Queensland bans oil shale projects for 2 years

Rick Wilkinson
OGJ Correspondent

MELBOURNE, Aug. 25 -- The Queensland government has placed a 2-year moratorium on oil shale projects, paralyzing the proposed Queensland Energy Resources Ltd. (QER) project in the McFarlane deposit about 15 km south of Proserpine on the state's central east coast.

The project would entail bulk sampling and open cut exploration of about 400,000 tonnes of oil shale material in the area.

Queensland Premier Anna Bligh flew to north Queensland over the weekend to formally block the $14 billion (Aus.) project.

She cited concerns of community and environmental groups who maintain that the Whitsunday region tourism industry and the Great Barrier Reef are at risk if the project proceeded.

The premier widened the ban by imposing the moratorium on all new oil shale projects while it investigates the environmental impacts of shale oil mining.

Only one lease—around the Stuart deposit near Gladstone—is current, and that was granted by the previous government in the 1980s. Bligh declared, "No new shale oil mines will be permitted in the state."

The move has created an outcry by the mining industry, with Queensland Resources Council CEO Michael Roche accusing the government of protecting the marginal Labor Party seat of Whitsunday at an election due later this year.

He added that exploration companies already rank Queensland as the least attractive jurisdiction in Australia, and the latest decision will simply reinforce that view.

"Sovereign risk is a key consideration with billions of dollars at stake," he added.

For its part QER says the government's move is premature. A company statement said: "The company remains convinced that developing the state's strategically important oil shale resources is in the best long-term interest of both Queensland and Australia."

Only 2 weeks ago the company announced it had abandoned the Alberta-Taciuk Processor (ATP) revolving kiln oil-shale processing technology in favor of the Paraho II technology to develop its vast oil shale deposits along the east coast of Queensland (OGJ Online, Aug. 14, 2008).

Paraho II technology has already been tested with more than 8,000 tonnes of Queensland oil shale samples.

QER says the deposits have the potential to produce 1.6 billion bbl of shale oil over the next 40 years.

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