Unconventional fossil fuels in South Australia — a bonanza to pass up

October 15, 2011
BHP's Olympic Dam uranium mine.

“I’ve come to believe that if we burn all reserves of oil, gas and coal, there is a substantial chance we will initiate the runaway greenhouse. If we also burn the tar sands and tar shale, I believe the Venus syndrome is a dead certainty.”

That was how renowned US climate scientist James Hansen, in his 2009 book Storms of my Grandchildren, set out the consequences for humanity of going after the last joule of fossil-carbon energy. The “Venus syndrome” refers to the prospect that Earth, like the planet Venus eons ago, will heat up unrestrained to the point where life becomes impossible.

To develop “unconventional” fossil fuels in a big way is, therefore, to court the ultimate environmental catastrophe.

Unlike Canada, Australia doesn’t have tar sands. But it does have large quantities of tar shales — in this country usually referred to as “oil shales”. Also, beneath our land surface are vast amounts of coal suitable for turning into liquid fuels or electricity through non-conventional methods.

If energy corporations have their way, South Australia’s northern expanses will have at least three large unconventional fossil fuel developments in coming years. Between Coober Pedy and Oodnadatta, Chinese and British interests are planning a major coalmine, to feed a coal-to-liquids plant and electricity generation.

Near the town of Orroroo in the state’s northern wheatlands, underground coal gasification is to be used to produce diesel fuel and more electricity. South-east of Coober Pedy, a large, newly discovered resource of oil shales is planned eventually to yield about two-and-a-half times Australia’s total current reserves of crude oil.

These three developments are projected to pump out greenhouse emissions throughout much of the century. True, the plans surmise that carbon dioxide from the processing and generating plants will be captured and locked away underground.

But no-one is saying where, and the storage technology remains unproven. Meanwhile, the emissions from cars and trucks that burn the liquid fuels produced will go straight into the atmosphere.

Geologists have known for many years that the Arckaringa Basin in northern South Australia contains one of the country’s largest resources of black steaming coal. The remoteness and depth of the deposits previously made extraction uneconomic.

Now, the London-listed firm Altona Energy has carried out exploration work and joined with the China National Overseas Oil Corporation to draw up plans for a coal-to-liquids operation to yield 10 million barrels a year of fuels, mainly diesel.

The coal is to be mined by conventional open-cut methods, then processed using the well-established Fischer-Tropsch method. This involves reacting the coal with water vapour at high temperatures to produce a mixture of gases known as “syngas”.

After purification, the syngas is passed over a catalyst to produce liquid hydrocarbons. In the absence of carbon capture and sequestration, Altona’s fuels are likely to have a carbon “footprint” greater by around half than that of conventional diesel or petrol.

The Fischer-Tropsch process gives out large amounts of heat, which will be used to generate electricity. The developers anticipate spare capacity of 560 megawatts, which they hope to export as base-load power to a grid connection at the Olympic Dam copper-uranium mine, 350 kilometres away. The process will also provide feed stocks for a petrochemicals plant.

The coalmine will be within the Great Artesian Basin, and large quantities of water will need to be pumped out to keep the workings dry.

The developers pledge to re-inject enough water into aquifers to stop ecologically valuable mound springs from drying up. Altona’s website, however, still promises a “potential water supply to open up the vast northern tracts of South Australia to industry and agriculture.”

Fischer-Tropsch technology also lies at the heart of the Orroroo project slated for development by the Queensland firm Linc Energy. Here, though, the syngas will not be produced in an above-ground retort. Instead, drill-holes are to be sunk into a deep, unmineable coal seam.

Air or oxygen will be pumped down, and the coal seam set on fire. In the resulting high temperatures, the coal will react with the oxygen and with underground water to produce syngas, which will be piped to the surface.

Much of the art with underground coal gasification lies in stopping toxic combustion products from polluting groundwater. In July 2010 such contamination halted a pilot operation by the firm Cougar Energy near Kingaroy in Queensland.

In South Australia, Linc maintains, this danger will be avoided. Linc plans to produce more than 7 million barrels of diesel fuel a year at Orroroo, while supplying as much as 500 megawatts of electricity to the grid.

Linc is also behind the plans to extract shale oil from the Arckaringa Basin near Coober Pedy. In the case of shale oil, liquid hydrocarbons are bound closely to the particles within shale, a fine-grained sedimentary rock.

