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Monday, 5 March 1984
Page: 415

Senator MASON(10.15) —The long title of the Liquid Fuel Emergency Bill 1983 is somewhat ominous, perhaps even prophetic. It is:

An Act to facilitate the management of liquid fuel that is, or is likely to be, in short supply

That contingency is only too likely to face Australia some time in the future, and perhaps not too far into the future. Of course that is why this Bill is before us. I think that the Government has exercised a very proper role by bringing forward legislation which would at least make the best of some crisis in which we suddenly found ourselves. When we look at the Bill's definitions we find that the liquid fuels listed are exclusively products of crude oil, ranging as they do from aviation gasoline to lubricating grease.

It is probable that few more important Bills than this will come before the Parliament for some considerable time, when one looks at the background properly . That background is that the older, Western-style societies in Europe and the United States of America have very substantial alternatives to roads as a form of transport. They have railways and canal networks which can use coal or even wood or charcoal in an emergency. Also, in most of these developed Western economies distances are relatively short by Australian standards. Only one Western economy stands out plainly as the exception, a nation with one of the world's smallest rail networks for its size, geographically, with virtually no navigable canals or rivers and with vast distances between its main centres and often between its sources of food and its cities. That nation is, of course, Australia.

We are probably the most dependent economy in the world on liquid fuel in large quantities to keep our buses, trucks, cars and aircraft on the move. Without it we would face the most severe type of recession; it would amount to virtual anarchy. One must foresee and warn against sudden and major food shortages, a complete breakdown of industry and almost total unemployment as the major transport services grind to a halt. I do not want to paint too depressing a picture, but I believe that to be a realistic picture, which we should always bear in mind because it is one of the constants of life in this continent. We should not underrate this risk to our society because it is obviously going to become closer and become worse with every day that passes.

The demand for crude oil in Australia is now about 650,000 barrels a day. By 1990 the best estimates are that this will have risen to about 710,000 barrels a day. Australian crude oil fields have the capacity to produce about 460,000 barrels a day, and we are not actually producing at that capacity. Most of this comes from the Bass Strait fields. It is apparent from these figures that we are self-sufficient for about 70 per cent of our crude oil requirements now. But we are on the downhill slide. As demand increases and as our practical delivery of oil from our present oil fields goes down, our self-sufficiency will, of course, decrease. It is only a matter of time before that happen. An important point to be made at this stage about our crude oil production is that Australian crude is a light crude, suitable for petroleum, but not very suitable for lubrication and fuel oil needs. So no matter how much crude oil we can produce in Bass Strait we will still have to import about 30 per cent of our needs in heavy crude oil.

We all feel that it would be nice if another major oil field in Australia could be discovered, something like the Bass Strait field. That would solve all of our problems. Possibly we will be lucky, but the evidence so far after a lot of exploration is that we might not be. It is a fact too that various techniques now used-computer-enhanced pictures from the Landsat satellite is one technique- reveal that probably there is not another off-shore field of those dimensions. Certainly it would be very foolish of us in the extreme to rely on luck in such a basic and critical matter for this society.

In the world scene the situation in the major oil-producing areas is not reassuring. The current war between Iran and Iraq could cause major difficulties at any time. The Soviet family in Saudi Arabia is quite a recent dynasty, yet it holds its position only because of a delicate balance of power between that country's population of unruly tribesmen. Saudi Arabia itself is only too likely to be afflicted by extremist Moslem sentiments such as those which have convulsed Iran in recent years. Whatever the political situation there it is a fact that the world's resources of oil are fast running out. The supply of oil is in glut now, simply because the major suppliers are pumping oil out of the fields virtually as fast as they can. But nothing they can do can increase the amount of oil actually in those fields. It is true that other areas will come into production when the price rise is very much higher than it is now and they are seen as economic. That very much higher price will, of course, apply the most severe sanctions to our society if we are forced to pay those prices. Of course even these resources are finite resources only.

So the scenario must be one in which liquid fuels derived from oil become scarcer and more expensive until finally they are completely or nearly completely exhausted. Regional or global war could advance the timing of this scenario quite dramatically and disastrously for this country. If with this background in mind we look at the Bill we are considering-I repeat that it is a Bill for an Act to facilitate the management of liquid fuel that is or is likely to be in short supply-we see that the Bill looks thin indeed because it is basically an instrument to requisition, ration and redirect those supplies of liquid fuel actually in the country and available. Nothing in the Bill can provide another drop of fuel if the crisis comes.

Of course, new technologies exist that would make it possible for this country to withstand the sort of crisis I have described. It is not necessary for liquid fuel to be derived only from crude oil. But it requires action being taken by government soon. That technology I am describing, which is very well established and used in many parts of the world, uses natural gas to make fuel methanol or, by a further chemical process, petrol. Our Pacific neighbour, New Zealand, has just completed in its North Island a major petrochemical complex which uses natural gas from its Maui field to make ethanol and petrol. New Zealand is a poorer country than Australia but there has been a political consensus there for some time that this is necessary for strategic reasons alone. If New Zealand suddenly lost all sources of imported oil, at least half the motor traffic could continue to run. While in New Zealand I discussed this with the Prime Minister, Sir Robert Muldoon, and the Opposition Leader, Mr Lange. Both agreed it was necessary. I suggested to Sir Robert Muldoon that on strategic grounds alone it was desirable. He agreed with that and said that it was by no means merely an economic matter.

