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Rundle share oil project



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FOR MEDIA THURSDAY 28 FEBRUARY 1980

RUNDLE SHALE OIL.PROJECT

I have great pleasure in announcing that Southern Pacific

Petroleum.(SPP) and Central Pacific Minerals (CPM) have advised

that, after evaluating a number of proposals for participation

in the Rundle Shale Oil Project, they have selected Esso . Exploration and Production Australia Incorporated (Esso) for

further negotiations. . SPP/CPM and Esso will enter immediately into negotiations with the aim of finalising a joint venture agreement as soon as possible.

Esso’s proposal to SPP/CPM includes an offer for substantial

financing of SPP/CPM*s participation in project investment and

also provides for SPP/CPM's participation in project management. The proposal provides for a maximum Esso interest of 50 per cent

in the project.

The policies of the Commonwealth have been of fundamental

importance in creating the circumstances.in which this project

is economically feasible. The viability of the project is

under-pinned ,by the Commonwealth’s policy on import parity pricing

for crude oil. Without, this assurance to the developers of an

economic market for. their product, it would not be possible to

justify the enormous investments that, will be involved. .

The project would not have been able to proceed without the Commonwealth's import.parity pricing policy. By providing a

long-term commitment that oil produced in Australia will be

marketed at realistic prices, companies have been able to

proceed to explore alternative sources of liquid fuels, which

may not have been.viable at lower crude oil prices.

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The general economic climate, the encouragement, given to

investment, and the great prospects for development in Australia

are all relevant to the decision to proceed with this very big

project.

The joint venture.agreement and the project will, of course, be

subject to all necessary Commonwealth and Queensland Government

approvals, including environmental considerations, Foreign

Investment Review Board approvals, and Reserve Bank approvals.

The joint venturers and Esso plan an immediate start on a major

research and engineering program for the project. Following this

work, present plans envisage the construction of a pilot plant to prove the. technical and economic viability of producing oil from Rundle oil shale. This plant is expected to take at least three

years to construct and will cost several hundred million dollars.

Employment at the plant will be about 500 and construction

employment about 2000. Many more will be employed in support industries in Gladstone and other centres in Queensland. .

If the pilot plant is successful, the partners expect to expand

production progressively to the deposit's full potential of

around 200,000 barrels of oil per day, which is about 30. per cent

of Australia's current requirements. Such production would

augment the world energy supplies and would replace 70 per cent of Australia's present imports of crude oil. Import bills are currently running at about $1.9 billion per year. Production

from Rundle could be particularly important to Australia as

current projections show, that^output from Bass Strait will decline progressively from the mid 1980s.

Esso's proposal, to SPP/CPM contemplates that all production

would ultimately be upgraded to a synthetic crude oil for

feedstock to Australia's refineries where it will be refined

into normal petroleum, products, including petrol.

The development of Rundle to its full potential would involve

expenditures by the partners of many billions of dollars.

Employment during the construction period is estimated to be

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between 6000 and 8000 people.for several years. The project

will be a very substantial addition to Queensland and Australia's economy.

It is difficult to overstate the importance of this project for

the development of the State of Queensland and for Australia as

a whole. The potential the project has for reducing Australia's

dependence on costly imported crude oil is very great. At a time when world oil markets are uncertain, the Government gives

very high priority to the development of indigenous sources of

liquid fuels. This has, of course, been one of the major aims

of the Government's oil pricing policies and it is pleasing to

note the success of these policies in this particular area.

It is likely that the successful development of this project

v/ill lead to further exploitation of Australia's shale oil

reserves. These subsequent developments will provide the

opportunity for other interested parties, including our major

trading partners, to participate in this industry.

The participation of Esso in the project is to be welcomed.

Esso has already made a large contribution to Australia's

development.through its many investments in Australia, particularly

in discovering and developing the Bass Strait.oil fields in partnership with BHP. The Rundle project will provide an

opportunity for Esso to reinvest in Australia the profits it

has derived from the Bass Strait oil fields. The willingness

of Esso to reinvest these profits in Australia is welcomed by

the Government. .

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