The Solution To Our Fuel Crisis. By David Archibald, who has over 50 years in and out of the oil industry. His first oil industry role was as a juggie on a seismic crew in the Channel Country of far western Queensland in 1974.
The fuel crisis is another thing that should be blamed on John Howard. As prime minister 25 years ago, he announced that Australia didn’t have to worry about fuel security as long as we were a net exporter of energy, including coal and uranium. That hasn’t worked in practice.
When you are short of diesel, everything comes to a stop until you fix that shortage. Without diesel you can’t do anything at all, so it concentrates the mind on the most important task….
Diesel is the economy. Half of the Country’s diesel consumption is in two states, Queensland and Western Australia, which combined have a quarter of our population. …
Monthly refinery production of diesel, assuming we can get supply of heavier crude oils, is a third of what it was 15 years ago. The production fall in 2021 was the closure of the Kwinana refinery, an unforced error.
Australia is delinquent with respect to our obligations to store liquid fuels as a signatory to the International Energy Agency. We are the only country to be delinquent. We are also the most diesel-intensive economy in the OECD. …
100% dependent on imported fuel:
Australia’s fuel supply situation is worse than it appears. We produce 21% of the inputs into our liquid fuel supply, but we export the same amount. That is because most of our domestic liquids production is on the west coast, where we don’t have any refineries. And most of that produced on the west coast is condensate, which the remaining refineries on the east coast aren’t configured to process.
So, we are effectively 100% reliant upon imported crude oil and imported refined product. …
There used to be an oil refinery run by BP at Kwinana, but that was closed in 2021. It had a capacity of 140,000 barrels per day. It was running at a profit and didn’t need upgrading. At the time, BP was run by a bloke called Bernard Looney, who “became CEO in February 2020 and served until September 2023, during which time he spearheaded a strategic pivot toward renewable energy and set net-zero ambitions.” In effect, the Kwinana refinery was sacrificed on the altar of global warming. As a modern refinery with the ability to handle a range of crude types it would have a replacement cost approaching $6 billion. The WA and Federal Governments could have stopped the refinery’s closure but they both worship at the same altar of global warming.
The nearest refinery is the Viva refinery in Geelong, 3,300 km to the east. …
Solution:
The first thing to do to fix our fuel problem is to utilise the oil and condensate we are producing but not refining. Onshore and offshore, Western Australia produces 50,000 barrels of oil and 250,000 barrels of condensate per day. The condensate is a byproduct of gas production for the LNG plants 1,300 km north of Perth.
The solution is simple. Install distillation columns to take the diesel, petrol and jet fuel out of the condensate and export the remainder. …
The whole 300,000 barrels per day of oil and condensate would yield 120,000 barrels per day of petrol. West Australian petrol consumption is 23,000 barrels per day so the balance of 100,000 barrels per day could be shipped to the east coast. …
Unnecessary fuel specifications should be relaxed to reduce capital costs. Sulphur specs, for example. Most Australian soils are sulphur-deficient and the more sulphur that falls from the sky, the better. Nothing is achieved by requiring low-sulphur diesel in the middle of nowhere. …
The next thing to do to secure Australia’s fuel security will be to develop the Pavo oilfield, which is located 100km off Port Hedland. This is a 109 million barrel oilfeld discovered in 2022. … Pavo is a simple, uncomplicated development. It is in 88 metres of water and has a low gas to oil ratio. …
For Western Australia, the proposal outlined above totalling $24.4 billion is the best possible near-term outcome. For the three million residents of the State, the per capita cost is only $8,815 (what they spend annually in Bali, on average) and well worth it for things that will operate with a positive cash flow. When the oil and gas fields run out, as they will, liquids production can switch to applying the Bergius liquefaction process to the lignites that exist in a belt from Salmon Gums, north of Ravensthorpe, wrapping around the Yilgarn Craton towards the South Australian border. When the lignites run out, as they will, the feedstock for the Bergius plant will switch to the eucalypts of the high rainfall forests of the southwest. Ideally this conversion from useless wood to precious liquids will be powered by breeder reactors.
Choices are more constrained on the east coast. There is no easy oil and gas left but there are plenty of coalfields from Cape York to the southern margin of the continent, and then around into South Australia. There is also plenty of oil shale …
The solution for the east coast is installing Bergius coal liquefaction plants. There is plenty of coal that is too low grade for export, either due to ash content or water content, which would be ideal because it is next to worthless. There was a Japanese research Bergius plant in the Latrobe Valley that operated until 1991. Victorian brown coal has a high reactivity and thus a low residence time. This Japanese effort determined a price hurdle of US$40 per barrel for development in 1991 dollars (oil was US$24 per barrel at the time). That equates to US$95.20 in 2026 dollars which is less than the current Brent price of US$102 per barrel.
To quote from the movie Aliens: “The readouts are all in the green.”
Yes we can:
There are no impediments to Australia becoming completely autarkic in liquids fuel production, petrochemical precursors and LPG, and ammonium sulphate for fertiliser. Well, no impediments apart from the current State and Federal Governments. But those can be overcome by the will of the People, once the People have suffered enough to get organised.