Australia’s Offshore Oil & Gas Exploration Slump an Economic Risk

Australian offshore and onshore petroleum exploration expenditure fell by 13.2%, to A$254.3-million in the December quarter the ABS reported. Onshore exploration expenditure fell 22.8% and offshore expenditure fell by 7.7%.

Australian offshore and onshore petroleum exploration expenditure fell by 13.2%, to A$254.3-million in the December quarter the ABS reported. Onshore exploration expenditure fell 22.8% and offshore expenditure fell by 7.7%.

Australia Petroleum Map A

The slump in exploration prompted warnings from the Australian Petroleum Production and Exploration Association (Appea) saying that the falling oil and gas exploration in Australia could prove an economic risk. Citing the Australian Bureau of Statistics (ABS) data Appea CEO Dr Malcolm Roberts warned that if the trend continued, Australia risked missing its opportunity to capitalise on the rising global demand for energy.

The ABS also reported that while total mineral exploration expenditure increased by 2.3% to A$457-million in the December quarter, the slump was in petroleum exploration.

  • Onshore oil and gas exploration expenditure fell by 22.8%, or nearly A$23-million, to A$77.7-million.
  • Offshore oil and gas exploration expenditure fell by 7.7%, or A$14.9-million, to A$177.5-million.

“Falling exploration activity has been evident for many years, but the latest offshore expenditure numbers are alarming. Offshore activity has fallen to its lowest level since 2004. Other sources show that only five exploration and appraisal wells were drilled offshore in 2017.  This situation is happening despite deep cost-cutting by the industry. Companies have almost halved the cost of exploration wells, putting downward pressure on prices and squeezing more activity from tight budgets.  Industry is doing all it can to revive exploration, given tough market conditions. Roberts said

The trend is a global one given the fact oil prices are still recovering from the crash in prices since 2008 and gluts remain with the U.S. hitting record production through rampant shale output. In Australia “onshore exploration is recovering but offshore activity is still falling.” Roberts warned.

Roberts is concerned Australia risked missing its moment to capitalise on rising global demand for energy with regional demand for liquefied natural gas set to almost triple in the next 20 years.

“All governments should be alarmed by the trend of falling exploration. The community owns the resources and needs to attract risk capital to discover and convert resources into jobs, revenue and export dollars. The community should be concerned if governments squander the opportunity to secure a return from public resources.” Roberts warned

Australia Petroleum Map B

In 2017, 21 new offshore petroleum exploration areas have been released. The majority of the 2017 Release Areas are located along Australia’s North West Shelf, spanning the Westralian Superbasin from the Bonaparte Basin in the northeast to the Northern Carnarvon Basin in the southwest. These are balanced by five Release Areas in the basins near Bass Strait offshore from southeast Australia, and by two offshore frontier areas in the Houtman Sub-basin of the northern Perth Basin. Following the award of one cash-bid area in the 2016 bidding round, one new area has been offered for cash-bidding in the Dampier Sub-basin.

Source: Mining Weekly, Gioscience Australia

From a Sunburnt Country

Leave a Reply

Your email address will not be published. Required fields are marked *