The project has a price tag of $8.3 billion and, according to The Age newspaper, includes plans for a hydrogen-fueled power station.
The concept is based on converting brown coal into gas and oil, producing 52,600 barrels of low-sulphur diesel a day. Greenhouse gases emitted from the conversion process will be pumped underground with hydrogen used in the power plant.
The economics of the project are reported to be based on oil prices as low as US$14 a barrel.
If it proceeds the project will be complete by 2008 and operated by Syntroleum Corporation, the US company which earlier this year withdrew from a synthetic fuels project in Western Australia.
Final design of the massive project is expected to be completed in September.
