at Stuart, at Rundle and at Condor. They have not been granted to this stage.
Senator ALLISON —Minister, would it not be wise at this stage to clarify the situation to make sure that we do not have any mining in world heritage property areas, and have those areas excised from the mining leases, the licences, or tenements, or whatever we call them? Given the level of concern by the GBRMPA, and by people like ourselves, would it not be useful to excise the world heritage bit out of those licences?
Senator Parer —Our jurisdiction does not cover this area.
Senator ALLISON —I understand that, but you obviously want to encourage shale oil mining.
Senator Parer —Yes.
Senator ALLISON —I know it is the Queensland government's affair but there is quite a level of subsidy possibly in the removal of the petroleum excise. We are not sure about the research and development, although I think there is probably $7 million that has gone into some of this, from our information. The federal government does have an involvement.
Senator Parer —Our jurisdiction, with regard to mineral areas and things like that, covers the offshore areas such as the North West Shelf, the zone of cooperation and so on.
Senator ALLISON —Would you be prepared to approach the Queensland government and suggest to them that this contentious part of the mining tenements be excised?
Senator Parer —You are clutching at straws. We have the Stuart oil shale one which we are looking at right now, which has been explained very carefully to you by the officer at the table. In any particular project, if there are cross[hyphen]relationships between the state governments and ourselves we talk to them. It is the same as when I talk to the Western Australian government about the North West Shelf. You could probably argue about what the Western Australian government is doing but it happens to be off their shores so we talk to them, but it is within Commonwealth jurisdiction.
Senator ALLISON —Yes, I understand that. I am suggesting to you that it might be useful as a way of demonstrating your credibility and integrity in relation to the Great Barrier Reef world heritage property.
Senator Parer —I think that is covered by Senator Hill.
Senator ALLISON —Senator Hill would say that the business of excising mining tenements is not his area, but I leave that as a suggestion.
CHAIR —Before you leave that suggestion, I think, as chair of this committee, it is a bit over the top to be questioning the credibility and the credentials of the minister at the table.
Senator ALLISON —I have suggested, and the minister has said already that—
CHAIR —Senator Allison, it is quite clear that, to do what you are suggesting, you would have to change the constitution.
Senator ALLISON —We do not change the constitution in order to negotiate with a state government over an issue. I am sure that is not beyond the department.
CHAIR —Land management is entirely in the hands of state governments and that is the constitutional law of this country.
Senator ALLISON —I think I understand that. Just changing the topic somewhat, have you considered the greenhouse gas emission implications of the Stuart, Condor and Rundle mines? At what point does your department become interested in the progress of these mines in relation to greenhouse gas emissions?
Senator Parer —This all comes under the Australian Greenhouse Office, which has been recently established, as I am sure Senator Hill would have explained to you. Basically, the director of the Greenhouse Office reports to three ministers—Senator Hill, Minister Moore and me. The office reports through Senator Hill so Senator Hill has the riding on it.
We have put in place certain things that are important. We want to address the Kyoto outcomes. One group that does report to me is the Greenhouse Challenge Office which, irrespective of some of their remarks made by some of the more bizarre people in society, has been a great success. We have put a lot more money into it to expand it out so that people participate in the greenhouse challenge. It has been a success because of two things: it has reduced the greenhouse emissions of a lot of industries that emit greenhouse and it has turned out to be in their commercial interest to do so. We push those two angles.
The other thing is that we require by 2010, or thereabouts, that electricity producers source two per cent of their electricity generation from renewables. A whole lot of other measures were put into place to address it. You talked about oil shale. There are problems in developing gas, and Gorgon is an example. The production of Gorgon gas will emit CO2. Yet that gas will go to countries such as Korea and other Asian countries and reduce the use of other fossil fuels that generate a lot more CO2. This becomes a bit of a problem because here we are generating some CO2 from a major development such as Gorgon—if it goes ahead, it is estimated at about $8 billion—to reduce the CO2 emissions of other countries.
Senator ALLISON —My question though was about shale oil processing and the greenhouse implications of it. Is it fair to say it is a high energy user? What sort of energy is required to extract the oil and how does that relate to the energy that is within the product produced?
Dr Lambert —It is not particularly high in greenhouse emissions because the retorting process does to some extent burn the residual oil in the shale. It is using its own fuel to some degree to heat and extract the oil. It is not a project that is particularly high in greenhouse emissions. There are, of course, some.
Senator ALLISON —I understand that it takes 25 per cent of the energy that is inherent in the petroleum that is produced to produce it. Is that not a factor for greenhouse?
Dr Lambert —Are those figures based on some overseas process or are you being specific?
Senator ALLISON —I am asking you what the figure is. That is the figure that I have read from material that I have seen about shale oil processing. I am asking you about this new process. Is that a fair figure for the Stuart process that is being contemplated?
—One would have to do a full fuel cycle analysis of it to get the answer, and a lot of figures that are pulled out of the air are based on bits of processes. In essence, this process being demonstrated at Stuart would be a lot more greenhouse efficient than many
others that have been tried or are in use around the world, and that relates to the particular properties of the Stuart ore which enables it to be retorted without disintegrating and forming a lot of fine dust which then requires another separation process to get out of the oil and so on. A whole lot of steps are not necessary because of the nature of the Stuart oil deposit and that gives it a considerable advantage over most other deposits in the world.
Senator ALLISON —I raised this question with the Greenhouse Office the other day in estimates and they had not had any advice from your department about this. They did not seem to realise that there might be something that needed calculating and did not appear to see it as their role.
Senator Parer —As the officer has explained to you, it is very difficult to answer that because we do not know the detail at this stage. We are, after all, talking about a pilot plant.
Senator ALLISON —Is it fair to allow mining companies to go ahead with a pilot plant, without doing some sort of assessment on the greenhouse gas emissions? You might find yourself in a position down the track where the pilot plant has been done and is ready to go ahead and suddenly you have to say, `Hang on a minute. It's not acceptable. The greenhouse gas emissions push us over our target.' At what point do you get involved in this discussion?
Mr Banfield —My presumption would be that, were the pilot to proceed to a full scale commercial development, a full environmental assessment process would take place in the context of the plant. All of the issues that have been talked about here this morning would be considered in an exhaustive way in the context of a broad ranging environmental impact assessment process.
Senator ALLISON —So an EIS would go to the question of increased greenhouse gas emissions in terms of the bigger picture?
Mr Banfield —I was answering in the general. I am not aware of the detail. But, generally, in this country any major project that goes ahead is required to undertake a comprehensive environmental assessment process. I would be fairly confident that under Queensland legislation there would be a requirement for that to occur so that all these sorts of issues would be considered.
