An Australian coal rush is on, with visions of oil from liquefaction

A rush is on to exploit a new source of oil in australia: the nation's vast coal deposits. Australian, Japanese, and US groups are taking part in projects now under discussion -- and two proposals already have government go-aheads, depending on current feasibility studies. Oil from coal has become the hottest energy topic in the country.

Most of the proposed plants will depend on brown coal deposits in Victoria which are owned by that state's government. The Victoria state government has announced it's approval of a (US) $4.7 billion coal liquefaction plant proposed by Rheinische Braunkohlenwerke AG of West Germany, subject to successful conclusion of a feasibility study.

And it also approved an application by Nippon Brown Coal Liquefaction Company -- a consortium comprising major Japanese companies -- to build a (US) $235 million pilot coal liquefaction plant in Victoria. If the small plant is successful, a full-scale one is envisaged. Victoria officials believe both projects could be operational between 1985 and 1987.

Another project is also close to gaining official approval in Victoria, also dependent, like the two others, on the state's vast brown coal reserves. Mitsui & Co., one of Japan's largest trading companies, is proposing construction of a plant to produce solvent refined coal -- several steps short of oil production and therefore less expensive -- to provide a comparatively cheap fuel for Japanese steel furnaces.

State officials believe approval will be granted within a few months, after the conclusion of ongoing studies in Victoria and at a pilot plant in Japan.

Arco Australia Ltd., a subsidiary of the Atlantic Richfield Company of the United States, is also financing feasibility studies aimed at establishing whether a coal liquefaction plant would be profitable. It envisages using privately owned Victoria brown coal deposits belonging to a long-established Austrialian oil producer, Moonie Oil Company (Moonie produces oil from onshore wells in Australia's Queensland State).

Many resource experts believe oil-from-coal projects would already be profitable at today's fuel prices.

Broken Hill Proprietary Company Ltd., Australia's largest company, with stakes in mining, oil production, and manufacturing, is also engaged in preliminary studies before deciding whether to launch an oil-from-coal project of its own, using black coal in the states of New South Wales or Queensland.

Commenting on BHP's research so far, the company's project development manager, Norman Keith, is enthusiastic about the potential of coal liquefaction.

And, he notes, Australian oil production will diminish -- unless there are new discoveries -- to point where, in 1990, there will be a daily deficit of 500 ,000 barrels a day. His company is studying proposals that it spend (US) $2.3 billion on a plant to produce 100,000 barrels of oil from coal daily.

Australia now imports 30 percent of its oil requirement. the bulk of its needs is supplied from the domestic Bass Strait offshore fields. But Bass Strait production is expected to decline in the second half of this decade. Hopes of major discoveries off the coast of Western Australia to rival Bass Strait have so far not been realized. But intense exploration continues.

Meanwhile, a desire to ensure future oil supplies has focused attention on alternative sources. Aside from coal, shale has been the target of much optimistic attention. One oil-from-shale project has already received government approval.

In the state of Queensland, an Exxon Inc. subsidiary, Esso Australia Ltd., is financing feasibility studies at the vast Rundle shale deposits, owned by Southern Pacific Petroleum and Central Pacific Minerals, two closely linked exploration companies.

If the studies are successful, the companies say, the plant may be operational about 1987, with output of around 25 percent of Australia's present oil needs once peak production levels are reached.

Most analysts foresee no last-minute hitches to prevent Rundle's becoming productive.

Share values of other companies controlling shale deposits have increased dramatically now that shale seems set to become a major source of Australian oil.

Coal, though it has lagged behined shale in glamour, has in recent months grabbed public attention as it became known that many major corporations, both local and foreign, were optimistic about its potential.

A large oil-from-coal industry exists in South Africa, where authorities encouraged the industry because of threats to that country's imported oil supply in protest against the segregationist racial policies in force there.

Oil-from-coal technology has, as a result, been improved in South Africa.

Similar technology will be used in Australia.

State and federal officials expect more proposals to establish oil-from-coal plants to be made in the first half of this year.

Victoria officials say approvals granted so far will not prevent the establishment of more coal-to-oil plants.

"There's room for everybody," says Neil Smith, chairman of the Victorian Gas & Fuel Corporation, a state government agency.

"There's a big demand for fuel -- and a need for several of these projects," he declares.

The Australian Coal Corporation, another group with its eye on coal liquefaction, using Queensland coal, called for a feasibility study by Fluor Engineers & Constructions Inc. of the US.

Fluor's report, now being evaluated by the Australian Coal Corporation, considers the proposed project "technically and economically feasible and strategically wise."

Some analysts believe that by the end of the decade Australia may have as many as 8 coal liquefaction plants: 4 in Victoria, 2 in Queensland, and 2 in New South Wales.

Whether this forecast is overoptimistic or not, it seems certain coal will play a major part in providing Australia's gasoline and other oil needs within a f ew years.

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