PRIME MINISTER I,.
FOR MEDIA THURSDAY 28 FE1 J6 R190,
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 Runidle Shale Project, they have selected Esso
Exploration and Production Australia Incorporated ( Esso) for
furtCher 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 SPPi'CPI4' 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. 2
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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. M~ any 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 potentirl1 of
around 200,000 barrels of oil per day, which is about 30 per cent
of Australia's current requirements. Such prodJuction would
augment the world energy supplies and would replace 70 per cent
of Aust--ralia'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 a. 3
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between 6000 and 8000 people for several years. The project
will be a very substantial addition to Queensland and Australials
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
will 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. 000---