Senator ALLISON —If this figure is correct—
Mr Alderson —To get to the point of your question with regard to particular projects or companies, the target set for Australia in Kyoto under the protocol, which provides for an eight per cent net growth in emissions over the budget period 2008[hyphen]12 on 1990 levels, is being addressed in a number of ways. The Prime Minister's announcement of 20 November last year announced a wide range of measures. There is also consideration of flexibility arrangements within the protocol such as emissions trading and the clean development mechanism joint implementation. Also, parliament, at the moment, is considering issues associated with a possible domestic emissions trading scheme.
In the context of current government policy, there is no need to look at caps on individual projects or companies. Indeed, it could be argued that that might freeze the structure of the economy. At this stage, there is not a formula that will be applied to individual projects or individual companies with regard to greenhouse gas emissions. But, as my colleagues have mentioned, under normal environmental impact assessment processes, consideration will be looked at what may or may not be reasonable in terms of environmental mitigation, be it greenhouse gas or other issues.
Senator ALLISON —I have heard the figure mentioned of 16 billion barrels of oil tied up in the three tenements we are talking about. You are not able to provide me with a more useful figure than 25 per cent, so what does that add up to in terms of greenhouse gas emissions?
Senator Parer —You cannot extrapolate that. What we are looking at at the moment is a pilot plant, which has to be proved. The aim of the pilot plant is to produce 4,600 barrels a day. To take a reserve, extrapolate it out, and come out with a horrendous figure, which you might like, and which some of the more looney people in the conservation groups might like, is just ridiculous. It is scare tactics.
We are looking at a pilot plant and it has to be proved. A reserve is not a resource unless it is economically viable. So you cannot do that. If you wanted to have an instant fix, which is what you are talking about, you could shut down the steel works at Port Kembla, and you could get rid of all the aluminium industries around Australia, because aluminium is very much energy intensive.
Senator ALLISON —How far into the future do you need to go with greenhouse gas emission target planning?
Mr Alderson —Under the protocol negotiated last December, the budget period for emissions is 2008 to 2012. Negotiations for a second budget period commence in 2005, so one might postulate that for projects you should be trying to look ahead for a second budget period. The reality though is that many of the details associated with the existing protocol relating to a whole range of issues—methodologies, land use clearing, defining arrangements to apply to the flexibility mechanisms, et cetera—still have to be negotiated. As you would be aware, there is a further negotiation—the committee of parties No. 4 meeting—in Buenos Aires at the end of this year. Until those details are settled, and they will have a fundamental impact, it is just not possible to postulate on where we might go after that. The signal I am sending is that over the next couple of years those details need to be negotiated. Negotiations for the second budget period will commence in 2005 and a very big element in that equation will be whether developing countries, who by that stage will be emitting as many if not more greenhouse gases than the developed countries, undertake some commitment.
Senator ALLISON —What is the earliest you would expect a full[hyphen]scale operation at this Stuart deposit—assuming the pilot project shows that it is viable—to proceed?
Dr Lambert —The plans are still plans until it is proven to be a viable technology. They should know the viability of the plans by next year. If it is viable they would then go to stage two and on to stage three, reaching full production in about one decade. So the full plan production of 85,000 barrels a day would be reached in about 2009.
Senator ALLISON —When would production commence?
Dr Lambert —The production would commence next year with the demonstration plant. That would continue to produce. They would build new modules to get up to commercial scale.
Senator ALLISON —If, as I contend, this will add to greenhouse gas emissions, we could begin that process in a very short time. But none of this has been factored into any of the calculations so far. Is it fair to say that?
Dr Lambert —As Mr Alderson said, it could be the company's responsibility. If there is to be an emissions trading regime, the costs associated with that would be something that the company would be dealing with rather than the government in a direct way.
Senator ALLISON —But doesn't the government have to deal with the trade[hyphen]offs? Would we have to negotiate a bit less land clearing in Queensland? How does it work? How do you decide that it is okay for more greenhouse gas emissions in that process?
Mr Alderson —There are certain aspects to answering that question. The parties to the protocol are governments, so in terms of meeting government commitments it is the government that would have to ensure—
Senator ALLISON —The state government?
Mr Alderson —No, the federal government. It is an international protocol and it is the national government that is a party to the protocol. So the federal government, if the protocol is ratified, would face the obligation of making sure that the commitments are met—in other words, the eight per cent target. In terms of an international trading scheme, either the government, as a party to the protocol, or an agency authorised by the federal government could participate in international trading.
Senator ALLISON —And get a better deal than increasing by eight per cent.
Mr Alderson —That is one element to the story. We then take that down, if you like, to the national level within Australia. So, through trading, through clean development mechanisms, you can in fact get some flexibility in regard to the eight per cent target. If we come in under eight per cent, then we as a nation would have some permit to trade; if we come in over eight per cent, we can comply with the protocol by securing quota from people who are underutilising in order to meet our emissions.
The second part of the question—within Australia, how do we deal with the business?—is an issue that is being looked at by the government. I mentioned the Prime Minister's announcement of 20 November. Already the government has put into place a very wide range of measures aimed at mitigating greenhouse gas emissions and meeting the target. The precise arithmetic on what needs to be achieved is not there yet because the science and arithmetic associated with soil carbons, land use clearing, et cetera, is still being worked on by scientific colleagues. I might just add that that is a bit of an international phenomenon that needs to be worked through.
The government will put into place a range of mechanisms. Already some specific measures are in place, as announced by the Prime Minister. One could speculate about other mechanisms, market types of mechanisms, such as a domestic emission strategy scheme, that may or may not be more cost effective in enabling us to achieve our target. Whether it is or not will depend on the practical arrangements that apply to that scheme. So I get back to the point that, through a series of domestic measures, the government will ensure that Australia is able to meet its obligations if it ratifies the protocol, but also there is some additional flexibility through the flexibility arrangements in the international protocol.
Senator ALLISON —It would be fair to say that there would need to be, wouldn't it? With regard to this precise arithmetic calculation or modelling that you need to do, will you be taking on board any of what we have just been talking about with shale oil processing? Will that be a factor that you will look at at any stage?
—The methodology adopted has been to say, `If we adopted a business as usual approach, what might our emissions be during the target period?' I might just add that this is a sort of common phenomenon applied by all the developed countries, the annex 1 countries. For the OECD as an average, and pretty well for Australia, you need to reduce emissions by about 30 per cent from business as usual by the measures put into place. That
forms the basis, for example, for thinking through what might need to be done. Australia, of course, because of its population growth and because of its economic growth as forecast, although it has got an eight per cent growth in emissions faces a challenge equal to the average for the OECD.
