Located in central Queensland the original Southern Pacific Petroleum project attracted strong government support and generated massive outrage among environmental groups due to the nature of its production processes.

The ill-fated project at Gladstone is thought to have burned through more than $150 million from shareholders and the federal and state governments in its attempt to extract oil from crushed shale.

The writing was on the wall last year when last minute wheeling and dealing wasn't enough to save the embattled Southern Pacific Petroleum with Sandco Koala LLC, a unit of shareholder Jeff Sandefer’s investment operation based in Texas, appointing Ernst & Young as receivers yesterday afternoon.

Until that time company directors had been frantically trying to raise $10 million in working capital to ward off the collapse after a series of mishaps left the plant 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.

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.

QER is holding out some hope of resurrecting the project in the future, saying it would keep staff on to develop a commercial operation although it is unlikely oil will be produced using the same process as the demonstration facility.

Greenpeace, has long declared that the oil extraction process using a high temperature rotating kiln was the most damaging of the oil extraction processes.