SPP succumbs to financial pressure

Last minute wheeling and dealing wasn't enough to save the embattled Southern Pacific Petroleum with Sandco Koala LLC, thought to be a unit of the Jeff Sandefer investment operation based in Texas, appointing Ernst & Young as receivers yesterday afternoon.
SPP succumbs to financial pressure SPP succumbs to financial pressure SPP succumbs to financial pressure SPP succumbs to financial pressure SPP succumbs to financial pressure

SPP said that although not conceding that Sandco Koala LLC has the right to make an appointment, at this point SPP is cooperating with the receivers.

Directors for the company had been frantically trying to raise $10 million in working capital to ward off the collapse after a series of mishaps left its Stuart shale oil plant in Gladstone, Queensland in a cash crisis.

The project had already drawn more than $300 million for the development of a demonstration plant, although, even the fresh injection would have only seen the company through until February.

Yesterday the Herald Sun reported that the projects major backer, Texan oil investor Jeff Sandefer, was ready to place the embattled company into receivership having invested $34 million in the project in May this year.

Sandefer was scheduled to invest more on the completion of a number of crucial preconditions, such as approval for the oil shale project's environmental impact statement, which failed to be achieved.

This combined with a $6 million cost blowout associated with a shutdown of the Stuart plant has led to the cash crisis.

However, full commercialisation is estimated to require a further investment of at least $3 billion.

Greenpeace used the announcement to warn potential investors in the project that shale oil remained a risky investment prospect.

"Shale oil's extremely high greenhouse pollution means that it can never be successful, regardless of who the developer is.

"Shale oil is uneconomic, unsustainable and unwanted and a change in developer isn't going to alter that fact."