National Liquid Fuels Vulnerability Assessment

There's good news and bad news contained in Martin Ferguson's keynote address at the "Energy State of the Nation 2008" conference held in Sydney on 18th March, organised by the Australia Energy Alliance.

The good news is that HON Martin Ferguson (Federal Minister for Resources, Energy and Tourism) has committed the Australian Government to undertake a National Liquid Fuels Vulnerability Assessment this year. It remains to be seen what answer the Government hopes to get from this inquiry, but it can't hurt to have another one can it?

The other good news is that Martin Ferguson is also well aware of our reliance on imported petroleum:

Without new oil discoveries Australia could face a trade deficit in petroleum products of more than $25 billion by 2015 and domestic oil production could be as little as 20 per cent of our needs compared with 80 per cent in the 1990s.

He even has a plan to deal with this oil import vulnerability. The bad news is that it looks like this (hat tip to Matt in Sydney and Stuart in Brisbane):

Plan A: "Our future depends on finding Australia’s next Bass Strait".
Plan B: See Plan A.

You can read his full speech here, but this is the key section relating to exploration:

Australia is gas and coal rich, but oil poor with one to two decades of known oil and condensate resources.

  • By contrast, we have hundreds of years' worth of remaining gas and coal resources.
  • Therefore, the need for policy settings that promote exploration is most apparent in the oil sector where our future depends on finding Australia’s next Bass Strait.
  • My Department is currently developing policy options to intensify mineral and petroleum exploration.
  • In the latter part of 2008, I will be bringing forward for Government consideration a package of proposals to significantly enhance Australia's exploration efforts.


  • The vast majority of Australia’s more than 50 sedimentary basins are largely unexplored.
  • Australia's easy oil has already been won and the simple fact is our frontier basins are higher risk and higher cost locations for exploration than other options around the globe.
  • One of the important jobs a national government can do is the preliminary scientific work to try to reduce risk and increase the relative prospectivity of new frontiers by providing a better information base for the industry.
  • I am pleased that Geoscience Australia is doing a very good job on this front.

So rest assured everybody - the Government has a plan to deal with this challenge.

That makes me feel much better then - all along I was worried that they didn't have a plan - but now I know they are crossing their fingers and hoping (and considering paying the oil industry to do more exploration) I can relax.

Jeez, you don't expect much from "Marn" do you? The guy is flat out counting past ten!

Gav and others,
Having sat opposite Martin and his chief of staff twice and explained peak oil and what was going to happen in regard to Oz oil imports (firstly in 2006 then last year at the ALP National Conference) on behlaf of ASPO and STCWA, I can say categorically:
i) Martin doesn't believe in peak oil.
ii) he, like other ALP politicians, don't realise that Australia only has 1% of world NG reserves, but that we are a major gas supplier for 'hundreds of years' and this will solve any oil problems.
iii) he has swallowed the APPEA line that we haven't explored much of Aust for oil and there are other Bass Straits out there waiting to be found.

He isn't as slow as he sounds on the media, but is a technologist and thinks technology will 'save' us. Remember, the Aust Senate had an Inquiry into Aust's fuels and oil vulnerability just last year- great resources on that site.


You never know. Maybe something you said started to sink in. Or maybe he has been lurking here on TOD and has been converted. Politicians can change their minds, they just can't be seen to be doing so.

LOL Big Gav, They plan to make bio diesel from senators earwax to meet production quota's so you can sleep easy. that should give us about 300 mbpd . How long will this tudy take, well 4 yrs minimum I would expect so we can hear the results of it on our car radios, while cueing for fuel ration coupons "ABC Radio National reports; a new study which began 4 yrs ago, shows where out of transport fuel."

I don't think Ferguson is softening us up for coal-to-liquids since he said the Boggy Ck CO2 storage experiment has to work. It won't and I doubt there will be any decent onshore or shallow water oil finds. Gav won't like this but I think Ferguson is not averse to nukes so I expect battery cars to get the nod soon.

Now that the penny has dropped at Ministerial level I think things must happen fast. Either fast action or fast dithering.

We've already got a couple of coal to liquids plants lumbering towards us.

Ferguson may not be averse to nukes but he doesn't believe in global warming either - so I doubt he has much of a constituency in his own party.

