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BRISBANE, Feb 13 AAP

February 13 2013, 1:28PM

Conservationists have condemned the Queensland government for lifting a ban on mining shale oil, calling it the dirtiest fuel source around.

The Newman government on Wednesday said it would lift a 20-year moratorium on shale oil mining imposed in 2008 by the former Bligh Labor government.

Last year, the new government also dumped Queensland's long-standing ban on uranium mining.

Premier Campbell Newman says dirty is a subjective word, and while he admits it's an energy intensive form of mining, it'll be a win for the state.

He says a commercial oil shale industry promises a river of royalties for the state, thousands of jobs and an opportunity to reduce Australia's reliance on oil imports.

"I do accept the criticism about this energy intensiveness, but at the end of the day we are running out of oil," he told ABC radio on Wednesday.

"If this thing can work and work competitively and provide that fuel source for this state and potentially an export industry from Gladstone, which is well set up to do that, than that is ultimately a win."

Queensland has about 90 per cent of Australia's known oil shale reserves, with the current resource considered capable of producing 22 billion barrels of oil.

The policy change means a Queensland Energy Resources trial plant at Gladstone, that's been running for some years, can move to a full commercial operation.

Other proponents will also be invited to gear up for commercial production.

The government says all projects will be subjected to strict environmental standards, including trials to assess the environmental effects of unproven technologies.

However one sprawling resource will remain off limits until at least 2028 amid environmental concerns.

A moratorium imposed by the former government on the McFarlane deposit, near Proserpine in the Whitsundays, will stay because of its proximity to the reef and wetlands.

Green groups have erupted in anger over the change, saying shale oil mining is a dirty, bottom of the barrel industry that uses destructive open-cut processes.

Greenpeace said shale oil was more polluting than brown coal and coal seam gas.

"It's probably the dirtiest fuel source around," spokeswoman Louise Matthiesson told AAP.

The Australian Conservation Foundation said shale oil was a "1980s energy option" and the Lock the Gate Alliance called it a desperate attempt to prolong the life of the fossil-fuel era.

The state Opposition says the government made the announcement as a smoke screen to divert attention from troubled Arts Minister Ros Bates.

"The Queensland premier has announced a seismic shift in policy in Queensland without any consultation," Opposition environment spokeswoman Jackie Trad said.

"If local communities or farmers or other stakeholders have concerns about CSG, they should be terrified of shale oil extraction."