SOUTH Australia is sitting on oil potentially worth more than $20 trillion, independent reports claim - enough to turn Australia into a self-sufficient fuel producer.
Brisbane company Linc Energy yesterday released two reports, based on drilling and seismic exploration, estimating the amount of oil in the as yet untapped Arckaringa Basin surrounding Coober Pedy ranging from 3.5 billion to 233 billion barrels of oil.
At the higher end, this would be "several times bigger than all of the oil in Australia", Linc managing director Peter Bond said.
This has the potential to turn Australia from an oil importer to an oil exporter.
"If it comes in the way the reports are suggesting, it could well and truly bring Australia back to (oil) self-sufficiency," Mr Bond said.
State Mineral Resources Development Minister Tom Koutsantonis said there were exciting times ahead for SA's resources industry.
"Shale gas and shale oil will be a key part to securing Australia's energy security now and into the future," he said.
Linc has hired Barclays Bank to find an investment partner for the next stage of the project, costing $150-$300 million.
The company aims to drill up to six horizontal wells to further confirm its figures, but Mr Bond is confident the region will be home to oil production.
The need to build another oil and gas hub, like the Santos production facility at Moomba, depends on the size of the discovery.
"If it really takes off, that's when you start to look at Moomba-type pipelines."
Mr Bond said there was the potential for a US-style "shale oil" boom in SA.
The Wall Street Journal reported last week the US could pass Saudi Arabia as the world's largest oil producer this year, thanks to the shale oil explosion.
Shale oil extraction involves using new technologies to drill vertically and then horizontally for distances of more than one kilometre through shale rocks that contain oil.
The process was once prohibitively expensive but advances have created a new oil boom in the US.
Mr Koutsantonis said: "We have seen the hugely positive impact shale projects like Bakken and Eagle Ford have had on the US economy.
"There is still a long way to go, but investment in unconventional liquid projects in South Australia will accelerate as more and more companies such as Linc Energy and Altona prove up their resources."
Mr Bond said the potential in SA was "massive", but even at the lower end of estimates - about 3.5 billion barrels - it was still very large.
"If you look at the upper target, which is 103-233 billion barrels of oil, that's massive," he said.
"The opportunity of turning this into the next shale boom is very real.
"If the Arckaringa plays out the way we hope it will, and the way our independent reports have shown, it's one of the key prospective territories in the world at the moment." Mr Bond said each well could flow at 1000-2000 barrels per day.
"You put in 50 of them and that's a lot of oil," he said. "We have a very good idea that this will be an oil-producing asset."
Mr Bond said Linc had so far spent about $130 million in the Arckaringa Basin, drilling four deep wells and "a couple of dozen" shallower wells.
British company Altona Energy was scheduled to start drilling this month to discover more resources for a proposed coal to liquids and power project also in the Arckaringa Basin.
That project, which could cost up to $3 billion, would involve an open-cut coal mine and possibly a 560 megawatt power plant.
The Linc Energy reports, from consultants DeGolyer and McNaughton and Gustavson Associates, are available on the Australian Securities Exchange website.