Senator ALLISON —Which is why I ask you that if we know we need to reduce by 30 per cent business as usual, wouldn't alarm bells ring if there is a prospect of a process which might be on the horizon? It may not happen, Minister, but it may happen. Wouldn't that be of interest to you?
Mr Alderson —When we look at business as usual, just bear in mind that, over recent times, Australia, because of its political stability, its costs, its availability of relatively low cost energy, has attracted some energy intensive industries. When looking at business as usual, that sort of activity and major projects are already factored into that projection, so the fact that some more large projects may come on stream is not in conflict with the projection that is already recognised.
Senator ALLISON —So you will not do any sort of study—
CHAIR —Excuse me, Senator. It is now quarter to 11 and time for our 15[hyphen]minute break. Can I also say that in the last 15 minutes we really got into the area of Senator Hill's environment portfolio. I think we are starting to drift away from this portfolio.
Senator Parer —Mr Chairman, before we break I would like to put a few statements on the record because it is quite apparent that, having gone down the track of safe shale oil mining and not having got anywhere, Senator Allison is now trying to run down the track of a major greenhouse gas emission. In other words, she is taking a view, in competition with Senator Brown, to stop any sort of development in this country.
I would like to put a few points on the record because some of the statements made in recent days have been totally groundless and without fact. Fact 1: a detailed environmental impact assessment study was completed in February 1993, when the previous government was in power, and it concluded that the proposed Stuart development could be carried out with little adverse impact on the environment.
Fact 2: the fact that the oil shale deposits on the Queensland coast extend in part under the seabed and therefore into the Great Barrier Reef world heritage property does not mean oil shale mining below the seabed will be approved. I am advised the Queensland government has given no consideration to approving mining seaward of the low water mark, nor has any such approval been sought.
Fact 3: the Democrats have made allegations in press releases of a `secret plan' to allow not only mining but also oil drilling in the Great Barrier Reef Marine Park. In fact, areas of sedimentary basins which underlie the Great Barrier Reef Marine Park apparently have low to nil petroleum potential. Therefore, even from a national interest point of view, it does not require exploration within the boundaries. The Great Barrier Reef Marine Park Authority has stated that it is not aware of any plans for mining in the Great Barrier Reef world heritage area as alleged by the Democrats.
Fact 4: the Democrats have implied that AGSO will be directing its activities to scientific analysis of the oil and gas potential of the Great Barrier Reef waters. The fact is AGSO have not conducted any surveys in the Great Barrier Reef area since 1990 and AGSO's work program does not include any plans whatsoever to undertake any further work in the area.
From the Commonwealth government's perspective, the World Heritage properties conservation legislation and the Great Barrier Reef Marine Park legislation provide the framework for determining what activities can occur seaward of the low water mark. The Prime Minister recently gave a commitment that there will never be mining, mining exploration or drilling that would affect the Great Barrier Reef. I fully support this commitment, as does Senator Hill.
Senator O'BRIEN —Can I have a copy of that statement, please?
Senator Parer —I have read it out.
Senator O'BRIEN —I understand that, but I wanted to rationalise questions I might have wanted to ask in the context of that statement; it would just make it easier.
Senator Parer —No.
Proceedings suspended from 10.48 a.m. to 11.06 a.m.
Senator ALLISON —Minister, you said that the EIS for the Stuart pilot project showed little adverse impact on the environment. As I understand it, the company said that the biggest problem from shale oil production is the risk of an oil spill. Is that your understanding of the reading of the EIS?
Senator Parer —I am telling you about an EIS that was done prior to us coming into government—and I am not saying it was not a good EIS; I am sure it was. When you are talking about an oil spill you are talking about a possible oil spill in a place like Port Curtis. I would imagine—someone else can comment here—that the only potential for an oil spill is when you are loading it onto a ship, and of course Gladstone is a place which does not have an oil refinery so massive amounts of oil are offloaded in Gladstone anyway—I do not know whether it is weekly or daily. But it is the same risks that you would get with any transfer of oil, whether it be in the Brisbane River or in the port of Botany or at Port Stanvac in South Australia or anywhere.
Senator ALLISON —GBRMPA the other day seemed to think that, if these shale oil deposits went ahead to full production and, say, we got to the 16 billion barrels, all the shipping movements would be south so that the refining process would be carried out—
Senator Parer —In Brisbane, probably.
Senator ALLISON —Yes, further south. From my reading it would appear that these mining companies would be interested in exporting that quantity of oil. Would that still mean that it would go south for refining and then be exported? I know this is a bit hypothetical but what is your understanding of it?
Senator Parer —We are probably all guessing. My guess would be that it would go south to Brisbane for refining but it would be for use for domestic consumption.
Senator ALLISON —And not be exported?
Senator Parer —I would not have thought so. What you do see exported, for example, is North[hyphen]West Shelf LNG, because of its location and all that sort of stuff. I do not know what is going to happen, for example, with Laminaria—maybe someone else knows that—which is up in the Timor Sea. But for the location of a plant like that which is in probably the biggest industrial centre in Queensland, in the Gladstone area, and with two oil refineries being located in Brisbane, one would assume that is where it would be refined and the product would be domestic, which would certainly alleviate future imports of oil from the Middle East and elsewhere.
Senator ALLISON —With 16 billion barrels of oil, how many average ship movements would that work out to be?
Senator Parer —Again, you are extrapolating a very successful pilot plant that turns into a stage three production which is of significance. When I say `of significance,' I think that, on full production, it is still about 10 per cent of Australia's production.
Mr Pickering —I understand that about 65,000 barrels per day might be anticipated from it.
Senator ALLISON —I am just wondering about shipping movements, though. What do ships usually carry in terms of numbers of barrels?
Mr Pickering —I am not sure of the answer to that, Senator, but there are two refineries in Brisbane, as the minister said. Those refineries have throughput in the order of 70,000 to 80,000 barrels per day, which is currently being sourced through shipping movements to those refineries.
Senator ALLISON —I am not so interested in Brisbane as the sites that are being contemplated here: Condor, Stuart and Rundle.
Senator Parer —Let me give you a better perspective of it. If all goes to plan—and that is a big if at this stage—production at 85,000 barrels a day would be 15 per cent of Australia's current oil production.
Senator ALLISON —So 85,000 barrels a day, how many shipping movements would that be?
