Addressing the Australian Petroleum Production and Exploration Association (APPEA) conference in Adelaide, CSIRO Petroleum Chief Dr Adrian Williams outlined the challenges facing the industry and addressed a range of options which new research and development would open up.

"Transport fuel accounts for over 40 per cent of Australia's energy consumption and this is rising. But we are faced with a declining oil outlook," Dr Williams says.

"ABARE figures show that by 2020, Australia's oil shortfall will equal $10 billion.

"Energy consumption is linked to economic growth - so cutting energy use is not an option. Instead, we need to come up with smarter, cleaner ways to use our coal, oil and gas resources."

Australia is gas-rich and, according to Dr Williams, there is a strong strategic argument for new gas-based fuels.

"While we certainly need to maintain our oil exploration efforts, the looming crisis in transport fuels can be averted by converting natural gas direct to liquid fuel. This will give us clean diesel now and provide the basis for developing hydrogen as an energy source in the future."

Natural gas can be converted to synthesis gas - a mix of hydrogen and carbon monoxide. The CO can be converted to CO2 and injected into deep saline aquifers, where it cannot add to global warming. (see diagram)

"We have a large supply of natural gas, so it simply doesn't make sense not to use it. But we must do so sustainably - and by converting it to hydrogen we overcome the greenhouse emission problem and also eliminate air pollution from energy generation," he says.

"For these options to become viable we also need to focus R&D efforts on the storage of natural gas and hydrogen, for example in vehicles."

Industry focus is also turning to renewable and clean electricity, with options like wind, tidal, biomass and hydro.

"However, geothermal energy is arguably Australia's most material option for renewable energy," Dr Williams says.

"The Cooper Basin, for instance, is the hottest place on earth (outside volcanic regions) and contains heat energy equivalent to all of Australia's electricity needs for 800 years. To capture even a small amount would be significant and the challenge requires significant R&D to help realise this opportunity."

To get Australia moving towards many of these goals, and to retain competitive edge, requires a major investment in R&D and a focus on:

proactive efforts to find and produce more oil use of gas for transport fuel (eg. gas to clean diesel, gas and hydrogen storage in vehicles) geological disposal of CO2 realising the potential of geothermal energy

"The challenge for all of us, including the science community, is to determine how we can take advantage of a rich endowment of energy and minerals, enhance sustainability across the full energy system and continue to improve air quality and address greenhouse gas emissions. All of this without compromising our material well being and competitiveness."

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