Trillions of dollars worth of
oil found in Australian outback
Up to 233 billion barrels of oil has been discovered in the Australian outback
that could be worth trillions of dollars, in a find that could turn the region
into a new Saudi Arabia.
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.”