Australia Could Become "the New Saudi Arabia"

[OnionTerror]

http://www.telegraph.co.uk/news/worldnews/australiaandthepacific/australia/9822955/Trillions-of-dollars-worth-of-oil-found-in-Australian-outback.html

The discovery in central Australia was reported by Linc Energy to the stock exchange and was based on two consultants reports, though it is not yet known how commercially viable it will be to access the oil. The reports estimated the company’s 16 million acres of land in the Arckaringa Basin in South Australia contain between 133 billion and 233 billion barrels of shale oil trapped in the region’s rocks.

It is likely however that just 3.5 billion barrels, worth almost $359 billion (£227 billion) at today’s oil price, will be able to be recovered. The find was likened to the Bakken and Eagle Ford shale oil projects in the US, which have resulted in massive outflows and have led to predictions that the US could overtake Saudi Arabia as the world’s largest oil producer as soon as this year. Peter Bond, Linc Energy’s chief executive, said the find could transform the world’s oil industry but noted that it would cost about £200 million to enable production in the area.

Shale oil is more costly to extract than conventional crude oil and involves the controversial process of hydraulic fracturing, commonly known as fracking. This involves introducing cracks in rock formations by forcing through a mixture of water, sand at chemicals at high pressure. “If you took the 233 billion, well, you’re talking Saudi Arabia numbers,” Mr Bond told ABC News. “It is massive, it is just huge If the Arckaringa plays out the way we hope it will, and the way our independent reports have shown, it’s one of the key prospective territories in the world at the moment.

"If you stress test it right down and you only took the very sweetest spots in the absolute known areas and you do nothing else, it is about 3.5 billion [barrels] and that’s sort of worse-case scenario.”

Australia is currently believed to have reserves of about 3.9 billion barrels of crude oil - about 0.2 per cent of the world’s total - and produces about 180 million barrels a year. The latest find, at the lowest estimate, would make Australia a net oil exporter; at the higher estimate, Australia would become one of the world’s biggest oil exporters. Tom Koutsantonis, South Australia’s mining minister, said the reserves were deep and remote and it was too early to confirm whether they can be profitably tapped.

“All these things are luck and risk,” he said.

“What we’re seeing up there is a very, very big deposit If the reserves and the pressure was right over millions of years and the rocks have done the things they think they’ve done, they think they can extract vast reserves of oil out of South Australia which would have a value of about $AUS20 trillion. (£13 trillion)”

The consultants reports, based on drilling and geological and seismic surveys, did not indicate how easily the oil can be tapped or profitably produced. John Young, a resources analyst at investment group Wilson HTM, said the reserves were “massive” but the actual volumes that may emerge remained uncertain.

“The numbers are going to be very large, but we really need to move from that [to] the quality of the resource - how good is it, how economic will it be, and that’s going to take a significant amount of exploration and appraisal work before the industry’s in a position to determine that,” he said. South Australia recently had a setback when BHP Billiton announced it was shelving a £20 billion plan to build the world’s biggest open-cut mine at Olympic Dam, which has the biggest known uranium deposit and the fourth biggest copper and gold deposits.

As Mr Koutsantonis, the state’s mining minister, said of the latest find: “Whether it’s economic to recover or not is still the question South Australia is blessed with abundant resources but there are a few setbacks and those setbacks are that they’re remote and they’re deep.”

Edited January 25, 2013 by Dave Beans

[Fortune]

It's too late. There isn't enough time to get it out of the ground. And there is neither enough capital nor energy to make it happen. My guess is that oil prices would have to double from here to make it economically worthwhile. And what will that do to the worldwide economy? Demand destruction. So we are back to square one. We are so totally screwed.

[Quantitative Spouting]

It's too late. There isn't enough time to get it out of the ground. And there is neither enough capital nor energy to make it happen. My guess is that oil prices would have to double from here to make it economically worthwhile. And what will that do to the worldwide economy? Demand destruction. So we are back to square one. We are so totally screwed.

