Gladstone could be the location for a $700 million ‘niche’ oil refinery,  as a joint venture of local and overseas partners launches  formal studies with the aim of completing the mooted project by mid-2019.

The project, planned at 46,000 barrels a day, is much smaller than recently shuttered refineries such as at Kurnell and Clyde in Sydney –124,500 and 85,000 barrels a day respectively – and BP’s Bulwer Island in Brisbane that, at 102,000 barrels a day, is slated for closure in the coming months.

Brisbane-based businessman Duncan Mackenzie said he has formed a joint venture with US Eagle Ford Oil and Gas of the US to pursue the project.

“It’s out of the box,” Mr Mackenzie said of the proposal, which centres on the production of an ultra-low sulphur diesel and some regular oils along with small quantities of liquefied petroleum gas (LPG) and fuel oil.

“It is a ‘niche’ project targeting the regional market,” he said. “Diesel figures prominently.

“There’s a burgeoning market in central Queensland – industrial and agricultural – and Gladstone has a deepwater port.

“Gladstone presents itself as a focus for industrial development.”

It is anticipated that most of the refinery’s feedstock will be sourced from imported oils, although there is the chance that local crude oil could also be used, he said.

“It will have the capacity to treat a diverse portfolio of crude oils, sourced globally,” he said.

With the looming closure of the Bulwer Island refinery, four of Australia’s eight refineries will have been closed in a matter of years with the capacity to produce 490,000 barrels a day compared with demand of more than 1.25 million barrels a day.

Discussions have been held with the three tiers of government – federal, state and local government – on the proposed refinery, he said.

Mr Mackenzie said he has direct experience working in the oil refinery sector in Europe and, after his move to Asia, is now pursuing market-based opportunities.

Along with the planned commencement of detailed feasibility studies into establishing a refinery in Gladstone, Mr Mackenzie said he is pursuing plans to establish a series of fuel import terminals along the east coast of Australia.

“There’s a lack of scalable import terminals,” he said, “and declining domestic refineries.

However, he would not disclose locations or partners.

Completing the necessary studies and obtaining government approvals is expected to take 18 months, with the remaining period needed to construct the proposed facility, which is likely to be the first stage in what could be a larger refinery.

Extracted in full from The Age.