The prospectus is for the issue of up to 25 million shares at an issue price of 40c each to raise $10 million with a minimum subscription of $2.5 million. Blue Ensign retains the right to accept oversubscriptions for a further 37.5 million shares to raise an additional $15 million.

Blue Ensign owns the rights to the patented Rendall Process to extract oil from oil shale and an 87-square kilometre tenement near Julia Creek containing between just under 900 million and 2 billion barrels of recoverable oil, according to executive chairman Chris Ryan.

The prospect has been assessed as having 895 million barrels of shale oil based on the Fischer Assay process, according to Ryan.

"However laboratory tests indicate that the Rendall process can achieve 200 percent [the production levels] of Fischer Assay," he said. "If achieved in practice, this increases the resource to between 1.5 billion and 2 billion barrels."

Ryan said shale oil's time has arrived and the Julia Creek Project will see the beginnings of the large-scale commercial production of shale oil.

"With conventional oil prices at nearly $US100 a barrel, the Rendall Process delivers a compelling energy message," he said.

"We estimate the process can produce oil from the shale at Julia Creek for around $US20 a barrel."

Ryan said there had always been three key difficulties in developing Australian shale oil resources - process mechanical reliability, cost of production relative to the prevailing oil price, and the environmental effects.

"We're confident the Rendall Process will overcome all three problem areas," he said.

According to Ryan, the Rendall Process offered major benefits including an ability to convert around double what conventional retorting extracts from oil shale.

In addition carbon dioxide emissions were "acceptable", there were no toxic emissions, and the residue and water produced were clean.

The broker to the offer, which closes on December 21, is Martin Place Securities.

The funds raised will provide working capital, be applied to the cost of acquiring royalty interests of the Rendall Process, and enable preliminary expenditure on establishing the proposed oil shale treatment pilot plant planned for Townsville.

The Townsville plant will allow the mechanical testing of the Rendall Process to produce 25 barrels of oil per day and form the basis for assessing the detailed design of larger, commercial-scale plants.

Blue Ensign will apply to the Australian Securities Exchange within seven days for re-quotation of 48 million suspended shares (of the company’s 123.4 million shares on issue).

Assuming the issue of 25 million new shares, the new shares will represent 19.6% of the company's expanded capital.