2000 Annual Report - Heron Resources Limited

2.0 Continued
Operations Review
2.11 BREMER-EUCLA PALAEODRAINAGE PROVINCE
OIL SHALE SCOPING STUDY.
2.11.1 Balladonia and Ravensthorpe-Norseman Oil Shale Projects
Heron 100%.
Oil shale – lignite – sulphur – limestone - heavy mineral sands – kaolin - vanadium.
The 3,497km 2 Balladonia project area covering 20 tenement applications is located 20-180km E of Norseman. The 2,008km 2
Ravensthorpe-Norseman project area covering 22 tenement applications is located from Norseman and SW to Ravensthorpe. The
project areas cover Tertiary-aged palaeodrainages which are prospective for lignite resources. Heron has demonstrated these lignites
to be oil shale bearing. From Landsat studies, the target basins are structurally controlled. Following a GIS study by Heron, some
tenement rationalisation was completed, particularly where the target carbonaceous units were felt to be too thin or at excessive depth.
With the dramatic increase in oil prices during 2000, Heron’s Oil Shale acquisition strategy of the last two years has been validated.
Energy
Resource estimates are qualitative at best, but from reviewing previous exploration data, there is a stated a potential of 1.5 billion tonne
at a Fischer Oil Yield of 95 litre per tonne. The Balladonia lignite has a higher ash content and lower specific energy values than
Victorian Tertiary brown coals, but is comparable to the Leigh Creek deposits being actively mined in South Australia. All of the Heron
lignite resources have a high oil yield, being up to 190 litre per tonne. The oil yields are comparable to oil shale deposits in Queensland,
which are now in production. The Bremer-Eucla Oil Shales are free of the environmental issues which relate to the Queensland
projects, operating as they do within proximity to the Great Barrier Reef.
Sulphuric Acid
The Bremer-Eucla lignite is relatively pyritic. Following flotation and roasting, this pyrite would be suitable for sulphuric acid manufacture.
Sulphuric acid is a major feedstock in nickel laterite processing. This sulphur requirement was the prime consideration for Heron
acquiring the Bremer-Eucla Oil Shale tenements. The increase in oil price has now changed the commodity emphasis to oil.
Oil Shale Scoping Study
Heron is re-appraising its Scoping Study using the Balladonia West deposit as the conceptual ore model (high oil yield, low strip ratio,
proximity to downstream energy users). The minimum economic Oil Shale target is felt to be:
• Minimum oil yield of 100 litres per tonne.
• Minimum resource 1 billion tonne.
• Waste to ore less than 2.0.
• Overburden depth not to exceed 25m.
• Scale of operation 50,000 barrels per day of oil/diesel.
• Mine life 20 years.
Potential production of sulphur-free syncrudes from lignite by pyrolysis, gasification or hydrogenation is being assessed, with waste
heat and tail gases of potential use for power generation.
With the capital costs of such projects around A$2.0 billion, a major industrial end-user would need to be introduced at some stage
to advance the Bremer-Eucla projects towards production. Development decisions will be made once the current Scoping Study has
been finalised.
The current study model involves a resource mined and milled at a rate of 22mtpa for at least 20 years, producing 50,000 barrels of
oil per day. Products are likely to include hydrogen, low sulphur naptha and shale oil. Residual carbon and spent shale could be used
to preheat and fuel the processing plant. The conceptual mining model involves 80 million bcm moved per annum at a strip ratio of
1:1.6. After the initial excavations, overburden waste would be used to backfill exhausted mined out areas.
Expressions of interest have been received, and a Memorandum of Understanding is being reviewed to evaluate various alternate
technologies and development concepts. The comprehensive Heron data base has been made available for review at the Perth office
of Heron’s Consultant, Paul Askins. Paul’s work on Heron’s Oil Shales has been outstanding.
Heron Resources NL Annual Report 2000 page 35