Senator Parer —We will take that on notice.
Senator ALLISON —Thank you. If I could just go back to the greenhouse question, I think you said that there had not been any fuel cycle studies done? I just wanted to clarify the work that had been done on shale oil processing. My question is, has a study been done of the fuel cycle of shale oil processing?
Mr Pickering — I do not know, Senator.
Senator ALLISON —Minister, could I just draw this to your attention: there has not been a study, apparently, of the fuel cycle of shale oil mining and processing. Is that something that ought to take place?
Senator Parer —If there has, Senator, I am not aware of it.
Senator ALLISON —I am asking you whether you think it is appropriate that there be one, given the greenhouse implications.
Senator Parer —You can be absolutely sure they will, because part of the whole process of economic viability revolves around things like consumption of power and so on, and how efficient it is. I would be confident that it will happen.
Senator ALLISON —So you think it will happen?
Senator Parer —I am sure it will happen.
Senator ALLISON —Have you any idea when?
Senator Parer —No, I do not, Senator. When you look at it, compared with the big energy users around Australia, I would be awfully surprised if you do not find it is incredibly small. On the energy balance, if you use up more energy than you are going to produce, then you have not got a viable operation. So it is energy balanced.
Senator ALLISON —It would be interesting to know, though, Minister, whether we are talking about 25 per cent on top of the fuel and oil.
Senator Parer —What you are saying is not on top of. You are saying that if they used 25 per cent of the input product to generate their power to produce 75 per cent of oil that that is on an energy equivalent basis. Whether that is the factor, I do not know. We may be able to find that figure. But then you move to the next stage, the possible CO2 emissions.
Senator ALLISON —Yes, I understand that. This is the bit that I am interested in.
Senator Parer —Okay, the energy balance. We might even be able to find that out from the company.
Senator ALLISON —Thank you. If I can move then to a question of off[hyphen]shore mining. Minister, can you tell the committee whether any company has expressed any interest at all in either the Townsville trough or the Capricorn Basin areas in terms of exploration for finding—
Senator Parer —No.
Senator ALLISON —Could I ask you to take that question on notice just to make sure that it is not something that those officers present do not know but which might have occurred?
Senator Parer —We will, but I am pretty confident of the response.
Senator ALLISON —The Queensland minister considered a departmental proposal to advertise for expressions of interest in oil and gas exploration on the reef. Are you aware of any movement by the Queensland government to do that?
Senator Parer —No. I think the Queensland minister has rejected that. He has not advertised or done anything like that at all.
Senator ALLISON —No, the advertisement did not go ahead, but I was just wondering whether you knew where it came from, whether this has just been deferred or whether—
Senator Parer —No. I have no knowledge of it, even in a preliminary stage.
Senator ALLISON —So you have not had any discussions with the minister about that?
Senator Parer —None whatsoever.
Senator ALLISON —Would you be surprised if an advertisement like that were to appear?
Senator Parer —Yes. I do not know what area you are talking about.
Senator ALLISON —Have you ever received any notification of any intention to seismically explore the reef by any private or commercial operation?
Senator Parer —Certainly not since I have been minister and I am pretty sure not in the last 10 years or so. Years and years ago, preliminary work was done looking at it.
Senator ALLISON —How many years ago?
Senator Parer —Twenty years—I do not know. It was a long time ago. In the 1960s.
Senator ALLISON —So there has been no seismic exploration since the 1960s?
Senator Parer —Not to my knowledge. You can ask AGSO that question. They often do geological work but, as far as I know, they have not.
Senator ALLISON —Perhaps I can put that on notice as well.
Senator Parer —Hang on. We might be able to give you a response.
Dr Williamson —There was some work done back in the 1960s by at least one international oil company collecting seismic data over the northern part of the Barrier Reef.
Senator ALLISON —Excuse me, when was that?
Dr Williamson —It was in the 1960s, I believe. I can check the actual date. The reality is that the Barrier Reef, as the minister indicated, is of little interest to petroleum companies. It is the wrong geological situation. You have a thin carbonate bank on shallow basement for virtually all of those areas. The only other seismic work that I am aware of has been research work. Some of that work, as was indicated, was done by AGSO, finishing in 1990. There has been a limited amount of seismic work carried out in conjunction with the ocean drilling project, which is a worldwide research project and which also looked at the Barrier Reef as an indicator of the growth of such reefs over time.
Senator ALLISON —This is the Barrier Reef?
Dr Williamson —Yes.
Senator Parer —That was done by AIMS, was it?
Dr Williamson —No, it was done by the Ocean Drilling Project, which is a worldwide consortium of oceanographic researchers, including Australia.
Senator ALLISON —What was the purpose of that drilling?
Dr Williamson —That was to investigate the growth of such reefs over time. This is a major, worldwide geoscience—
Senator ALLISON —The growth of coral, is it?
Dr Williamson —The growth of coral and that reef, in particular, which was the actual study. That particular research effort also studies the deep ocean quite extensively because the deep ocean gives a continuous record of geological processes that you cannot find on land. Reefs are the same. They have continuous growth over time without the interruptions that you find in sedimentation on land.
Senator ALLISON —Would that sort of drilling identify oil reserves?
Dr Williamson —That sort of drilling is not undertaken by a vessel suitable for oil exploration. Quite specifically, they do not have the blow[hyphen]out preventer on the drill stem which means that, if they encounter high pressure hydrocarbons, they are in serious difficulty. I have been told by people in that program that they felt that, if they encountered high pressure hydrocarbons, it would threaten the very viability of the whole project because of the loss of equipment. So they very specifically seek to avoid any areas that might be associated with hydrocarbons.
Senator ALLISON —So how do they avoid hydrocarbons? How do they know where they are and how far down to go? What if they come upon them accidentally?
Dr Williamson —They look at what information they have on geology, they have seismic site surveys for the locations and they site the wells specifically so there is no potential of encountering hydrocarbons. They keep away from the sorts of structures that could contain hydrocarbons.
Senator ALLISON —How deep would they go?
Dr Williamson —From memory, and I would have to check, in the Great Barrier Reef region they did not go any deeper than about, say, 600 or 700 metres, and that was one of the deeper holes. I think the shallower holes were around 300 metres.
Senator ALLISON —Just picking up on that question of the low level of oil potential, I will refer to what the Head of the Australian Petroleum Exploration Association, Mr Orchardson, said back in 1990:
When the heat had died down and the industry had been able to talk to the government and the conservation movement, he believed exploration of the Townsville trough and the Queensland trough would be made available.
Does that surprise you?