I raised that point because I have suggested a number of times, often by way of question in this place, to the Minister for Resources and Energy (Senator Walsh) that it is high time we started on the same technology, with at least one complex to make probably methanol-I do not think it is necessary for us to go to petrol here yet-from natural gas as a supplement to our existing supplies. This could be used as a blend initially because M20, that is, 20 per cent methanol with petrol, requires no changes to the engines of cars. Because methanol has a high octane rating it is a useful alternative to putting lead into petroleum which is, of course, known to be harmful to the health of people who have to breathe the exhaust fumes that motor traffic produces in such huge quantities, especially in a city like Sydney. So the methanol option does have that advantage as well.

A comprehensive test was undertaken some little time ago, between May 1975 and June 1976, by the Volkswagen group supported to the extent of about $800,000 by the West German Federal Ministry of Research and Technology. The VW program employed 45 vehicles and consumed 150,000 litres of test fuel with a blend of 85 per cent gasoline to 15 per cent methanol, and the test environment ranged from the heat of Corsica to the cold of Lapland. The vehicles, said VW, were in more or less normal production state, although some of the plastic components had been replaced with others made of methanol resistant material. The introduction of these materials into normal line production is said not to present many problems and would be a quite minor item in the cost of a motor vehicle, a few dollars. Volkswagen's report on the test program makes some interesting points. (Quorum formed)

I was describing the fascinating Volkswagen experiment with methanol and I pointed out that Volkswagen's report on the test program makes some interesting reading: Basically methanol blends are already-honourable senators should remember that this was eight years ago-an acceptable alternative of equal value to normal petrol. Methanol can improve the efficiency of an engine to the point where a 3 per cent energy saving can be achieved and, of course, emission quality is also improved, this being because no lead is emitted if one uses methanol instead of lead to increase the anti-knock capacity. The equipment of new vehicles on the production line for operation on a blended fuel is possible without much extra cost, but Volkswagen says interestingly enough that the conversion of old vehicles is not justifiable except in the case of a national emergency. I suggest that this makes an important point which I commend to the Minister: This is something we have to plan a long way ahead and in association with our motor manufacturers if we are ever going to get to the stage of using methanol alone as a fuel. This was the case with methanol vehicles in Brazil. It was necessary for Fiat Brazil to tool up on its production line for cars which use total alcohol. This in itself is an argument for pretty long term planning of this type of situation. The final Volkswagen point was that even under difficult climatic conditions test vehicles operated perfectly. It has been proven pretty much by a reliable engineering firm whose qualifications to do this sort of work cannot be disputed that this is a goer and is a form of liquid fuel that could keep our buses, our trucks, our tractors and our cars going in a time of emergency.

The Minister's reply to me, not unreasonably, has been: 'Not yet. I have looked at this and it is not economic. We are keeping an eye on the situation'. I suggest to the Minister that economic factors are not necessarily the only ones to be taken into account in this matter. We are living now in a very uncertain world over which we have no control. We cannot really control what is going to go on in Saudi Arabia. We do not know what is going to happen eventually in the Iran-Iraq war. That behoves us to take into account some sort of planning which would provide us with some sort of supplement if we found ouselves all alone in the hard cold world, maybe in wartime, without the means to keep our vehicles going.

I also bring to the Minister's attention the scenario of a world war, not now but in 10 or 15 years time, when our own Bass Strait crude was running down. We would then be dependent on oil imported from overseas. I believe that in the next war there will be no sea traffic and no courageous tanker crews. It will not be worth while having them as every one of them will be knocked off and sunk before it is an hour out of port. It will be understood that there is no future in trying to send oil to Australia in time of war. There will be none whatsoever . That supply could dry up completely in a matter of days or weeks. When that is taken into account, it is sensible for us to start planning the natural gas to methanol and petrol option and to do it in association and co-operation with our motor manufacturing industry so that we have some kind of insurance policy against the future. We know the time will inevitably come when it will be necessary for us to do this. We are fortunate; we are a lucky country because we have truly vast resources of natural gas on the North-West Shelf which provides us with the opportunity of taking this option.

There are, of course, problems of blending petrol and methanol due to the tendency of methanol to combine easily with water, like most alcohols, as we all know when we pour ourselves a Scotch and water. Petrol does not do that. Petrol tends to float on top of the water. This causes what is called phase separation. The methanol and water form one layer in the tank and the petrol another. However, this and similar problems have now been solved and the technologies exist to cope with them completely. Finally, the lead time for this technology is at best five years and probably 10 years if we are to get the motor industry to tool up for cars coming off the production line that can use this technology fully. If we started the operation now we could have our first plants operating by about 1990. We would perhaps be coming to a methanol car and the methanol fuel area about 1995. I suggest to the Minister that is about spot on. On that basis, now would be the time to start.

Debate interrupted.