Nonsense. 13tn is a vast amount of money, nearly 10 years of the total UK GDP. Just like UK shale gas will open up a fresh era of self supporting gas production.

[Executive Sadman]

I watched that 5 minute thorium (actually about 1.2 hours) someone posted on here a week ago. If this guy Kirk sorenson is right, and thorium can be combined with that air to oil (co2 to ch4 or something) they trialled in stockon (or even denninger with his thorium + coal to diseasal) there will be plentiful energy worldwide and Australia will be a non entity.

While I think these are probably possible, the green luddites that infest politics will probably stop plentiful and cheap energy.

[Fortune]

Nonsense. 13tn is a vast amount of money, nearly 10 years of the total UK GDP. Just like UK shale gas will open up a fresh era of self supporting gas production.

Well, I'm a subscriber to Peak Oil and I think we passed it in 2005. It never was a question of human civilsation running out of oil but rather a question of how much would it cost to get it out of the ground. Shale oil has about an Energy Return on Investment (EROI) of about 5 to 1 (5 units of energy obtained from 1 unit of expended energy). Just to keep things as they are we need an EROI of about 10 to 1. And to maintain human civilisation at a minimal existence we need at least 3 to 1. So shale oil is woefully not enough. Have a gander at the oil drum for the whole concept of EROI: http://netenergy.theoildrum.com/node/6284

Add to that the death throes of fiat currency worldwide and we have a serious problem that cannot be kicked away into the future as usual. So again, to put it in a nutshell, we are screwed.

[TrevorS]

Nonsense. 13tn is a vast amount of money, nearly 10 years of the total UK GDP. Just like UK shale gas will open up a fresh era of self supporting gas production.

http://www.smh.com.au/business/20-trillion--not-reality-check-for-linc-oil-find-20130124-2d8zf.html

"$20 trillion ... not: reality check for Linc oil find"

Meanwhile BP not convinced here...

http://www.telegraph.co.uk/finance/newsbysector/energy/oilandgas/9806638/Shale-gas-is-not-a-game-changer-for-the-UK-says-BP.html

"Christof Rühl, BP’s chief economist, said it foresaw “extremely limited growth” in shale gas in Europe. “Europe has various problems: environmental concerns, outright bans on fracking, a lack of infrastructure and a long tradition of not minding so much having to import things,” he said.

Energy Minister John Hayes told MPs on Wednesday afternoon that shale gas could have a “profound economic effect” on the UK. But Mr Hayes conceded it would be unwise to make direct comparisons with the speed and scale of development in the US because the UK’s geography, geology and land ownership were different and cost of extraction may be higher." .

Need to bribe the NIMBYs makes it less economic.

..nor BG.

http://www.telegraph.co.uk/finance/financetopics/davos/9821023/Davos-2013-UK-shale-gas-no-game-changer-says-British-Gas-boss-Sam-Laidlaw.html

"Sam Laidlaw, chief executive of British Gas owner Centrica, said it would be at least a decade before the UK saw any shale gas production and that, even then, it would not be “the game changer we’ve seen in North America”...partly because of the environmental concerns and partly because we don’t have a well-developed supply chain.

He added that other obstacles included planning regulations, the “density of the population” in potential exploration areas, and “landowners’ incentives”."

NIMBYs continue to hold the whip hand. Tail wagging the dog.

"Some US energy specialists at Davos have expressed doubts about whether the UK has the political will to push ahead with shale gas in the face of likely local resistance"

I guess we all know the answer to that one.

Story comments reveal high levels of ignorance and conspiracy theory. Are these growing? Both are strong features of many third world countries.

[wherebee]

The finds in the outback are interesting as another demonstration of Australias long term vital strategic postion to both US and China. Expect more marines in Darwin soon.

Bad news is this means more free money for politicians to be spunked up agains the wall in OZ, more left wing vote buying, and I predict now mass immigration to ruin the country in the same way as the UK has gone.

F&&&&UCK.

[Kurt Barlow]

Probably Hyperbole.