Dr Williamson —That is his opinion but, as the minister has said, government policy is certainly that there will be no exploration in that region, and that has not changed.
Senator Parer —No. I might tell you, Senator, I have seen drill cores off the Barrier Reef done by AIMS studying what has come out of the rivers and the temperatures that have occurred over the years. It is purely scientific, but I have seen those in AIMS. They are interesting.
Senator ALLISON —But no private or commercial operators have shown any interest in exploration since say—?
Senator Parer —None whatsoever to my knowledge.
Senator ALLISON —If there were to be a proposal, and perhaps I am asking you whether the government has one, I think you probably will say no, but I will ask this question anyway—if there was a re[hyphen]writing of the Great Barrier Reef Marine Park Act and regulations, and oil exploration and extraction became a permitted use in some areas like the Townsville trough and the Capricorn Basin, would you rule out altogether possibilities of licences being issued over them?
Senator Parer —Senator, we have made our position absolutely clear on this.
Senator ALLISON —Yes, I am just inviting you to do that again.
Senator Parer —It is a matter really for the Minister for the Environment, Senator Hill, but I think the position of the government has been absolutely clear. I am just hoping that, out of this estimates, you will now put out a correcting press release, to set the record straight.
Senator ALLISON —Are there any companies that you know of that might be interested in the Townsville trough and the Capricorn Basin for exploration?
Senator Parer —Not to my knowledge.
Dr Williamson —The Townsville trough is a very deep water area. The Capricorn Basin, certainly from our perspective, seems to have very limited petroleum potential on a risk basis and it would not seem it would encourage any company to be searching in that basin. The answer is, I suspect, there would be very little interest at this time.
Senator ALLISON —Is it the case that there is a structural and a stratigraphic trap within the Townsville trough which is normally associated with oil deposits; is that the right terminology?
Dr Williamson —There has been very little data collected in those areas. There has been no data since 1990 and, certainly, data of the density that the petroleum industry uses to explore is simply unavailable. People can speculate on what they wish, but the data to define such features does not exist.
—A couple of questions arise from your statement, Minister. You say, `I am advised the Queensland government has given no consideration to approving mining seaward of the low[hyphen]water mark, nor has any such approval been sought.' Has the Queensland
government given consideration to exploration seaward of the low[hyphen]water mark, or has approval been sought for exploration seaward of the low[hyphen]water mark?
Senator Parer —Not to my knowledge. If they did, they would certainly have consulted: under the agreement with the state of Queensland, the area from the low[hyphen]water mark out comes under the Great Barrier Reef Marine Park Authority, and that would involve Senator Hill. To my knowledge, he would know about it, and the answer is no.
Dr Lambert —Maybe I could add something. There are long[hyphen]term exploration leases that cover the offshore area, but the reality is that it is very difficult to drill and define a resource in that offshore area. To my knowledge, there has not been any exploration drilling beyond the shoreline.
Senator O'BRIEN —How do we know that the Stuart deposit goes out into the marine park area?
Dr Lambert —It has a very simple geology, and it is done by extrapolation of that simple geology. What is not known is the grade of the hydrocarbon content beyond the shoreline.
Senator O'BRIEN —So there has been no advice from the Queensland government that there is an application, or consideration of an application, to explore. Would not that testing of the ore body, if it exists, require an exploration approval?
Dr Lambert —As I understand it, the existing exploration lease would permit drilling and exploration in that area. What other checks and balances would have to be in place before drilling actually occurred, I am not sure. There is also an application, which has not been granted yet, for a mineral development licence that extends roughly to the boundaries of the current exploration licence. But that mineral development licence has not been granted. It is merely an application.
Senator O'BRIEN —That lies with the Queensland government, does it?
Dr Lambert —Yes.
Senator O'BRIEN —Who has made that application?
Dr Lambert —The partners in the oil shale joint ventures.
Senator O'BRIEN —Has there been consultation with the Commonwealth about that, from the Queensland government to the federal government?
Dr Lambert —I am not sure. It is in Queensland waters. I am not sure of any consultation, and I am probably not the right person to ask about that.
Senator Parer —Not to my knowledge.
Senator O'BRIEN —Do you know when the application was made?
Dr Lambert —In 1995. And there are applications over Stuart, Rundle and Condor, which cover roughly the extent of the existing exploration licences. They are largely to retain access to the resource if, in fact, the demonstration project at Stuart proves successful and the project continues.
Senator O'BRIEN —With the purpose of exploring it?
Dr Lambert —Ultimately, obviously, the large components are onshore. Whether there is an offshore exploitation would have to be decided at the end of a significant process.
Senator O'BRIEN —So the applications are sitting there on the basis that, if the onshore exercise is viable, they could then be attempted to be activated, if I can put it that way?
Dr Lambert —No, not automatically, no. There would have to be an environmental process.
Senator O'BRIEN —I did not say `automatically'. I said `attempted' to be activated.
Dr Lambert —Yes; there would have to be an environmental impact assessment process, which would involve the Commonwealth because it is almost certainly in world heritage property.
Senator O'BRIEN —Is that resource defined as a petroleum resource or a mineral resource?
Dr Lambert —It is a mineral resource. The reason for that is that it is mined by open pit in a similar fashion to coal and so on.
Senator O'BRIEN —By open pit?
Dr Lambert —By open pit methods.
Senator O'BRIEN —So if there were mining in the ocean area, some sort of reservoir system would have to be constructed to go over the ocean bed for extraction in that pit. Is that how it would work?
Dr Lambert —There have not been any engineering plans done, because obviously we are talking about a hypothetical concept. But if I was to envisage what would happen it would be like this. We are talking about very shallow water; we are talking about extensive mudflats going into shallow water. The engineering process that I would envisage would involve walling off the water in the narrows; we are talking about a maximum of one kilometre from the low[hyphen]water mark into the narrows, and then there would be an open pit mine.
Senator O'BRIEN —I understand you are talking about how it might be done but not with any detail of any plan to do that. I am just trying to develop an understanding of the existence of the exploration licence and, potentially, the right to extract that, subject to whatever checks and balances might apply. In terms of your statement, Minister, when you said, `Therefore, the national interest does not require petroleum exploration within the park boundaries,' would the national interest require extraction of the minerals within the park boundary were they to reveal significant shale oil potential for extraction?
Dr Lambert —It is totally hypothetical. I think, on all the advice given, the potential for oil is very limited. That is from the indications.
Senator O'BRIEN —I am talking about shale oil, not oil or gas—or shale that carries oil.