There were lots of readers of my solar thermal article in Canberra - hopefully they'll see sense :-)

Martin doesn't seem to have shown much enthusiasm about nukes previously I might add (unless he was just Rodent bashing previously) :

MARTIN FERGUSON: In pure economic terms, nuclear power does not stack up in Australia. Why put in place a source of energy which potentially makes Australia less competitive in a tough global community, and will effectively see jobs go offshore. ...

MARTIN FERGUSON: There's no requirement for Australia to actually go down the nuclear power route.

The Government's got to also understand we don't have the scientific or technical capacity to actually embrace nuclear power, even if it was economical.

More importantly, we also have to make baseload power decisions in the next 18 to 24 months, which are going to see us through to 2020, 2025.

These are immediate decisions, not some futuristic debate that the Prime Minister wants to embrace from time to time without any clear position as to where the Howard Government is going.

If the Prime Minister wants to go nuclear, then he shouldn't only be putting out the Switkowski report, he should be nominating what incentives he's going to put into place that will determine what is the nature of his trading system that makes nuclear power stack up, and where he intends building nuclear power plants in Australia.

ALEXANDRA KIRK: So, you say under no circumstances would Labor support nuclear power generation?

MARTIN FERGUSON: Labor is not interested in nuclear power, because Australia doesn't need nuclear power.

ALEXANDRA KIRK: Or enrichment?

MARTIN FERGUSON: The Labor Party will not be supporting an enrichment capacity in Australia, and nor will be embracing nuclear power.

Ferguson has forgotten the rule never say never. I distinctly recall him disagreeing with Albanese over nuclear. No doubt an understanding was then reached whereby the ALP speaks with one voice. Remember Garrett was vehemently opposed to Gunn's pulp mill then he was told what the official line was going to be. Pragmatism seems to be winning the day, witness our staunch republican Kev visiting HM the Queen.

Are the new government more anchored in reality on energy issues than Howard? If the renewable energy target has been officially increased I don't see a flurry of new projects, if anything a slowdown in the wind farm build compared to the Howard years. I believe they cancelled the $2000 subsidy for LPG car conversion. Tough biscuits for the night shift worker in Sydney who commutes from Gosford or wherever. Now that peak oil has been acknowledged at the highest level doing nothing doesn't seem like an option. However they don't seem to have anything up their sleeve.

From today's Australian :,25197,23494594-5005200,00.html

THE Rudd Government's embrace of renewable energy is expected to usher in a second wave of investment in wind power, despite a two-year waiting list for turbines.

Paul Curnow, a partner at law firm Baker & McKenzie, said the outlook was "very good", with investors who had been lying in wait since 2004 now ready to "bring all that potential to market".

The Government's national scheme will include a legislated target of 45,000 gigawatt hours of renewables-based electricity in 2020. This will ensure 20 per cent of Australia's electricity supply will be obtained from renewables by 2020.

The Renewable Energy (Electricity) Act 2000 currently requires the generation of 9500 gigawatt hours of extra renewable electricity per year by 2010 -- enough power to meet the residential electricity needs of 4million people.

There are about 40 wind farms in Australia, and at a clean energy conference in Sydney later this month, delegates will be told by AGL Energy Ltd carbon and government affairs national manager Tim Nelson that this could turn into 250 over the next decade.

Mr Curnow expects the number to jump when the commonwealth and the states flesh out details relating to the target later this year.

He noted that when the Howard government introduced its Mandatory Renewable Energy Target in 2001, there was a burst of investment which dried up when it was clear the government was not going to extend the scheme.

"All the wind farms you see in Australia came out of that," Mr Curnow said.

I guess that answers the question about Rudd and renewables. Since there are nearly 9000 hours in a year that 2020 target approaches 5 Gw continuous average, maybe 10% of all current installed capacity. I surmise that since CSP, geothermal and solar towers can't be sure of their contribution to the 20% target (circa 10 Gw) that investment remains more of a gamble than windpower.

While we're still smitten with Rudd remember so far it's all talk and that the renewables surge is yet to happen. At least Howard had a cycle commuting minister in Tony Abbott. I note on telly tonight that Premier Lennon reneged on his promise to get a hybrid and is now cruising the boulevards in a shiny new Statesman. I have this horrible feeling we are going to be disappointed in the new 'green' ALP.

I agree most investment seems likely to go into wind initially if the news MRET target is put in place.

Geothermal will have to wait until GeoDynamics proves it is possible - which could be a while.

