#Official Mining Thread

[Wayno]

from the Australian Mining Review

Expansion plans now back on the table

BHP Billiton’s $28.6 billion Olympic Dam mine expansion is moving forward again, after the South Australian Government granted the company a four-year extension of the indenture agreement for the project, which was shelved in August.

During a joint news conference at which SA premier Jay Weatherill announced the extension, BHP officials pledged to spend more than $650 million on the expansion.

BHP’s commitment during the four years will include spending $540 million to re-scope the expansion and $110 million for mine research and community initiatives.

The original indenture was due to expire on December 15.

“BHP Billiton has recommitted itself to South Australia,” Mr Weatherill said.

“We have extended the indenture to allow BHP to develop a revised plan involving new ways of mining and processing.”

However, it is those very innovations that have SA’s Greens worried. They attempted to thwart the extension by introducing a bill against it but the measure was voted down.

The party’s parliamentary leader Mark Parnell said that that the acid heap leaching method being considered for Olympic Dam had barely been mentioned in the original environmental impact statement.

“To expand this mining method to an Olympic Dam-size operation without even a cursory assessment and revised approval process is deeply concerning,” Mr Parnell said.

The extension keeps the amended indenture agreement valid until October 2016, which will enable BHP to investigate a less capital-intensive design for the improvements. If it proceeds, the expansion would create a massive copper, gold, silver and uranium operation capable of exporting 19,000t per annum of uranium.

The SA Chamber of Mines and Energy applauded the State Government’s action.

“It is a sensible decision by the Government to ensure an investment decision by BHP Billiton on Olympic Dam is not further delayed,” chief executive Jason Kuchel said.

“This injection of funds into developing mining and processing techniques is a positive for the industry as a whole as it means more money is spent on research and development right here in South Australia.”

BHP had been expected to approve the project by June 2012, but as commodity prices began to slump the company announced it would not approve any new major developments before the December deadline.

The state expects to receive about $350 million per year in royalties from the expansion.

[skyliner]

Not really surprised as they have spent so much already. Does this new information infer that the level of investment originally proposed would eventually take place? (taken in the context of the future potential of the Indian market that is rapidly developing and being encouraged by Gillard).

[Wayno]

Not really surprised as they have spent so much already. Does this new information infer that the level of investment originally proposed would eventually take place? (taken in the context of the future potential of the Indian market that is rapidly developing and being encouraged by Gillard).

ask me this question in 2016 we'll know by then...

[Shahkar]

$20 trillion shale oil find surrounding Coober Pedy 'can fuel Australia'

SOUTH Australia is sitting on oil potentially worth more than $20 trillion, independent reports claim - enough to turn Australia into a self-sufficient fuel producer.

Brisbane company Linc Energy yesterday released two reports, based on drilling and seismic exploration, estimating the amount of oil in the as yet untapped Arckaringa Basin surrounding Coober Pedy ranging from 3.5 billion to 233 billion barrels of oil.

At the higher end, this would be "several times bigger than all of the oil in Australia", Linc managing director Peter Bond said.

This has the potential to turn Australia from an oil importer to an oil exporter.

"If it comes in the way the reports are suggesting, it could well and truly bring Australia back to (oil) self-sufficiency," Mr Bond said.

State Mineral Resources Development Minister Tom Koutsantonis said there were exciting times ahead for SA's resources industry.

"Shale gas and shale oil will be a key part to securing Australia's energy security now and into the future," he said.

Linc has hired Barclays Bank to find an investment partner for the next stage of the project, costing $150-$300 million.

The company aims to drill up to six horizontal wells to further confirm its figures, but Mr Bond is confident the region will be home to oil production.

The need to build another oil and gas hub, like the Santos production facility at Moomba, depends on the size of the discovery.

"If it really takes off, that's when you start to look at Moomba-type pipelines."

Mr Bond said there was the potential for a US-style "shale oil" boom in SA.

The Wall Street Journal reported last week the US could pass Saudi Arabia as the world's largest oil producer this year, thanks to the shale oil explosion.

Shale oil extraction involves using new technologies to drill vertically and then horizontally for distances of more than one kilometre through shale rocks that contain oil.

The process was once prohibitively expensive but advances have created a new oil boom in the US.

Mr Koutsantonis said: "We have seen the hugely positive impact shale projects like Bakken and Eagle Ford have had on the US economy.

"There is still a long way to go, but investment in unconventional liquid projects in South Australia will accelerate as more and more companies such as Linc Energy and Altona prove up their resources."

Mr Bond said the potential in SA was "massive", but even at the lower end of estimates - about 3.5 billion barrels - it was still very large.

"If you look at the upper target, which is 103-233 billion barrels of oil, that's massive," he said.

