A BAN on shale oil mining in Queensland will be lifted, creating potentially thousands of jobs and providing the cash-strapped State Government with a new revenue stream.

Natural Resources Minister Andrew Cripps will today announce plans to lift the ban, placing the Newman Government on a collision course with environmentalists.

The decision will mean the Government can count on new royalty revenue from shale oil, liquefied natural gas and uranium in the future.

The shale oil industry has been in limbo since 2008 after a 20-year moratorium was placed over a major deposit in north Queensland and the industry told it must prove its technology before the Government would give the green light to proceed.

Shale oil is a sedimentary rock that can be mined, crushed, heated and processed or heated in place to produce petroleum and other fuels.

The Newman Government's decision will allow one operator, Queensland Energy Resources, to progress its trial plant at Gladstone and seek approval for a full commercial operation.

Other potential operators are likely to kickstart the approvals process for their own operations in coming years, with 90 per cent of Australia's known oil shale reserves in Queensland.

However, the Government will maintain until 2028 the moratorium on the controversial deposit near Proserpine in north Queensland, which critics claim is too close to the coastline and sensitive wetlands.

Mr Cripps said the industry could provide huge economic benefits to Queensland, with the current resource considered capable of producing 22 billion barrels of oil.

"As the world supply of conventional crude oil diminishes, there are strong prospects for oil shale to become the next major source of liquid fuel supplies in Australia, and Queensland is well placed to lead that charge," he said.

Under the new shale oil policy, the Newman Government promised project proponents would have to demonstrate how they would meet high environmental standards.

Environment Minister Andrew Powell stressed approvals would be made on a "case-by-case" basis.

QER chief executive Pearce Bowman said the Government's decision recognised the potential importance of oil shale to Australia's transport fuel future, and QER's achievements in constructing and operating a clean and quiet technology demonstration plant.

Originally published as Revenue boost as shale mine ban lifted