In 2013 Queensland mining company Linc Energy announced they’d found oil beneath Coober Pedy, and it seemed to be a lot. The little known company had released an independent preliminary report on the Arckaringa Basin, claiming may hold up to 233 billion barrels of oil, or AU$24 trillion in liquid gold.
“If it comes in the way the reports are suggesting, it could well and truly bring Australia back to (oil) self-sufficiency,” Linc CEO Peter Bond said at the time.
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Worst case scenario, he said, there were only 3.5 billion barrels in the ground, which would still be “massive” for the town and the state. It was a bold claim but no one in SA, which has the country’s second-highest unemployment rate, wanted to doubt him.
His company, Linc Energy, specialised in cutting-edge fracking technology that had made Bond millions. He had the mansion with its own cinema, the luxury car collection, and the personal island which he bought in 2011. He was even backed by Russian billionaire Roman Abramovich who in 2012 invested $450 million in Linc.
And South Australia, it has to be said, is a sucker for promises of easy money. For years the state had watched the rest of the country get rich ripping iron ore and coal out of the dirt while it waited its turn. It knew it had BHP, the world’s biggest mining company sitting atop the world’s biggest supply of uranium, and many hoped it was just a matter of time until the expansion of Olympic Dam went through and made it rain.
It didn’t, but Linc Energy gave them hope, party thanks to comments from lunatic fringe investment advisors like Dr Kent Moors of Duquesne University, “energy advisor to 20 world governments,” who appeared on sketchy investment advice websites detailing how Coober Pedy was about to “rewrite the geopolitical world order.”
It wasn’t, but that didn’t stop anyone from buying into the dream. People bought up the company’s shares and there are unverified stories of investors buying houses in Coober Pedy on the hunch the town was about to boom.
What they didn’t know was that Linc was already in trouble. It delisted from the ASX in 2013 and moved to the Singapore Stock Exchange as an accounting manoeuvre. Meanwhile, details were starting to emerge about environmental damage caused by its Chinchilla plant in Queensland.
Fracking, the process where water is pumped into an underground coal seam to force natural gas to the surface, may be notorious, but Linc’s Chinchilla plant went a step further. It used a technique called Underground Coal Gassification, which sees oxygen pumped into coal seams and set on fire to release gas.
Only the process seemed to poison the surrounding landscape and by early 2015, the Queensland state government had imposed a 314 square kilometre exclusion zone around the site. Documents from early investigations released later that year showed the process had permanently acidified the soil in a region that once enjoyed pristine agricultural land.
Coober Pedy’s fortunes remained mostly the same. Life went on as always and by 2015, Peter Bond’s son, Adam, said publicly that his father was wrong and the dream of fracking oil in South Australia was “impossible.”
“We just don’t have the resources on the ground to facilitate it and it makes it harder for us to attract investment from major traditional oil investment markets such as the US because if you look at it pound for pound, you are investing in a remote area in a remote part of the globe,” he said.
To the uninitiated it might seem like wow, there’s a huge amount there, but the reality is there is only going to be a small amount that can be extracted.
When I called John Young, a resource analyst with Ord Minnett, to ask what happened he explained there is a real difference between finding oil and finding shale oil, an unconventional resource.
“The thing about unconventional resources is you can come up with very large numbers for what might be under the ground,” he said. “The shales might be quite thick and they might extend over a couple of kilometres. So you do the numbers and the result looks like there is a large amount of this resource.”
“People were coming out with these huge numbers. To the uninitiated it might seem like wow, there’s a huge amount there, but the reality is there is only going to be a small amount that can be extracted.
Things were looking bad but when the boom ended and the price of oil dropped, the company went under. As of 18 May 2016, the company owed creditors $290 million and its executives were being investigated for environmental breaches. On April 15, 2016 Linc Energy was insolvent and on June 1, the company’s US subsidiaries filed for bankruptcy protection.
A few days after that happened I called Peter Bond to get his thoughts on Coober Pedy’s oil and everything else. Over the phone, he sounded like a man under strain.
“Mate, we started drilling, we did find proof of an oil resource,” he said. “We were about to start a large seismic program.”
“The oil price dropped to nothing and we couldn’t justify it.”
Has it been sold?
“I resigned. I haven’t been involved with Linc since 12 months ago when I resigned. The last time I read in the paper, they had 15 offers.”
Then I asked how he was doing, personally.
He didn’t answer. He just said he had to go. Then he hung up.
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