The strength of these bonds, the Oildrum website notes, means this oil is much more energy-intensive to extract than oil from tar sands.

But if underground temperatures can be raised high enough, the hydrocarbons are freed from the shale and can be pumped to the surface through a borehole, as with conventional crude.

In its media releases, Linc speaks of “modern technology” making the underground heating possible.

The September 28 Australian refers to “burning the shale while still underground”, but this almost certainly reflects confusion with coal gasification. Heating methods that have been tried with oil shales involve microwaves and electrical resistance. Or, Linc’s engineers may have in mind drilling numerous boreholes and circulating hot air, carbon dioxide or steam.

Heating entire geological strata to high temperatures takes formidable amounts of energy, and if the source is fossil fuels, the greenhouse impact of shale oil production becomes alarming.

A 2007 University of California study reports emissions similar to those for oil produced from Canadian tar sands. As environmentalists point out, burning fuel derived from tar sands gives a modest family sedan something approaching the greenhouse footprint of a Hummer.

For people able to lock away the dangers of fossil carbon emissions in deep recesses of their brains, the new prospects in South Australia are enticing.

State Labor minister for mineral resources development Tom Koutsantonis remarked in late September: “These are exciting times for SA’s resources industry and these recent developments in the Arckaringa Basin showcase the exploration potential of this state.”

The quantities of hydrocarbons offered by the new projects are impressive. Linc anticipates total shale oil production of 8.2 billion barrels from its Arckaringa prospect, and Altona, 7.8 billion from its coal-to-liquids scheme.

In all, production from the three new unconventional fuel developments could multiply by five Australia’s proved oil reserves, estimated in 2010 at 3.3 billion barrels.

Whatever the costs to the environment, the potential profits are of a kind to make investors drool. Referring to his company’s underground coal gasification, Linc CEO Peter Bond was quoted by the ABC on April 8 as saying, “We can produce a barrel [of diesel] for $30.” For comparison, current prices of conventional crude oil are above US$80.

If the projects in South Australia succeed, other corporations can be expected to pile into an unconventional-energy bonanza. Further reserves of shale oil are located in Queensland, inland from Mackay and Gladstone. Underground coal gasification, as at Orroroo, could allow the extraction of huge amounts of currently unmineable coal from numerous Australian basins. Total recoverable coal reserves could multiply — if an estimate relating to US coalfields applies in Australia as well, by as much as 300%.

And what if workable, acceptably cheap technologies aren’t available for capturing and storing the resultant emissions? On economic grounds, at least, there is nothing much to stop energy companies carrying on down the unconventional-fossil route.

When margins are $50 a barrel, any price that today’s governments seem likely to place on emitting carbon into the atmosphere becomes small change.

The potential cheapness of coal-to-liquids and shale-oil fuels brings with it a particular danger. If a rapid, global shift to clean transport technologies such as electric vehicles is to take place, a strong price signal in the form of rising fossil fuel costs seems essential.

“Peak oil”, with the depletion of conventional oil reserves outrunning new discoveries, is currently expected to drive such a price rise. But big quantities of unconventional-fossil liquid fuels, coming cheaply onto the market, would dilute the price signal and maintain transport emissions as a large part of human greenhouse impacts.

Extolling his company’s fuels, Linc CEO Bond was reported by the ABC on April 8 as saying: “This could actually put peak oil [for Australia] off for two generations.”

An obstacle for the unconventional-fossil developers is the fact that many of their costs come “up front”, requiring capital to be committed years before profits start to flow. Nevertheless, firms such as Altona and Linc seem well able to score backers for their plans.

Shortages of “up front” financing are blocking rapid development of renewable energy sources such as wind and solar, of which South Australia has world-class resources. In general, the renewables industry faces an acute funding drought.

The financial and technical resources now being lined up for unconventional fossil fuels should be redirected to renewable alternatives — by force of regulation if necessary.


3.3 billion barrels 1 barrel = ~ 317kg of CO2. Total CO2 = 1,046,100,000,000 kg CO2 Sums ok? How much carbonic acid - H2CO3 - does that amount to? http://en.wikipedia.org/wiki/Ocean_acidification Anyone for a soda? Why can't we just get a government that gives a damn about global warming? Why can't we force Holden and Ford to make only electric vehicles? Stuff the Bogans and Plebs!

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