Fossil Fuels and Uranium Supply

With the exception of crude oil, Australia is generally well endowed with fossil fuels and with uranium. Exports of both uranium and coal have contributed significantly to Australia’s Gross Domestic Product. There are several issues that may affect the future domestic resource mix, and the amounts and value of exports. These include:

• the greenhouse impacts of burning fossil fuels
• the as yet undemonstrated reliability and cost of carbon sequestration technologies, and the practicality of their application both overseas and in Australia
• the timing and success of developing ‘clean coal’
• strong international growth in the nuclear energy sector, and
• the increasing gap between global oil supply and demand, and Australia’s increasing dependency on imported oil.

Black coal

The identified resources of 72 billion tonnes of black coal represent over 200 years of domestic consumption and exports at today’s levels. Australia is the world’s largest exporter of black coal. Black coal will probably remain the dominant global energy source for electricity, steel and cement production for the foreseeable future, particularly if ‘clean coal’ technology and CO₂ geosequestration can be confirmed as effective and affordable greenhouse mitigation technologies.

Brown coal

Resources in the La Trobe Valley represent over 800 years’ supply at the current level of consumption (65 million tonnes annually) for electricity generation. Water content, low calorific value and autocombustion risks render brown coal unsuited to bulk transport. However, technological developments, such as drying and pelletisation, promise to elevate processed brown coal into a product competitive with black coal, in terms of thermal properties, safety risk, and environmental impacts, both domestically and as an export commodity.

Oil

Australia’s oil reserves are mainly ‘light grade crude’, some of which is exported. Australia’s requirements of ‘heavy crude’ need to be imported. Domestic production has been steadily declining, resulting in a lowering of Australia’s level of self-sufficiency and a growing need for imports. In 2005, imports exceeded exports by $4.7 million, but the Australian Petroleum Production and Exploration Association (APPEA) predicts that by 2015, this figure could be $12 billion to $25 billion. Australia’s future oil availability and price will depend on international conditions. Australia has about 40 offshore basins that are under-explored, but these are technically demanding and will be costly to develop if oil is found. The domestic oil deficit could be offset by coal-to-oil conversion technology, such as the Fischer-Tropsch process.

Gas

Liquefied Natural Gas (LNG) exports have grown strongly, particularly in relation to large gas discoveries in the North West Shelf off Western Australia in the last two to three decades. Reserves will meet domestic demand for the foreseeable future, although an Australian Bureau of Agricultural and Resource Economics report suggests that possible depletion of gas supplies in eastern Australia by around 2020 may require the gas to be piped from Western Australia to eastern consumers. Gas-to-liquid conversion will to some degree offset Australia’s declining domestic oil supplies.

Uranium

Australia boasts 24 per cent of the world’s low-cost uranium resources, and all production is exported. There is significant potential for further discoveries, although access to land for exploration, and development permits, are controlled or precluded in several jurisdictions. Potential price increases related to strong international growth in the nuclear electricity generation industry will place increased pressure on jurisdictions to relax policies relating to uranium exploration and development.

Marat Fainstein, Julie Harman and Andrew Dickson, Australian Gas Supply and Demand Balance to
2019–20, Australian Bureau of Agricultural and Resource Economics (ABARE) report for the Department of Industry, Tourism and Resources, Canberra, August 2002.