Senator Parer —There are no plans. The advice I have is that no approval has been sought at all to mine shale from the low[hyphen]water mark.
Senator O'BRIEN —I understand that.
Senator Parer —If there were—and I am being hypothetical now—I want you to bear in mind that the Gladstone harbour is one of the big ports in Australia. It has been dredged, and if it needs re[hyphen]dredging it will be re[hyphen]dredged because it needs to take large vessels. You are talking about an operation that, if it did occur, would be very little different from the sort of dredging that already goes on in Gladstone port. I do not want to give any impression at all that there is any indication, because the advice I have is that the Queensland government has given no consideration to mining seawards of low water, nor has an approval been sought, on the checking out we are doing.
Senator O'BRIEN —No. It is the right to explore or to research a known ore body that I am asking about.
Senator Parer —The Prime Minister has made it clear there will be no mining or oil drilling in the Great Barrier Reef Marine Park, and no[hyphen]one disputes that.
CHAIR —Full stop.
Senator O'BRIEN —No, not full stop. Your statement, Minister, goes on to say that that would affect the Great Barrier Reef.
Senator Parer —Yes.
Senator O'BRIEN —But if the full stop were after the word `drilling' in your statement, what the chairman said would be so—that it would be a categorical exclusion.
Senator Parer —In reciting that statement, you will agree that I said that, even from a national interest point of view, it would not require petroleum exploration to take place.
Senator O'BRIEN —Yes. I was asking about that because you were talking about oil drilling.
Senator Parer —That is exploration.
Senator O'BRIEN —Yes, but we are talking, in this case, about the Stuart ore body and about a mineral deposit which carries oil, rather than a body of oil or gas. I was trying to clarify just where your statement in effect ended in terms of that particular ore body. Forgive me if I was going over matters a bit but, essentially, there is a live application for exploration approval to prove up the ore body. That is dormant; it is there for whatever purpose.
Senator Parer —It is not in the Great Barrier Reef Marine Park.
Senator O'BRIEN —No. It is just outside it, is it not?
Senator ALLISON —In world heritage property.
Senator O'BRIEN —So it is world heritage property.
Senator Parer —There are three categories, aren't there? There is a world heritage park, a region and a property.
Senator O'BRIEN —If that application for exploration were to be approved, there would need to be a role for the Commonwealth at that stage. If a Queensland government next week, next month, next year or next decade, approves that, there would have to be a role for the Commonwealth in reviewing the environmental impact, would there?
Senator Parer —That is something you should direct to Senator Hill. It is not our portfolio area. I would presume yes, because of the Great Barrier Reef Marine Park Authority and the way it is structured, but I may be wrong. It is something that you should direct to the Minister for the Environment.
Senator O'BRIEN —I am happy to direct that through you, Minister, given that the environment estimates are concluded.
Senator Parer —We could pass it on.
Senator O'BRIEN —Thank you for that.
CHAIR —You will pass that on? Thank you.
Senator O'BRIEN —What role would your department play in that, if any?
Senator Parer —None.
Senator O'BRIEN —If the Queensland government said to go ahead with that exploration, there would be an environmental impact statement. The decision would be made by Minister Hill or whoever occupied the portfolio at the time. If it were approved, there would then be whatever exploration was approved. If it got to the stage where there was an intent to exploit the reserve, what role would your department then have?
Senator Parer —Probably none. None at all.
Senator O'BRIEN —Would AGSO have any role in that process at all?
Senator Parer —No. Why would AGSO have a role?
Senator O'BRIEN —I am asking. I am here, like a lot of people, to be educated about these things. I may have some questions that arise for AGSO out of that. I will leave that. As you would be well aware, in estimates Senator Hill said, in relation to these deposits, `When I looked at the map of the licence area I was concerned about the fact that the deposit is stretching offshore, and that is a matter that is still of concern to me.' There has been some discussion about whether Senator Hill wrote to you about this matter. Did he in fact write to you about the matter?
Senator Parer —Yes, he did.
Senator O'BRIEN —Did he express those views?
Senator Parer —I might be able to find something here. Yes, he did advise me of his concerns.
Senator O'BRIEN —If the matter lies within his department and not yours, why would he need to do that?
Senator Parer —One of the things we have that is a little different from the past government is a whole of government communicative approach on things that might impact on one another's particular areas of interest. It is a matter of information that he would be passing back to me.
Senator O'BRIEN —All right. It does not have a specific purpose because of the responsibility that you have in any way over this, particularly?
Senator Parer —No particular purpose, apart from the fact that we have always expressed an interest and we hope that that pilot plant is successful and we get major oil coming out of Stuart.
Senator O'BRIEN —As you would know, it is not our intention to interfere with legitimate operation in any way. On another matter, under the United Nations Convention on the Law of the Sea, does the minister agree that articles 248 and 249 place a duty on a nation state like Australia, if it is engaged in marine scientific research in the exclusive economic zone of another nation state like Indonesia, to make research available to the treaty nation?
Mr Payne —I understand that is correct, Senator.
Senator O'BRIEN —With respect to marine research, I think you would agree that Australia does have a duty to provide Indonesia with all the information detailed in the articles I referred to. Does Australia have a duty to comply with any or all of the other conditions stipulated in article 249?
Mr Payne —I am not sufficiently familiar with the detail of that to be able to answer that now, but I could take that on notice and provide an answer.
Senator O'BRIEN —Thank you. Has the department or the minister's office received any legal advice with respect to marine research regarding Australia's duties under those two articles, particularly 249(1)(b)?
Mr Payne —I believe the answer to that is yes, we have received legal advice.
Senator O'BRIEN —What is the source of the legal advice?
Mr Payne —The Attorney[hyphen]General's Department.
Senator O'BRIEN —Is that advice able to be provided to the committee?
Senator Parer —I am not sure about that. I will take that on notice.
Senator O'BRIEN —Is it the case that under the Convention on the Law of the Sea the collection of exploration data in offshore waters is marine scientific research?
Mr Payne —That was one of the issues that we received that advice on, Senator. I am not sure whether I am at liberty to give you the answer on that until the minister has made his decision about releasing the advice.
Senator Parer —I have not seen it.
Senator O'BRIEN —Are you taking that on notice?
Senator Parer —Yes.
Senator O'BRIEN —Has the department engaged in correspondence with the minister's office, other agencies or private persons dealing with the issue of whether or not the collection of seismic data is marine scientific research?
Mr Wonder —Sorry, Senator, would you repeat the question?
Senator O'BRIEN —Has the department corresponded with or received correspondence from the minister's office, other departments or other parties dealing with whether or not the collection of seismic data is marine scientific research?
