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Proposed stuart shale oil project near Gladstone, QLD

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The Federal Minister for Resources, Mr Alan Griffiths, announced today that the Government had agreed to continue the exemption from excise on petrol produced from approved shale oil demonstration plants.

The exemption, which has existed for over 40 years, would apply to a proposed demonstration plant based on the Stuart deposit near Gladstone, Queensland.

Mr Griffiths said that the Stuart joint venturers, Southern Pacific Petroleum and Central Pacific Minerals, had been working for some 18 years towards the development of Queensland's vast shale oil deposits.

“The Government is confident that the confirmation of the exemption to 2005 will provide the spark to see the Stuart deposits developed at a commercial stage," the Minister said.

Mr Griffiths stated that the Government's action would provide stability and certainty. Within this framework, the joint venturers could raise capital and take other necessary steps to allow the construction of a demonstration plant capable of producing some 4,400 barrels of liquid fuels per day by the mid-1990s.

The plant* would demonstrate the application of innovative process technology based on a rotary kiln designed to process oil sands. While the process has been tested at pilot plant level with Australian oil shale, the Stuart plant is intended to show that the technology can be scaled up to operate at commercial levels, Mr Griffiths said.

"We have provided the right climate for the venture to proceed. It is now up to the proponents to show they can move to commercial operation."

Mr Griffiths paid tribute to the Federal Member for Hinkler, Mr Brian Courfcice, and the Queensland Premier, Mr Wayne Goss, for their efforts in presenting the case for development of oil shale resources.

"Both men had the foresight to understand the important contribution that a nascent shale oil industry will make to the local economy of Gladstone, the regional economy of Queensland, and ultimately, to Australia,* Mr Griffiths said.

Parliament House Canberra ACT 2600

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“In providing the continued excise exemption for the Stuart Oil shale project, the Government will act to end the current unrestricted exemption from product excise for petrol produced from shale oil. *

"This will be replaced by a guarantee of exemption from excise until the end of the year 2005, for approved oil shale demonstration projects, up to a maximum of 600,000 barrels of petrol per year."

In this way, the Government would be encouraging approved demonstration projects, such as Stuart, with significant technological benefits, but at the same time ensuring that any commercial scale shale oil project was developed on its economic merits, Mr Griffiths said.

The Minister stated that the thrust of Government policy was to ensure the efficient development of Australia’s energy resources. He observed that the Government's moves in recent years in the petroleum sector had already borne fruit, with a

number of important discoveries made.

Australia was likely to meet a high proportion of its liquid fuel needs from conventional sources until well beyond the turn of the century, Mr Griffiths said, but the development of shale oil resources would be an encouraging supplement.

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INFORMATION: Minister's Office Lisa Amor 06 277 7480 Department John Tysoe 06 272 4492

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Southern Pacific Petroleum H I . (SPP) Central Pacific Mnerals N.L (CPM)



7TH JUNE, 1991

The Minister for Resources, The Hon. Alan Griffiths, today announced arrangements regarding gasoline excise exemption which will have an important bearing on the Stuart Oil Shale Project and the long term future of Australia’s energy supply.

A copy of the M inister’s statement is attached.

The Government’s decision to provide an assurance that gasoline derived from shale oil from approved demonstration plants will remain exempt from product excise until 2005 is welcomed. The Government has advised that this decision has been made in recognition of the substantial Research & Development investment made by a number of operators in the shale oil industry, notably Southern Pacific Petroleum N.L. and Central Pacific Minerals N.L. and that the Department of Primary Industries and Energy has confirmed SPP/CPM’s Stuart Stage 1 Project

would meet the criteria for an approved plant which would benefit by this exemption.

The excise exemption will apply to approximately 40% of the proposed Stuart Stage 1 output which is to be dedicated to the production o f gasoline.

The remaining production from Stuart Stage 1 (about 60%) is in the form of low- sulphur fuel oil upon which no exemption applies.