"The opportunity of turning this into the next shale boom is very real.

"If the Arckaringa plays out the way we hope it will, and the way our independent reports have shown, it's one of the key prospective territories in the world at the moment." Mr Bond said each well could flow at 1000-2000 barrels per day.

"You put in 50 of them and that's a lot of oil," he said. "We have a very good idea that this will be an oil-producing asset."

Mr Bond said Linc had so far spent about $130 million in the Arckaringa Basin, drilling four deep wells and "a couple of dozen" shallower wells.

British company Altona Energy was scheduled to start drilling this month to discover more resources for a proposed coal to liquids and power project also in the Arckaringa Basin.

That project, which could cost up to $3 billion, would involve an open-cut coal mine and possibly a 560 megawatt power plant.

The Linc Energy reports, from consultants DeGolyer and McNaughton and Gustavson Associates, are available on the Australian Securities Exchange website.

http://www.adelaidenow.com.au/news/sout ... 6560401043

Since this isn't my area of expertise, would this benefit Adelaide and bring more development into SA? Sorry if you think its a stupid question

[rev]

I think this belongs in the Energy Thread..anyhow..

If it turns out that there is 233 billion barrels of oil as estimated, worth $20 trillion, then it will have huge economic benefits for South Australia and Adelaide.
I doubt there will be a sudden surge in new towers or a new tallests.
What I think will happen, is depending on the size of the development/project, create thousands of jobs and increase wealth in the general population. Provided those jobs are given to locals and not fly in fly out's from interstate, or worse, overseas. A negative side effect though could be inflated house prices and rent costs as seen in some other parts of Australia where mining has boomed.

Another knock on effect, if this goes ahead and is even a quarter as big as they it might be, is that it might increase confidence in the South Australian economy. Which might end up with more people coming to live here, which might end up with more building proposals getting off the blueprints and under construction.
Even if the Queensland company relocates to Adelaide, I think there would probably be enough existing office space to accommodate them, doubt they are a big company.

But, one thing is certain, if this goes ahead, in any capacity, it's great news for Coober Pedy and other "nearby" outback towns.
3.5 billion or 233 billion barrels of oil, either way that's jobs for the locals up in the outback.

[Shahkar]

Well oil shale is recovered by mining so it does belong in this thread if I'm not wrong? And wow. This is what we want, don't we? Well I certainly hope so this goes ahead!

[rev]

Haha not sure on the process, you may be right.
And yes, let's hope this one goes ahead and is quite sizable. But lets not get overly excited, it's just estimates at the moment.

[[Shuz]]

Great news. Despite all the doom and gloom (given current state of the economy and massive debt that we're in right now), South Australia's economic outlook has never looked better, and has always looked quite healthy in the medium to long term. A lot of these resource projects will take some time to develop before their true potential is fully realised in 20-40 years time.

[Maximus]

If this turns out to be true, and given our solar, wind and geothermal energy assets (both actual and potential), I can foresee a time when SA is the nation's energy producer. A whole new level of respect would then come our way from the eastern states. God, I'd love to see the tables turned.

[mattblack]

Great news. Despite all the doom and gloom (given current state of the economy and massive debt that we're in right now), South Australia's economic outlook has never looked better, and has always looked quite healthy in the medium to long term. A lot of these resource projects will take some time to develop before their true potential is fully realised in 20-40 years time.

Its pretty unbelievable. Considering that we have this, Olympic Dam, various other mining prospects throughout the state, the best geothermal, solar, wind and wave energy opportunities in the country and a speculated $1 Trillion worth of resources in the Woomera protected zone it definately does look positive. It really depends on how accessible many of these resources are and how much infrastucture is needed to get these projects viable. Exciting times.

[Ben]

SA could become it's own country and sell oil to the rest of Australia

[Nathan]

Interesting that the Fairfax press has not a mention about what you'd think is pretty damn big news...

[PeFe]

Don't worry Fairfax will wake up eventually, their journalists will be reading about it on other websites and the scramble to write an article has begun. Given the current situation at Fairfax (retrenchments to journalists and editors) its not surprising. Also doesn't help that Fairfax has no "presence" in Adelaide (as far as I know)

[Ben]

stock has gone up 600% in 6 months. DAM wish I was on it

[Nathan]

Don't worry Fairfax will wake up eventually, their journalists will be reading about it on other websites and the scramble to write an article has begun. Given the current situation at Fairfax (retrenchments to journalists and editors) its not surprising. Also doesn't help that Fairfax has no "presence" in Adelaide (as far as I know)

I was thinking it was a combination of certain owners, with a bit of the petty parochialism thrown in (also see their coverage of the TDU - even in the Sports > Cycling section, the only TDU stories are negative ones about the fees paid to Lance)