Mr Payne —Not to my knowledge, Senator. I am only aware that we sought advice from the Attorney[hyphen]General's Department on that issue. I may have to check our files to be absolutely sure about that.
Senator O'BRIEN —The reason I ask those questions is that in the course of the public hearing of the Joint Standing Committee on Treaties held on 2 September and 28 October representatives of the Attorney[hyphen]General's Department and, to a lesser extent, representatives of this department asserted that they have the complete answer to the questions and issues raised in relation to this matter. I take it that is because of the legal advice. Is there any other advice that is relied upon?
Mr Payne —Not to my knowledge.
Senator O'BRIEN —In the Age on 9 March this year, Mr Heath, the Chairman of the Australian Petroleum Production and Exploration Association is reported as stating that, while it was too early to judge the impact of the oil price slump on industry expenditure, it was clear that `lower prices in the long run would cause the death of some projects'. Can the department, or the minister, give details of any projects of which they aware that are in jeopardy?
Senator Parer —Others are welcome to have input into this, but I think that the comment by Mr Heath was based on two or three aspects. One was that the major projects that we are looking at in Australia today are the North West Shelf, Gorgon, Undan Bayu, Timor Sea and also the Sunrise Troubadour area, as it is called, up in the Timor Sea. They rely on three things, the first being the price they get for the gas, which is important to them. Traditionally, the price obtained for gas has been tied in on an energy basis to the price of oil. If the oil price goes up, the gas price goes up and vice versa. It is a complex formula. The second thing is the effect the Asian crisis will have on the demand for gas. The third thing, which is equally as important if not more so, is the highly competitive nature of competing projects from other parts of the world for the same product. I presume that that was the basis of the remark.
I think you asked a question earlier that is going to come up later or maybe here, about attending LNG 12, and I might tell you that was the first time that the LNG world conference has been ever held in Australia in 30 years of meetings. I would also tell you that it was
dominated by the enthusiastic proponents of these developments and also a lot of buyers and competing countries as well. It is a very competitive world out there, and probably he would be flagging the fact that it is competitive and that we cannot sit on our hands and think that we are the only people with these sort of resources, because we are not.
Senator O'BRIEN —I am not disagreeing with any of that. The question was whether your office or the department has any details of any projects that they are aware of that are in jeopardy?
Senator Parer —I suppose you could say all or none. That might seem a strange sort of an answer, but I am sufficiently optimistic and sufficiently bullish about the attractiveness of Australia to think that one of the benefits coming from the Asian fallout is that Australia is now an even more attractive place to start looking at these sorts of projects than it was before.
Senator O'BRIEN —You invited any officers to make any comment.
Senator Parer —I do not think they can add to that.
Mr Payne —No, I am not aware of any projects which have specifically been—
Senator O'BRIEN —There is no project that is in imminent danger of falling over because of the impact of the oil price slump?
Senator Parer —While we have a project facilitation branch, one of the things in looking at the competitiveness around the world—and we have just recently formed an LNG action agenda with the LNG people—is to look at any impediments that might be there that adversely affect our competitiveness in comparison with that of other countries.
Senator O'BRIEN —Okay. I needed to judge the statement of Mr Heath in the context of your answer.
Senator Parer —Basically, my interpretation of what he said would be pretty accurate.
Senator O'BRIEN —Thank you, Minister. I started to ask about the attendance of officers of the department at the LNG 12th International Conference in Perth on 4[hyphen]7 May: did the officers attend as officers of the department or in a private capacity?
Senator Parer —As officers of the department.
Senator O'BRIEN —How many departmental officers did the Petroleum and Fisheries Division of the department originally recommend should attend the conference?
Mr Pickering —Four officers from Petroleum and Fisheries Division attended.
Senator O'BRIEN —No. How many were originally recommended to attend the conference from your division?
Mr Pickering —I am not aware that there is any difference between the recommended number and the number that went.
Senator O'BRIEN —Okay.
Mr Wonder —Can I clarify your question? When you say `recommended', by whom do you mean?
Senator O'BRIEN —I am not sure by which officer, but perhaps we could short[hyphen]circuit—
Mr Wonder —By a staff member?
Senator O'BRIEN —Yes. Did someone in this division recommend to you or the minister's office that a certain number attend?
Mr Wonder —Mr Pickering has answered that he is not aware of any difference between the number recommended and the number attending.
Senator O'BRIEN —Was there such a recommendation? That is the first step.
Mr Pickering —I do not know of any recommendation. Would it help if I gave a little more information about the attendance?
Senator O'BRIEN —It may do.
Mr Pickering —The Executive Director of the Resource and Energy Group attended, plus four officers of our division, as I said, led by First Assistant Secretary John Hartwell. One of those officers was Amanda Booth, in conjunction with one of the officers from Project Facilitation Division, and there was an additional officer from Project Facilitation Division. A total of seven from the department attended.
Senator O'BRIEN —It was always the intention that that number would attend?
Mr Pickering —As far as I know. I really do not know what your questioning is driving at.
Senator O'BRIEN —Mr Wonder, you can probably clarify that.
Mr Wonder —I cannot add anything further to the officer's answer.
Senator O'BRIEN —You may need to take these questions on notice, and I accept that. Could the department provide details as to how many departmental officers from this division are permanently based in Queensland and in Western Australia?
Mr Pickering —Permanently based? I do not think any are.
Senator O'BRIEN —None. Can you tell me what the position has been for the financial years commencing with 1994[hyphen]95 through to the current year?
Mr Wonder —In respect of the division's running costs?
Senator O'BRIEN —The number of departmental officers who have been permanently based, historically, going back to 1994[hyphen]95?
CHAIR —Permanently based in either WA or Queensland.
Mr Wonder —I believe there are none.
Senator O'BRIEN —I am happy if—
Senator Parer —That is Petroleum; but you are talking about Fisheries too, are you?
Senator O'BRIEN —The Petroleum and Fisheries Division, I am talking about. That is why I say you might want to take this on notice.
Mr Pickering —I am sorry, but I cannot answer in respect of the Fisheries side of it.
Senator O'BRIEN —I am talking about the division, because it is a division that covers both. I started to ask these questions of the other division, and I was told to wait.
Mr Wonder —We will take that question on notice. We are not aware of any officers from the Petroleum and Fisheries Division, including both Petroleum and Fisheries related officers, that are located in those states, but we will take the question on notice and confirm that advice.
Senator O'BRIEN —Thank you for that.