There is no water where this 'oil' find is which of course is shale oil which will require hydraulic fracturing. To utilise this resource they will have to build a power plant (a big one) and desal plant at Whyalla then pump the water 400km inland and distribute to the many thousands of well heads that will be needed to exploit this reserve of tight oil. They will also have to build power lines from the coast as there is insufficent water to run large power plant in that location unless you also pump cooling water there too.

None of the above is a a complete show stopper but does demonstrate that this won't be cheap oil.

Nethertheless it does further reinforce the logic of my decision to emigrate here

[corevalue]

Probably Hyperbole.

There is no water where this 'oil' find is which of course is shale oil which will require hydraulic fracturing. To utilise this resource they will have to build a power plant (a big one) and desal plant at Whyalla then pump the water 400km inland and distribute to the many thousands of well heads that will be needed to exploit this reserve of tight oil. They will also have to build power lines from the coast as there is insufficent water to run large power plant in that location unless you also pump cooling water there too.

None of the above is a a complete show stopper but does demonstrate that this won't be cheap oil.

Nethertheless it does further reinforce the logic of my decision to emigrate here

Kurt, you party-pooper!

[Executive Sadman]

The finds in the outback are interesting as another demonstration of Australias long term vital strategic postion to both US and China. Expect more marines in Darwin soon.

Bad news is this means more free money for politicians to be spunked up agains the wall in OZ, more left wing vote buying, and I predict now mass immigration to ruin the country in the same way as the UK has gone.

F&&&&UCK.

Yep. Having lots of resources under your control tends to get govt to do funny things (see Saudi arabia, Venezuala) Generally, if the public get a few scraps thrown to them, they'll led the govt do whatever they want.

[Gigantic Purple Slug]

Probably Hyperbole.

There is no water where this 'oil' find is which of course is shale oil which will require hydraulic fracturing. To utilise this resource they will have to build a power plant (a big one) and desal plant at Whyalla then pump the water 400km inland and distribute to the many thousands of well heads that will be needed to exploit this reserve of tight oil. They will also have to build power lines from the coast as there is insufficent water to run large power plant in that location unless you also pump cooling water there too.

None of the above is a a complete show stopper but does demonstrate that this won't be cheap oil.

Nethertheless it does further reinforce the logic of my decision to emigrate here

They will drill a well and use the water out of that.

[Kurt Barlow]

They will drill a well and use the water out of that.

That wasn't an option for the Olympic Dam expansion which isn't that far away. There they were looking at Desalination at Whyalla / Port Augusta and piping the water to Roxby.

[TriceratopsKitchen]

That wasn't an option for the Olympic Dam expansion which isn't that far away. There they were looking at Desalination at Whyalla / Port Augusta and piping the water to Roxby.

Pretty sure the western extent of the Great Artesian Basin is under Arckaringa.

[Kurt Barlow]

Pretty sure the western extent of the Great Artesian Basin is under Arckaringa.

Might have been once although I thought in SA it was largely restricted to the North East - ie Cooper Basin area.

[TriceratopsKitchen]

Might have been once although I thought in SA it was largely restricted to the North East - ie Cooper Basin area.

Certainly water above ground in the Cooper Basin system, we've been there and fished it.

Not sure how optimistic this map is, but looks to cover the area where they intend to frack.

[Kurt Barlow]

Certainly water above ground in the Cooper Basin system, we've been there and fished it.

Not sure how optimistic this map is, but looks to cover the area where they intend to frack.

It would appear to cover the area in question but that does not mean the volumes required are available. A given area will only support a certain discharge rate which if exceeded will exhaust supplies in that locaility. Given that most of the recharge of the GAB occurs in QL then I suspect the SA part is most vulnerable to depletion.

Edited January 26, 2013 by Kurt Barlow

[TriceratopsKitchen]

It would appear to cover the area in question but that does not mean the volumes required are available. A given area will only support a certain discharge rate which if exceeded will exhaust supplies in that locaility. Given that most of the recharge of the GAB occurs in the NT and QL then I suspect the SA part is most vulnerable to depletion.

