Energy Finance

Australia’s Queensland state has implemented a ruling to ban shale-oil mining for 20 years, thus blocking a plan by Brisbane-based Queensland Energy Resources Pty. for an oil-sands stripmine to be constructed about six miles away from the nation’s Great Barrier Reef. 

Closely held Queensland Energy was formed in 2004 by U.S. investor Sandefer Capital Partners LP to buy most of the shale-oil assets of Australia’s Southern Pacific Petroleum NL.

The ruling interrupts plans by the E&P, owner of the McFarlane deposit, to dig up about 400,000 tonnes of rock for testing. The company plans to mine more than 1.6 billion barrels of oil from the play during the next 40 years.

Meanwhile, Queensland’s government will spend the next two years researching whether shale oil deposits can be produced in an environmentally acceptable way.

Beyond the land-based effects of stripmining the shale, Queensland officials are concerned that the proposed mine would create as much as 40 million tonnes per year of greenhouse gases.

According to the Queensland Resources Council, a mining industry association, the ruling will erode Queensland’s standing as a destination for exploration investment.

Currently, only one lease exists to mine shale oil in Queensland. That development is near the coast at Gladstone, about 550 kilometers by road from Brisbane.

Elsewhere, Canada’s Pembina Institute, based in Alberta, has also challenged government permits granted to companies with oilsands projects because of the effect on the environment. It is urging the province to slow the pace of oil-sands development.

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