CHAIR —Are you clear that the question goes back to 1994[hyphen]95?
Mr Wonder —Yes, back to 1994[hyphen]95.
Senator O'BRIEN —Is there any intention to permanently base departmental officers in those states in the next three years?
Mr Pickering —Not that I am aware of.
Senator O'BRIEN —Thank you.
Senator ALLISON —I want to ask for clarification on an answer that was given to Senator O'Brien a couple of minutes earlier. I am happy to wait until Senator O'Brien has finished his questioning.
Senator O'BRIEN —I have one more subject to deal with.
CHAIR —You ask go ahead and for the clarification.
Senator ALLISON —Thank you. Minister, could you clarify whether the licences for the Stuart and Rundle deposits are exploration licences or now development licences?
Senator Parer —There is only one development licence, as I understand, and that is Stuart.
Senator ALLISON —When was the conversion from exploration to development for Stuart?
Senator Parer —The only granted mineral development licence is over the Stuart deposit, which is MDL 177, which is entirely on land. Part of the Stuart mineral development is covered by a mining lease, which was granted by the Queensland government in September 1996.
Senator ALLISON —The lease is in 1996: is that the same as a development licence?
Senator Parer —I am not sure what they do in Queensland these days. Usually they start off with an authority to prospect—which they now might call something else—and they used to go straight to a lease, but I think they have probably got an intermediate mineral development licence now. Then you go to a lease, which is the part that is full[hyphen]scale. I think that is right. Does anyone know the three stages?
Dr Lambert —It is an exploration permit for minerals, followed by a mineral development licence, followed by a mining lease.
Senator ALLISON —Stuart is now a mining lease: is that just for the pilot project or for the broader—
Senator Parer —It is MDL 177 and it will be clearly shown on any Mines Department map. It is Queensland government mines stuff; it is not us.
Senator ALLISON —I understand that. This does not cover Rundle; it is just Stuart?
Senator Parer —Yes.
Senator ALLISON —If it is possible to clarify whether that is just the pilot project or whether it is the operation beyond, that would be useful.
Senator Parer —We can, but it is the sort of thing that really should be directed to the Queensland government. We will see if we can get you an answer on that.
Senator ALLISON —If it is beyond the pilot and if there is no intention to go ahead at this stage, can I ask why it could not remain an exploration lease and why it was upgraded to a development? I know that is a Queensland government affair.
Senator Parer —If you are spending $250 million on a pilot plant, you need pretty secure tenure. An exploration licence technically does not give you anything. It has a time frame on it; it expires. A lease is for a certain period of time. I do not know what the length of this is, but usually it is 21 with a rollover of 21, as I can recall.
Senator ALLISON —What is the process between a development and a lease? What needs to take place? For instance, when does an EIS get done? Is that part of the application for a lease or part of the application for a development?
Senator Parer —This is totally Queensland government, because the tenure is Queensland government.
Senator ALLISON —I know, but you did say that there would be an EIS done. That is a reassurance you have given.
Senator Parer —There was an EIS done on Stuart.
Senator ALLISON —That was for the pilot project, not for the full development.
Senator Parer —It was phase 1, yes, the pilot plant.
Senator ALLISON —My question is related to phase 2, 3 or whatever it is.
Senator Parer —Again, it would be Queensland government.
Senator ALLISON —I am still trying to understand the process. When does an EIS get done for the full project or for stage 2?
Senator Parer —We have done the EIS on the pilot plant. It depends on what comes out of that and what the next stage is. My understanding is that it is a modular type approach with the pilot plant. In other words, you just add modules. Presumably, phase 2 would be an EIS process. Again, it is the Queensland government.
Senator ALLISON —I am still trying to understand when that happens. Does it happen before the lease is agreed?
CHAIR —Could I just make a comment here? We really are getting outside the province of this portfolio and department. Departments end up with a huge number of questions they have to answer after each one. They are always late coming back because of that.
Could I suggest, Senator Allison, that with this list of questions you write to the Queensland government's department of mines and ask them to set out the process. I do not think it is the responsibility of this department to have to answer questions that should be directed directly to the Queensland government.
Senator Parer —We can give you the procedure as it occurs for Commonwealth type operations. Everything is looked at. You get advice from the Heritage Commission.
Senator ALLISON —It would be good to have that, because the problem here is understanding who is responsible for which part of the process. In particular, because Stuart and Rundle go into world heritage areas, they do become a Commonwealth responsibility, as I understand it. That is why it is important for us to understand.
CHAIR —I am going to bring a halt to this. Can I ask the Minister to get the Commonwealth's responsibilities and put them before the committee? In terms of the state situation, they should write to the state and get it.
Senator Parer —All I can do is give you the responsibility for my own portfolio and we really do not have any. When you talk about impinging onto areas like the Great Barrier Reef Marine Park, it is the responsibility of the Minister for the Environment. I think that would have come through in the estimates committees. I cannot really add to that. When it comes to local issues that relate to a state—and it can be Mount Isa, Cloncurry or anywhere else—that is the responsibility of the state government.
CHAIR —I have been very lenient in terms of allowing questions to go far and wide and well outside the portfolio. I will always adopt that particular policy, but the time has come for us to get back to the portfolio and proceed. Matters relating to the Queensland government should be addressed directly to the Queensland government and get a formal answer direct from them. Any further questions?
Senator O'BRIEN —When do you expect to announce the results of the review of the petroleum resource rent tax legislation?
Mr Pickering —As to the stage that that review process is at, as you are probably aware there have been two external consultancies let in that process. One of those is still to be completed. It is near completion but it has not yet been completed. Once that is completed, the position will be put before the government, and that is hoped to be within the next four to six weeks if everything goes smoothly. It would be some time after that.
Senator O'BRIEN —Does the government have a timetable for amendments proposed to the Petroleum (Submerged Lands) Act 1967 in respect of renewal of petroleum licences?
Mr Payne —The answer would be that the government would like to introduce those amendments as soon as possible. It is just a matter of scheduling in the Senate, I understand. The answer is the government wants to introduce them as soon as it can, but I do not know when that will be.
Senator O'BRIEN —They are not scheduled in the next fortnight?
Senator Parer —I just do not think they can fit it in the program. I would like to be able to say yes.
Senator O'BRIEN —You can answer as to whether they are or are not scheduled.
Senator Parer —I do not think they are. They are not, no.
Senator O'BRIEN —That is all I have on subprogram 1.8.
CHAIR —Any further questions on 1.8? If not, I thank the officers at the table for their contribution. We shall move to subprogram 1.9, coal and minerals industries.