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Australia’s oil-shale opportunity

Linc Energy has discovered a potentially significant, untapped oil-shale play in South Australia’s Arckaringa basin

The Brisbane-based junior found the deposit in the Stuart Range formation, in its PEL 122 licence, and believes it extends into the neighbouring PEL 121 permit.

The 124 metre thick deposit, which was hit by the Arck-1 stratigraphic well, lies at a depth of over 854 metres and covers an area of about 1,150 square km. The most prospective black shale in the deposit was about 70 metres thick, with preliminary analysis indicating potential oil yields of between 25 to 45 litres per tonne. The find lies near to the company’s previously announced oil show with its Maglia-1 exploration well.

At around 100 metres thick, an oil-shale deposit of over 200 billion tonnes could be present, said Linc’s chief executive, Peter Bond. “It is a remarkable prospect that we have only just begun to properly explore. This exploration programme and recent success of discovering what appears to be a multi-billion barrel unconventional oil-shale play provides significant opportunities for Linc and South Australia,” he said, adding: “But, frankly, it's just the beginning.”

The company took 24 core samples from the most prospective interval within Arck-1 which have been sent for geochemical analyses. Permian coal intersected during the drilling of Arck-1 also appeared to be hosting oil in cleat and natural fractures, similar to results obtained from Maglia-1, which encountered residual oil shows last year.

Following the completion of Arck-1, the drilling rig will be moved 10 km north to the Wirrangulla Hill-1 well, which was spudded last month and encountered a Stuart Range shale formation thickness similar to Arck-1 and oil fluorescence in the upper geological sequences. The third well of Linc’s 10-well exploration programme in the Arckaringa basin came up dry.

The company has completed a 1,153 km 2-D seismic sweep of the Arckaringa basin and is processing the data. But preliminary results signal a substantial number of new leads and previously unknown target sites, said Linc.

Australian resources

Australia has a large identified, non-producing oil-shale resource of 22.39 billion barrels, which could potentially contribute to future oil supply if economic and environmental challenges can be overcome, according to the government. Most of the thick cenozoic lacustrine oil-shale resources of commercial interest lie in a series of narrow and deep extensional basins in Queensland, near Gladstone, and Mackay.

Shale oil deposits of varying quality also occur in New South Wales, Tasmania, and Western Australia in sedimentary sequences of permian, cretaceous and cenozoic age.

Oil shale is extracted from sedimentary rock, which contains kerogen – a mixture of organic chemical compounds – by mining. Oil shale needs more processing than conventional oil, increasing production costs. Heating oil shale to high temperatures releases a vapour that can be distilled to produce shale oil.

Exploration and production

Exploration has been mainly focused near Gladstone and Mackay in central Queensland and in north-west Queensland. At present, no oil is being extracted from oil shale in Australia. From 2000 to 2004, a stage-one demonstration-scale processing plant at the Stuart deposit, near Gladstone, produced more than 1.5 million barrels of oil using a horizontal rotating kiln process. But no oil has been produced since 2004 and the facility has since been dismantled.

The demonstration plant achieved stable production capacity of 6,000 tonnes of shale a day and oil yield totalling 4,500 barrels a day.

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