Queensland unveiled plans for a AU$16 Million biofuel plant in the port city of Gladstone.  Premier Annastacia Palaszczuk says the Oil demonstration plant is to be built at Southern Oil Refining's Yarwun waste lube oil refinery and is expected to start operating later this year.

For the first three years, the Gladstone plant will produce one million liters per year of biofuels that will be used in field trials by the Royal Australian and US Navies.  If it all goes as hoped, the plant will undergo a AU$150 Million expansion into a commercial refinery that will churn out around 200 million liters per year of advanced biofuel for military, marine and aviation use.  Virgin and Qantas airlines have expressed interest in using biofuels.

"This announcement, along with the three percent biofuel mandate that applies from next January, illustrates how biofuels are going to figure more prominently in the fuel supply chains of the future," said Queensland Biofuels Minister Mark Bailey.  Last December, the Queensland parliament passed legislation requiring that ethanol make up three percent of regular gasoline sales and bio-based product make up 0.5 percent of diesel sales in the state from mid-2017.

The plant puts Queensland is on the cusp of creating a lucrative large-scale biofuels industry.  But what is Queensland's gain turns out to the New South Wales' loss.  Southern Oil Refining originally planned to locate it in Wagga Wagga, where it already has the facilities - until Queensland offerred to help cover the relocation cost.

"We've been talking to the NSW government (and) honestly, the Queensland government were the guys who wanted it more," said Southern Oil Refining managing director Tim Rose.  "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," he added, pointing out that it appeared as though "the Queensland government are fully behind this, whereas the NSW government really wasn't".

Premier Palaszczuk defends investing a "small amount of money" to bring a new industry and what be thousands of jobs to a region suffering from 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," said Ms. Palaszczuk.