Hopefully they wake up to the potential of large scale CSP (obviously there are 4 or so plants already underway, but only one reasonably large one).

I'm not smitten by Rudd - just cautiously hopeful. The Tassie ALP is hopeless.

From those figures it seems that Australia needs around 25GW of electricity on average per hour.

I am not familiar with the figures for Australia but using UK figures as a proxy around 40% of electricity use goes to hot-water heating, where that is used instead of gas.
I believe that residential solar thermal is reckoned to be able to save around 15% of that.
In Australia it would do still better, as collectors on the roofs would also reduce the heat load into the house, economising on air-conditioning needs.
Air source heat pumps would greatly reduce heating and cooling needs for the rest.

So out of the needed 5GW per average hour supply of renewables needed residential solar thermal should be able to take care of at least 1.5GW, with additional contributions from heat pumps.

And that is before you start building any wind turbines and so forth, and should be considerably cheaper.

20% of electricity from renewables sounds not only achievable but fairly modest and cost-effective.

Ferguson at least seems to understand the Australian situation as it stands today but is still pushing the line that we will at least be able to import 80% but ata very steep cost. The penny has not yet dropped that the 80% my not be available to buy at any price. It still seems to be driven by an econmic agenda. As long as we can export LNG and import oil then everything is OK. What i we can't import the oil? What then? Maybe the minister will have got Kyles letter by then. Guess he'll have to do some intra ministry juggling to tell that to the tourism operators.

When did Lou Holtz move to Australia???

Not only that but why did they name his parliamentarty district after asuperhero. Martin Ferguson is the Member for Batman.

You should see the member for Incredible Hulk !

It remains to be seen what answer the Government hopes to get from this inquiry, but it can't hurt to have another one can it?

Rule number 1 in politics is never hold an enquiry into something where you don't know what the answer is, so I supect the minister is very well aware of Australia's vulnerability. The very title of the assesment has been couched in a negative term (vulnerability) rather than a positive term (outlook). This gives us a hint of what the government is thinking but wants someone else to actually deliver the bad news.

I suspect that Ferguson has read the MacNamara report, taken it all in and then let out a very long but quiet "Shiiiiiiitttt this is bad".

IMHO I think that he needs to get Peak Oil on the agenda early in the governments first term so that we can start the inevitable CTL vs GHG debate. Fergie will be all for CTL as will a number of other key ministers and Rudd will try to project himself above it all and apply a paternalistic even hand.

Linc Energy is well on the way to completing their pilot Underground Coal Gassification process combined with liquids production.

If this technology pans out, we will have no shortage of liquid fuels in Australia by 2015 at the cost of substantial increases in CO2 emissions.

Regarding Nukes and the ALP, a deal was done to allow Uranium mining but reject nuclear reactors for oz. It was a great political move.

From a global perspective, if the CTL technology like Linc's work out, humans will be sorely tempted to increase the CO2 concentration way over 600 PPM.

As it happens I've just about finished a post on CTL in Oz.

Ferguson is very enthusiastic about it - global warming be damned (though both the major initiatives present themselves as "clean coal")...

I'll be very interested to see the post!

I learned a lot of your concentrating solar power article but I think you were rather optimistic on cost especially M&O and the impact of non-sunny days.

Take proponents cost projections with a huge a grain of salt, especially when they're asking for "launch aid" :-)

CTL post is up now - not too many comments so far.

At the end of the day I think CSP has the most potential to provide the bulk of our energy needs in a way that doesn't have a lot of nasty side effects and can be replicated fairly rapidly and across a large swathe of the planet.

I hope Ausra can make it as cheap as they claim - but even if it works out to be in the 7-10 cents per kWh range, I think that is a price worth paying - we just need to get cracking on the efficiency side of things so that as many people as possible find this price affordable.

Australia is blessed with huge natural gas reserves. All that's needed are the pipelines to take the gas to the main centres, and all cars can run on it, replacing most oil.

That's by no means a trivial task. The gas fields are a whole continent's worth of desert away from any of the main cities.

Also, no private company would build those pipelines without supply contracts already signed up, so its a chicken & egg thing - no guarantee of buyers once its built means it doesn't get built.

In the meantime we're busy pumping the gas as fast as we can, shipping it off to China & Japan on long-term fixed price contracts. Gotta love the free market :)

Are there any reliable maps of where these huge reserves are? Are we talking out in the outback in the desert, or offshore?