Yeah. Not sure. I've never dug a bore there or anywhere. I'm still yet to find consensus as to how significant recharge rates of the GAB are, seems to vary from "this is ancient groundwater, and the pressures coming out of bores have dropped 50% in 100 years" to "Since it pissed down last year, the GAB is being replenished".

[RufflesTheGuineaPig]

If there is $300bn worth of oil there, someone will find a way to get it out.

For $300bn someone will lay a pipe and ship in some bit generators.

[mk1mini]

Well, I'm a subscriber to Peak Oil and I think we passed it in 2005. It never was a question of human civilsation running out of oil but rather a question of how much would it cost to get it out of the ground. Shale oil has about an Energy Return on Investment (EROI) of about 5 to 1 (5 units of energy obtained from 1 unit of expended energy). Just to keep things as they are we need an EROI of about 10 to 1. And to maintain human civilisation at a minimal existence we need at least 3 to 1. So shale oil is woefully not enough. Have a gander at the oil drum for the whole concept of EROI: http://netenergy.theoildrum.com/node/6284

Add to that the death throes of fiat currency worldwide and we have a serious problem that cannot be kicked away into the future as usual. So again, to put it in a nutshell, we are screwed.

Nail and head. Ultimately the worlds economy is based on eternal growth but there are only limited resource -we are trying to create an infinite system out of finite resources!

[The Masked Tulip]

Oz will need the money to buy loads of warships, submarines and fighters. They can't rely on stopping aggressors at the Brisbane Line.

[Kurt Barlow]

If there is $300bn worth of oil there, someone will find a way to get it out.

For $300bn someone will lay a pipe and ship in some bit generators.

But if the cost of producing that oil is $90 a barrel at current prices that isn't a very attractive investment proposition. Further more if your production is going to be based on diesel gen sets then production costs are going be closely related to the oil price.

Sort of explains why to date shale oil production has never really got off the ground. Most of the recent developments in enhanced oil recovery don't work in these types of fields. I accept though hydraulic fracturing techniques make explotation more viable.

[Damik]

Probably Hyperbole.

There is no water where this 'oil' find is which of course is shale oil which will require hydraulic fracturing. To utilise this resource they will have to build a power plant (a big one) and desal plant at Whyalla then pump the water 400km inland and distribute to the many thousands of well heads that will be needed to exploit this reserve of tight oil. They will also have to build power lines from the coast as there is insufficent water to run large power plant in that location unless you also pump cooling water there too.

None of the above is a a complete show stopper but does demonstrate that this won't be cheap oil.

Nethertheless it does further reinforce the logic of my decision to emigrate here

or perhaps not: http://www.gizmag.com/dry-extraction-fracking/23513/

also not sure why would you need the cooling water for the gas turbine ...

[Kurt Barlow]

or perhaps not: http://www.gizmag.com/dry-extraction-fracking/23513/

also not sure why would you need the cooling water for the gas turbine ...

Fine if you are happy with the relative cost of operating an open cycle gas turbine at about 25% efficiency. Do you have any idea of the cost of hauling fuels into the interior of Australia where no rail networks run?

[Kurt Barlow]

or perhaps not: http://www.gizmag.com/dry-extraction-fracking/23513/

also not sure why would you need the cooling water for the gas turbine ...

There are various developmental techniques for fracking as an alternative to water including Co2 and nitrogen. As for liquid propane I'm quite interested to see how that works pumping it into rocks that are between 50 and 100 degrees centigrade notwithstanding the issues around hauling and storing the quantities required in one of the hottest and remotest spots on the planet.

[BalancedBear]

Fine if you are happy with the relative cost of operating an open cycle gas turbine at about 25% efficiency. Do you have any idea of the cost of hauling fuels into the interior of Australia where no rail networks run?

There is plenty of solar energy to b harvested in Australia though. If the oil fields were large enough, I'm sure pipelines and train lines could be constructed.