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Thursday, 8 December 1983
Page: 3508

Senator MASON —My question is addressed to the Minister for Resources and Energy . How does the Government intend to guarantee sufficient supplies of motor spirit in Australia if political troubles or war resulted in a sudden lack of availability of Middle East oil? Is the Government aware that a highly respected and internationally used mathematical model, called Markal, to assess the best available energy options for national economies, has been applied to Australia by a Commonwealth Scientific and Industrial Research Organisation team, and that it has concluded that we could profitably begin to produce methanol as a motor fuel from natural gas, and possibly also petrol, from 1990 onwards? Since the lead time for such natural gas to methanol or petrol plants is at least five years, does the Government intend to commence planning this development over the next few years, perhaps using North West Shelf gas on a large scale, in view of the current dilemma of the North West Shelf partners? Finally, is the Minister aware that major natural gas to methanol and petrol plants are already complete and operating successfully in New Zealand?

Senator WALSH —Senator Mason has asked a number of questions. In regard to the first question, as to the likelihood of a sudden disruption in supply from overseas, nothing could fully compensate for the complete withholding of supplies from overseas; not that that is likely. It is, however, possible, for a variety of possible reasons, that a smaller amount than is currently supplied from overseas could be supplied at some time in the future.

The Government has before the Senate now, we hope that it will be passed during this session, the Liquid Fuel Emergency Bill, the pre-planning for which was done by the previous Government, and which is intended to cope as best as is possible with such a situation. The Government is also involved with the International Energy Agency's plans for coping internationally with such a possible major disruption to world oil supplies.

Regarding the mathematical model which has predicted that by 1990 it could be economic to produce methanol or even petrol from natural gas, I am aware of that study. It incorporates assumptions about real increases in oil prices which were made some time ago and which are higher than I think most people, possibly including even those who drew up the model, would make today if they were again drawing up the guidelines for that model. In other words, disregarding short term disruptions of supply, it now seems unlikely that real oil prices will increase in the time frame that had been previously envisaged. Therefore, the period in which it may be economic to produce petrol or methanol from natural gas needs to be pushed well back into the 1990s.

The third question was whether the Government would commence planning for development of production of methanol from natural gas next year. In view of the points I have already made, the answer to that is no, because we believe it would be premature to initiate such plans at this stage. Expectations about this question can be proved to be wrong. For example, it was only a couple of years ago that Senator Sir John Carrick was forecasting that by 1985 we would be producing 50,000 barrels of oil a day from the Rundle shale deposits. I do not think that anyone expects that to happen by 1995, let alone by 1985. That estimate is very generous to Senator Sir John Carrick. If it ever happens, it is more likely to be pushed some time into the twenty-first century.

On the last question, regarding the New Zealand natural gas to methanol and petrol plant, I understand that it is not yet complete but that it will shortly be completed. It is not for me to pass judgment on the policies of the New Zealand Government. Again, I believe that plant was commissioned and adjudged to be economic against an expectation of a very rapid increase in real oil prices, which has not occurred. I would therefore be surprised if the fuel produced from that plant in late 1984 or 1985, whenever it is completed, were price competitive, at least at this stage, with petrol produced from imported crude oil.