If we are talking in the outback, are they stranded from all rail and road access?

Remember that LNG will work not only on the sea but also as an overland method of transport (it ain't free, but if you need the gas, it can work)


Bah - spare me - I'm an optimist but this stuff about Oz gas lasting a century and us being the 2nd largest exporter in the world for an extended period of time is silly.

I'll do a proper post on this shortly (its been sitting in my pipeline for a while), but as a rough summary, Oz gas consists of :

1. Cooper Basin (ie. outback) - mature and depleting (traditional source for much of eastern states gas network)
2. Bass Strait (offshore) - mature but apparently has 30 years left (other main traditional source for eastern states gas network)
3. North west (offshore) / north (offshore) - lots of gas, mostly unexploited except for existing LNG plants in Karratha (plus pipeline to Perth / Bunbury) and Darwin, lots of new LNG projects planned and underway - all for export, with the WA government trying to reserve 15% for domestic use
4. Coal seam methane (mostly Queensland) - new and growing fast, some LNG projects already proposed, new power plants being built near coal seams
5. Sundry small gas finds around the country
6. "unexplored basins" - TBD

On a related note, see this post from a little while back :

A Gas To Liquids Plant On The North West Shelf

The U.S. Geological Survey report Thursday called it the largest continuous oil accumulation it has ever assessed.

What is a comment about the Bakken doing on this thread ?

I did ask for someone to write up some analysis for TOD Main but it hasn't eventuated unfortunately.

I've tracked the news on this topic recently :

My conclusion :

Well - the USGS report is out and the estimate for recoverable oil in the Bakken is pretty modest compared to some of the massively inflated estimates floating around the lunar right media lately - 3 to 4.3 Billion Barrels of Technically Recoverable Oil. This is still a respectable number - more than 1 month of global oil consumption at the current rate (which gives you an idea of how hard it is to have a serious impact on the peak date, and how much that 220 billion barrels of "undiscovered" oil under Iraq is worth).

May I suggest a Strategy to Reduce Australia's Vulnerability ?

Create a Non-Oil Transportation Alternative.

1) Electrify the railroads (at least half the track mileage), and induce freight to move from truck to rail by any of a variety of means. This also means less oil for roads repairs.

2) Construct either a high speed rail (300 kph) for passengers and packages only, or a semi-high speed rail (175 to 200 kph) for both passengers and express freight (such as fruit & vegetables, fish, critical inventory, etc.) from Adelaide to Brisbane. Sydney-Canberra-Melbourne would be a logical first phase.

I suspect that semi-HSR would have greater value at lower cost. Sydney-Melbourne might support one track at 300 kph and two tracks at 175 kph.

Combined with regular speed trains, such a system could provide a non-oil alternative for perhaps half of domestic air travel.

3) Rapidly expand trams, including some high value-high cost projects (Sydney comes to mind). Melbourne has a good system that could be improved, and all major Austrialia cities could be brought up to the Melbourne standard.

France intends to build 1,500 km of new tram lines in the next decade, some in cities as small as 100,000. Adjust for population and this puts Australia at 500 km of new tram lines.

4) Electrified commuter rail lines can be expanded significantly throughout Australia. Perth has just more than doubled it's commuter rail lines, yet still more can be done even there. (And Perth lacks trams).

5) Bicycles need to find a place for transport in Australia. Paris was "bike hostile" yet they have had great success with velibs (rental bicycles with kiosks every 600 m or so throughout Paris, first half hour free). More bike lanes and simply a change in attitude (commercials, TV programs, etc.) are likely needed IMVHO.

6) More walkable neighborhoods and less sprawl. Zoning and other changes are useful, but simply building more trams and higher petrol prices will do a lot to move in this direction.

Best Hopes,



Your insight from the other side of the world is amazing and I endorse your ideas wholeheartedly.


All good ideas Alan - thank you.

Thanks !

Just an application of good principles.

A couple of follow-up points.

If a non-oil alternative exists, it can be used in an oil supply emergency (acute or chronic and prolonged). If no such alternative exists, suffering and dislocation are the only alternatives.

Someone may live about a km from a tram stop and not use it under current conditions, but "under stress" they may either walk or bicycle to the stop.

Someone going from Brisbane to Canberra, or Adelaide to Sydney, or ... may chose to fly today even with a good train alternative, but would welcome a half day train ride in the future at "reasonable cost".

