29-03-2016

Queensland Biofuels pilot plant announced

Queensland has again defeated NSW because the state "wanted it more", and this time the financial stakes are higher than State of Origin glory.

The state government has secured a $16 million biofuels pilot plant for Gladstone in central Queensland, despite the NSW-based company behind it, Southern Oil Refining, already having the facilities and plans to establish it in Wagga Wagga.

The change means Queensland is on the cusp of creating a lucrative large-scale biofuels industry, particularly if the Northern Oil Advanced Biofuels Pilot Plant is successful.

There are plans to expand the plant into a $150 million commercial-scale refinery that would produce 200 million litres of advanced biofuel a year, suitable for military, marine and aviation use.

Southern Oil Refining managing director Tim Rose said the company was won over by Queensland's determination and strategic vision, which included its 10-year biofutures roadmap.

"We've been talking to the NSW government (and) honestly, the Queensland government were the guys who wanted it more," Mr Rose said.

"What we're trying to do here is really one of the first of its kind in the world, so this is a pretty major step and ... the Queensland government are fully behind this, whereas the NSW government really wasn't."

Mr Rose said the Queensland government had offered a grant to help cover the extra cost for the company to set up in Gladstone instead of Wagga Wagga.

Premier Annastacia Palaszczuk said the "small amount of money" was worth it to bring thousands of potential jobs and a completely new industry to the state, currently hit by the mining downturn.

"If it means jobs for Queenslanders, I'm prepared to fight NSW and get those jobs here and that is exactly what we have delivered here today," Ms Palaszczuk said in Gladstone on Tuesday.

The pilot plant is expected to be operational later in the year and will aim to produce one million litres of fuel within three years for use in field trials by the US and Australian navies.

Virgin and Qantas are also interested in using biofuels for their aircraft, Ms Palaszczuk said.

The plant will use biomass material like sugarcane bagasse as feedstock for the production of bio crude oil, which will then be distilled into saleable kerosene and diesel products.

The announcement comes after state parliament last year passed new laws to mandate that at least three per cent of petrol sold in Queensland must be ethanol blended by the start of next year.