Australian Shale Oil Experiment to Close

SYDNEY, Australia, July 22, 2004 (ENS) - Greenpeace Australia is declaring victory after the announcement Wednesday that Queensland's only shale oil pit is to be partly closed. The project to extract the fossil fuel from shale, a type of stone, has been fraught with environmental and financial problems.

Shale oil company Queensland Energy Resources (QER) said that Stage 1 of the controversial Stuart Shale Oil Project near Gladstone in central Queensland is to be shut down.

“Shale oil is an environmental nightmare and the closure of the Stuart Project makes it more difficult for a shale oil industry to be developed in Australia,” said Greenpeace climate campaigner Gareth Walton.

Stuart Shale Oil Project (Photo by by Graham Pope courtesy Australian Institute of Geoscientists)

In February, U.S. based Sandefer Capital Partners formed the Queensland company to buy Southern Pacific Petroleum (SPP). Sandefer Capital Partners was the major investor in SPP, which had been in the hands of receivers since December.

Greenpeace says Sandefer purchased the A$360 million shale oil project and around 14 billion barrels of shale oil, for less than A$40 million.

"Stage 1 is not a success – it’s more than four years behind schedule and more than $130 million over budget; has had repeated technical problems, has never run at full capacity and has never made a profit despite being propped up by millions of dollars of government subsidies, Walton said.

QERL Chairman Ross Dunning said that despite the closure, the future of the company is bright. "Over the past several years, Stage 1 has produced over 1.5 million barrels of oil." He said this record demonstrates that "large volumes of oil can be produced from the Stuart deposit," he said.

But Walton said, “Despite QER’s talk, today’s decision means that Stage 2 of the Stuart Project is now less likely to proceed. QER’s claims that shale oil can be environmentally responsible are not credible."

“The Stuart Project was an experiment that never should have been started. “Industry and governments should be developing sustainable industries; renewable energy such as wind and solar, rather than unsustainable industries like shale oil which put worker’s jobs at risk,” said Walton.

Nine other companies, including the Queensland Gas Company continue with their shale oil development projects in various Queensland locations.

Greenpeace has been campaigning against the development of a shale oil industry in Australia since 1998 because of its environmental impacts, particularly its greenhouse emissions.

Oil shale is a fossil fuel, but despite its name is not really oil but kerogen. When the shale rock is heated, the resulting vapor becomes liquid oil when cooled.

The Australian Institute of Geoscientists says the shale at the Stuart Stage 1 pit is about 200 liters (52 U.S. gallons) of shale oil per metric ton at zero percent moisture.