Such a "Capitals Route" (sorry Perth, Hobart & Darwin) would pay for itself with short passenger trips (such as Melbourne-Canberra) and longer freight hauls (the longer the haul, the greater the rail advantage over trucking, especially if rail is faster than trucking). However, under stress, it can handle longer passenger trips and shorter freight hauls.

This is a dichotomy with rail. Passenger service is more competitive with shorter hauls and freight is more competitive with longer hauls. A "Capitals Route" would allow a combination of both :-)

And the regular rail lines can feed both passengers and freight into the semi-high speed rail line (175-200 kph) (with a section of 300 kph Melbourne-Sydney for passengers and very low density, valuable freight such as mail). A short stretch from the Gold Coast et al at 100 or so kph before joining the main line will lose little patronage because of the extra few minutes.

OTOH, I do not see the economic viability of more than 110 kph or so service beyond the Capitals Route. I would have judged that Cairns will have to wait for much higher oil prices before passenger rail service is justified, but Queensland Rail tilt train service is offered. Extending QR electrification north of Rockhampton and south of Brisbane should be a good idea.

Best Hopes,


Even 100 kph on the Sydney-Melbourne train would be good if they cut out the whistlestops and provided everyone with LCD screens for video, internet etc. Selling points are lower energy use than car/plane and arriving in the centre of town.

G'day Gav,
Have been an admirer of your site for years but haven't had much to say having been caught up in arguments on TOD USA and related sites.
I share your doubts about Oz gas riding to the rescue. From what I have read in US based info viz Molly Ivins et al coal seam methane seems to have been pretty much an environmental disaster there from saline water entering creeks etc. Is anyone looking into environmental impacts in Oz?

As for securing NW shelf supplies for domestic supply you only have to look at the flak the WA Prenmier took over that one to see the difficulties involved.

I have been collating ABS stats for about 15 months re liquid fuels imports so I know that the pollies and Joe Public are blissfully unaware of the liquid fuels crisis that is just around the corner.

Liquid fuels imports for the 12 months ending Nov 07 were $A23.3 billion, and for the 3 months to Feb 08 totalled $A7.6 billion, and this does not include lubricants and related materials.This means that for the 12 months imports are likely to top $A30 billion not including price increases.

When you factor in the strength of the Australian Dollar affecting exports the deficit mentioned by Ferguson looks closer than 2015 to me.

Most people would be unaware that Vietnam is our main supplier of crude. They are currently building refineries due to come online this year and next which makes it likely that we will soon be purchasing product rather than crude which will further increase the trade deficit.

Thats if we can secure it as it is likely that other purchasers in the region without a current account deficit and lots of foreign currency reserve might be interested in this supply.

The further I look the more I am concerned that our liquid fuel supplies could virtually dry up overnight.

Remember stealing East Timors reserves is not an option open to us anymore.

It appears to me that oil imports account for the vast majority of the current account deficit and have dones so for some time. I haven' t the data to back itup but I also suspect that our high inflation is largely an imported problem on the back of petroleum imports. We have been spared some but not all of the rise in oil by the strengthening dollar, but we are ina weak position to defend that strenght if the mining boom runs out of steam.

Do you have numbers for our crude imports and exports ?

I thought most of our imports from Asia were refined products coming in from Singapore already, and that our refineries mostly processed local oil output (but I don't claim to have done any real research, this was just my impression).

Regarding the deficit, liquid fuels are a huge problem - but with coal prices doubling (or more) in recent weeks, we may find our net energy financial position isn't on a one way slide for a while (especially as LNG exports pick up once the new North West Shelf trains are commissioned and then some of the newer projects start to come online).

Regarding CSM environmental damage, I remember blogging a horror story from the US at PE a year or two ago, but I've never seen any discussion in the local media - if anyone has some tales (or wants to do a guest post on the topic) feel free to share.

Well, you weren't expecting any better energy policy from the Australian government than we get from the American government, were you?

Governments are doing right things to varying extents. Though these efforts are pretty small compared to what they ought to be.

Whatever research various governments are funding into renewables and nuclear will help. Ditto for battery research. Ditto regulations on more efficient appliances and houses. There are some moderately bright spots. But the scale just comes up far short of the problem.

Ultimately market forces will cause most of the solutions to get implemented.