The excise exemption for gasoline produced from Australian oil shale has been on the books for over 40 years. It was the basis on which the Glen Davis plant was operated immediately after World War II, thus providing Australia with gasoline during the period of post-war petrol rationing.

With the improvement o f oil shale processing technology, the Government has now cancelled this exemption. However, at the same time it has agreed to extend it in a limited form to 2005 to assist approved shale oil plants in their initial demonstration stage.

The new arrangements, which assure continuity of the exemption for a fixed period, facilitate financing arrangements for Stuart Stage 1.

The full scale (3 Stage) development of the Stuart Oil Shale project is based on substantial investment and research by SPP/CPM over many years. Following the


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construction and operating o f Stage 1, the subsequent commercial plants together (Stages 2 and 3) arc designed for production at 17 times the level o f Stage 1. At this size they arc substantially more economic to operate and will not require excise exemption.

The positive initiative of the Government is welcomed as it recognises the potential of a very large new industry and sets the economic environment for its development.

Consequently the two Australian Companies are now proceeding to final detailed engineering and setting in motion the financing plans for the construction of Australia's first modem shale oil plant at Stuart.

Sir Ian McFarlane, Chairman o f SPP and CPM said today:

“We have been working on exploration and development of oil shales for 18 years and now have an opportunity to build the first modem commercial demonstration plant in Calliope Shire near Gladstone.

It is to be based on the eastern Queensland Tertiary oil shales which we believe to be the most economically attractive in the world. Apart from the advantages o f their proximity to infrastructure, they can be cost-effectively mined by open pit methods. They also produce a cleaner and better quality oil shale than other substantial oil shale deposits.

This is in marked contrast to Colorado oil shales, upon which most past shale oil technical and economic commentary has been based.

Whilst Smart Stage 1 is primarily a demonstration plant, it is the key to unlocking major resources and providing Queensland with a centre of oil shale technology.

The commercial Queensland shales are of sufficient size to enable them to make a major contribution to Australia’s balance of payments problem. I

I welcome the M inister’s initiative in this regard and the G overnm ent’s decision to create a favourable econom ic environment for this to happen.”




Queensland's oil shale resources are she most economically attractive in the world and contain 27 billion barrels of oil. The key to their development is the construction of a processing plant to prove up modern technology, and pave

the way for full scale commercial development.

Using new technology SPP/CPM propose to establish the first plant at the Stuart Deposit near Gladstone.

The Stage 1 Plant will process 6,000 tonnes of oil shale per stream day to produce 4,400 barrels of hydrogenated naphtha and fuel oil. Following successful demonstration of the technology, known as the Taciuk process, in Stage 1,

full commercial development (Stages 2 and 3) will follow resulting in the production of 74,000 barrels of syncrude .per stream day.

Based on previous analyses undertaken by Bankers Trust Australia adjusted to reflect technology construction costs estimated by Bechtel for Stage 1, Stages 2 and 3 when fully operational will be commercially viable an an oil price of around SUS20.00 per barrel Dubai December 1990 values).


. The Stuart Oil Shale Deposit has the potential for two additional 60,000 barrel/day plants which would bring total production up to 200,000 barrels/day with an export value equivalent to the Northwest Shelf project but at a cost some 25% less (1989 values).

. SPP/CPM's exploration programme for oil shale in the period .1974 to 1982 resulted in the discovery of 8 deposits with total resources of 27 billion barrels. These deposits would support average production of

1,000,000 barrels/day of syncrude for at least 60 years. At current prices, this would equate to $A10 billion per annum which would reflect in import savings or export earnings. The construction and

demonstration of Stage 1 is the key to opening up this industry.


The flow-on benefits for Australia include :

. Ultimate permanent employment for over 10,000 people.

. Annual Federal '.Government tax income of the order of $7 5 million per year^when1 Stage 3 is in production.

. Savings of $650 million per year in foreign exchange earnings (Stage 3) due to decreased importation of oil.

. The proving up of leading edge technology with worldwide application in which Australian companies will have a major interest.