OREANDA-NEWS. Australia’s aged refining sector has shrunk by more than half over recent years, but at least one small local player appears to want to buck the trend with ambitions to fill a niche market on the country’s northeast coast.

According to local press reports, privately owned Australian minnow Casper Energy, headed by Brisbane-based businessman Duncan Mackenzie, has teamed up with Nevada outfit Eagle Ford Oil and Gas Corp. on plans to build a small oil refinery in the central Queensland port city of Gladstone. The project is designed to meet demand for fuel, particularly low sulfur diesel, in the burgeoning industrial and agricultural sectors in and around Gladstone.

The $700 million project would involve construction of a greenfield refinery with capacity of 43,000 b/d and a fuel storage facility for up to 100 million liters, Gladstone-based newspaper The Observer has reported. Mackenzie did not respond to Platts’ inquiries on the project, which is expected to employ 1,000 workers during construction and 300 permanent personnel once operational.

The new refinery would be the first to be constructed in Australia since the 1960s and would have greater feedstock flexibility than larger existing facilities, which were built to process light sweet crudes. The plant is expected to refine mainly medium and heavy sour crude oil.

Casper Energy reportedly expects the approvals process for the new refinery to take 18 months. The construction phase is forecast at four years.

News of a proposed addition to Australia’s oil refining capacity, albeit a small one, comes as the number of operating plants around the nation’s coastline has dropped to four. BP operates the 146,000 b/d Kwinana oil refinery in Western Australia, and the nation’s other three refineries are Viva Energy’s 120,000 b/d Geelong facility in Victoria, ExxonMobil’s 85,000 b/d Altona plant in Victoria and Caltex’s 109,000 b/d facility at Lytton in Brisbane.
The most recent refinery closure was in May, when BP shuttered its 102,000 b/d Bulwer Island plant in the Queensland capital of Brisbane. The closure of the 50-year-old Bulwer Island refinery, first flagged in April 2014, brought the total number of facilities that have been shut around the country since 2003 to four. In 2003, ExxonMobil mothballed its 78,000 b/d plant at Port Stanvac in South Australia. In 2012, Shell converted its 79,000 b/d refinery at Clyde in Sydney into an import terminal, and Caltex did the same with its 135,000 b/d Sydney facility at Kurnell in late 2014.

As the refineries have closed, Australia’s dependence on imported fuels has risen.

Production of refined products nationally is expected to decline by 13% to 515,000 b/d in the financial year ending June 30, 2015, mainly due to the closures of Kurnell and Bulwer Island, according to figures from the Office of the Chief Economist in the Australian Government’s Department of Industry and Science. Output is set to fall further to 389,000 b/d in 2015-2016, as a result of the reduced refining capacity.

Meanwhile, imports of refined products have increased. Imports of products have climbed from 423,000 b/d in 2013-2014, to 508,000 b/d in 2014-2015, and are forecast to surge to 667,000 b/d for 2015-2016.