Southern Pacific Petroleum has been put into receivership, taking with it the dreams of Sir Ian McFarlane. No, not the RBA Ian McFarlane or the Minister , but the founder of Southern Pacific who has spent the best part of 35 years trying to bring his dream of creating oil from Queensland shale to production. I only hope that if I have the same span of time with On Line Opinion and National Forum it proves to be more fruitful for me. You have to admire his tenacity – all those years without any positive cashflow or dividends.
This failure adds to the tally of failures of innovative Australian mining processes. Southern Pacific’s shale oil deposits are close to Gladstone, the scene for the demise of Ian Howard-Smith’s Queensland Magnesium Corporation’s plan to supply huge amounts of the potential world demand for magnesium. Then there are the disasters of the various attempts to produce nickel from lateritic deposits; the BHP HBI project; the Windimurra Vanadium plant etc. etc. etc.
I am not suggesting that we are the only country where ambitious projects sometimes fail, just that we are having a bad run of them and in mining, an area of endeavour where we have world class expertise. In terms of the size of our economy these failures, some running into the billions over years, are up there with the tech wreck in the USA. Except that most of those didn’t involve any tax payer money, whereas most of ours did.
Not that the demise of Southern Pacific means there is no future for the shale oil deposits themselves. I have noticed some speculation about just how much fossil fuel there is around, and how long it will last. Some think we may have already passed peak flow of oil. This article puts the case that we are rapidly running out of economic stores of liquid fossil fuels, and if it is correct that means that the price of reserves of these fuels, including oil shale, will soar. If only McFarlane could have hung on for 40 years, rather than only 35, he might have seen some Malthusian alchemy on his stores of greasy rock. Maybe that benefit will pass to the Canadian company that issued the bankruptcy proceedings and who just happened to be equity partner and creditor at the same time.