ABC NORTH AND WEST SA - DISCUSSION ABOUT ARCKARINGA BASIN Transcript
03/05/2011
ANN JONES: On a similar theme to the mining conference we've just been talking about, Altona Energy released a statement saying that South Australia's Arckaringa Basin could provide long-term security in terms of transportation fuels. Here to tell us about it is Peter Fagiano, chair of Altona Energy. Welcome to the show.
PETER FAGIANO: Good morning. Good morning on such a lovely day here in South Australia.
ANN JONES: Now transportation fuels. This means diesel I think in the case of Arckaringa Basin. Is that right?
PETER FAGIANO: That is correct, yes.
ANN JONES: And how much of the transport fuel overall economy does diesel make up in the percentage wise?
PETER FAGIANO: Well it's probably equally shared between gasoline and diesel. Diesel's obviously a fuel used in an industry up in the mines. Also it's a very efficient fuel for the cars, and the public transport generally. Our intent initially is to convert coal by gasification to produce a range of products. The prime product will be diesel, followed by petrochemical-grade naphtha which is a very valuable feedstock in the petrochemical industry. And in additional[sic], we'll be producing a lot of power. In overall statistics the annual production of diesel will be about 10 million barrels. The cost of that, the overall production cost including capital investment and the operating cost in terms of chemicals, catalysts and staff to run the plant - equates to around 33 cents a litre of diesel. So when you look at the current price of diesel that is a fantastic basis for developing a gasoline or power industry here in South Australia.
ANN JONES: Now you - that is under half, I think, the current going rate for diesel prices. Does that mean that we would see a price drop at the pump in South Australia?
PETER FAGIANO: I believe that will be the case. Obviously you have to add in the cost of distribution and taxation, but you know, it's a very economic basis for developing an Indigenous diesel production business here in South Australia, plus you have security of supply not just for decades but centuries here. It's a huge asset you have here in Arckaringa Basin. You know, 7.8 billion tonnes of coal.
ANN JONES: Now the project, once it is up and running it will throughput 10 million tonnes of coal annually, producing 10 million barrels of diesel or naphtha products.
PETER FAGIANO: Mmm hmm.
ANN JONES: And given the high price for diesel on the international market, will your company - I mean, is there a promise there that it will sell the fuel internally within Australia when a higher price could be sought elsewhere?
PETER FAGIANO: No. Our original intent is purely the domestic market, service the domestic market - and then the surplus can be exported.
ANN JONES: So okay, so we'd - you'd be servicing first of all South Australia and then the rest of Australia, and after that the export market?
PETER FAGIANO: Correct, yeah.
ANN JONES: Okay, so and - when can we see, well, the potential South Australian diesel getting on to our market, to... who many more months or years would it take?
PETER FAGIANO: Well currently we're carrying out a bankable feasibility study here in Adelaide. Working with Australian consultants and some of the overseas specialists. That will occur. The initial phrase of that will be completed by the end of this year. We'll have some additional drilling in Arckaringa Basin which will commence the last part of this year, the results of which will be completed probably by the end of the first quarter of 2012, so we believe that all going well, plus presenting our business case - in terms of environmental impact analysis to PIRSA and the government agencies shall be during the course of 2012. We shall start the project in terms of detailed engineering, procurement, and construction at the end of 2012. The first phase of - in terms of developing the mine... the mine development will take two years, so 2014 will be able to produce coal for starting the process. In parallel with that we'll be starting the actual construction of the plant. So sometime at the end of 2016, beginning of 2017, this project should be up and running.
ANN JONES: Well I can almost hear the consumers of diesel around the country areas of our state licking their lips at the prospect of some cheaper fuel coming through. Peter Fagiano, chair of Altona Energy, thank you very much for coming on and describing what your company's been up to.
PETER FAGIANO: Can I just have one comment before you finish.
ANN JONES: Yes.
PETER FAGIANO: You asked Bill Rapard(*) about the availability of resources to - for the boom in the mining sector here in South Australia.
ANN JONES: Yes.
PETER FAGIANO: We're proposing an interesting solution, we think that a lot of the construction work of building these plants can actually be carried out off site, and our recommendation is to build a modular fabrication site here in the vicinity of Adelaide. We have access to highly-skilled resources. Also it's a much cleaner - and safer - working environment. And we believe some 40 per cent plus of the normal work done on site can be done in this facility with equipment and piping and cabling, et cetera, pre-assembled such that it can be transported to site by road and rail. And then the residual construction work is carried out in the normal way on site. By doing this you reduce costs - you improve quality - you improve safety of the working environment, and so on. And it's less disruptive on the life of the skilled workforce you need for these types of project. Plus by building this fabrication centre here in Adelaide you can use it not just for the Arckaringa Project, but also Broken Hill and Olympic Dam, whatever it might be, you could actually therefore transfer a lot of the work from these projects from the remote centres of work. You still have to do work there. It's impossible to do everything remotely. But it makes it a lot easier to recruit skilled labour to work in that type of environment. And I think that's something very important, not just for our project, but also for many projects being considered here in South Australia.
ANN JONES: Interesting concept. A different way of approaching construction for our remote areas. Peter Fagiano, thank you very much for your time.
PETER FAGIANO: Great. Lovely talking to you. Bye bye.