Australia's Queensland State Bans Shale-Oil Mining for 20 Years

By Angela Macdonald-Smith

Aug. 25 (Bloomberg) -- Australia's Queensland state placed a 20-year ban on shale-oil mining at the McFarlane deposit in the Whitsundays region, citing a risk to the environment.

The move stops immediate plans to dig up about 400,000 metric tons of rock for resource testing at the site, Queensland Premier Anna Bligh said yesterday in an e-mailed statement. Only one lease currently exists to mine shale oil in the state, in Gladstone, and no new mines will be permitted, she said.

Queensland Energy Resources Ltd. has been investigating a plan to mine as much as 1.6 million barrels of oil from the deposit in a A$14 billion ($12.2 billion) project, the Courier- Mail reported. The project is opposed by environmental groups including Greenpeace, which described it as ``lunacy'' because of the amount of harmful emissions that would be generated.

``Government will devote the next two years to researching whether shale oil deposits can be used in an environmentally acceptable way,'' Bligh said in the statement. ``While the development of shale oil has potential as an energy source, we will not allow it until we can be assured that it can be extracted and processed without harming the environment.''

The decision will further erode Queensland's standing as a destination for exploration investment, the Queensland Resources Council, a mining industry association, said in a separate e- mailed statement.

The proposed mine, located 10 kilometers (6.2 miles) from the Great Barrier Reef, would have created as much as 40 million tons a year of greenhouse gases, equivalent to a quarter of Queensland's annual emissions, Greenpeace says on its Web site.

Shale-oil mining involves heating solid organic matter called kerogen found in rocks until it decomposes to release hydrocarbons that can be captured to produce synthetic crude oil and combustible gas.

To contact the reporter on this story: Angela Macdonald-Smith in Sydney at amacdonaldsm@bloomberg.net