Southern Pacific Petroleum N.L. and Central Pacific Minerals N.L. (SPP/CPM) were founded in 1968, and since 1973, have pioneered the development of economic oil shale deposits. The companies today jointly control 24.4 (net) billion barrels of in situ shale oil in Eastern Coastal Queensland, Australia, and have adapted a new retort technology, the Alberta-Taciuk Processor (ATP), to enable economic production of oil from these shales.

SPP/CPM finalized a joint venture in 1997 with Suncor Energy Inc., (Suncor) to develop one of the companyís 10 deposits, the Stuart deposit, which has a total in situ oil shale resource of 3 billion barrels. SPPís Annual Report highlights the progress made on the Stuart Project.

The Stuart joint venture has a three-staged development plan to achieve total production of 85,000 barrels per day by 2007. Stuart Stage I, with a capacity of 4,500 barrels per day, is expected to become operational toward the end of 1999. (See related article in this issue.) The companies have also commenced initial technical and environmental studies for Stuart Stage II, which is expected to have a capacity of 15,000 barrels per day.

Planning for Stuart Stage II commenced in June 1997 with the inception of Southern Pacific Petroleum (Development) Pty. Ltd. (SPPD), a wholly owned subsidiary of SPP/CPM. SPPD was formed to investigate and perform the role of developer for all subsequent stages of the Stuart Project and is jointly funded by SPP/CPM and Suncor.

ATP Development

Data obtained from research conducted on the ATP from 1995 to 1997 under a federal government-sponsored research and development program is currently being incorporated into the Stage II design basis. This research evaluated thermal impacts of organic and mineral reactions during retorting and combustion, defined flow properties of the hot ash streams generated in the process and simulated alternate configurations proposed for the dryer/ash cooler section of the retort. Adding to this data are the results of design testing in the pilot plant in Calgary during September 1998 which confirmed the direction of design improvements for Stage II.

In October 1998 a team was formed to develop the ATP for Stage II. The team is developing a preliminary design basis for Stage II to provide a defined base for the application of Stage I test results.

An important part of the ATP teamís design work is the systematic capture of learning from Stage I which will be used to enhance performance and reduce technical risk in Stage II. The testing program during 1999 is designed to facilitate this and to confirm, on a larger scale, parameters determined in the 1998 Calgary pilot plant program.

Assuming technology and learning success from Stage I, two major milestones are planned for the Stuart Stage II Project: commencement of construction in 2001 and production of first oil in 2003.

SPP/CPM and their joint-venture partner on the Stuart Project, Suncor, expect to launch this new oil shale industry by the end of 1999 when the first reliable oil production is anticipated from the $250-million Stage I Demonstration Plant on the Stuart deposit near Gladstone.

The companies hope to achieve production totaling 85,000 barrels per day from the Stuart deposit by 2007. The development program to achieve this would be based on the timely scale-up of operations from the Demonstration Plant to a single commercial module of the Alberta-Taciuk Processor and finally to the construction of a commercial plant consisting of five commercial-size ATP units. The three-stage development plan was conceived and adopted not only to mitigate investment risk, but also to take maximum advantage of research and development data captured in the learning curve from each stage which will be applied to subsequent stages of the Stuart development and to the future development of the companiesí other deposits.

The Future

SPP anticipates 1999 will be a highly rewarding year, not only in that it represents the first production from the oil shale search which commenced 26 years ago, but also that SPP will gather a wealth of technical information from the initial operations of Stuart Stage I.

The importance of the learning curve in this industry is clearly illustrated by the experience of the Canadian oil sands industry which reduced operating costs by 75 percent in 16 years. With the staged approach to engineering design, where the learning of each stage is immediately incorporated into the next stage, the company hopes to be able to exceed these achievements.

The steady improvements in efficiency and reduction in costs will of course also benefit other deposits which are now subject to a screening process preliminary to formulation of an overall development program to bring these into production as rapidly as possible. Full development of these resources would be equivalent to around 20 Stage III operations, and could bring benefits equal to 20 plants. According to an independent report, the Stuart Stage III plant alone is expected to provide for Australia, approximately 5,000 direct and indirect jobs, and $380 million increase in gross domestic product per year.

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