THE continuing low level of exploration interest in the country continues to be a significant concern for the Australian oil and gas industry.
Responding to the release of the Australian Government’s ‘Resources and Energy Quarterly’ report , the Australian Petroleum Production and Exploration Association (APPEA) said the current state of the local industry “provides equal measures of optimism and disappointment.”
APPEA chief executive, Dr Malcolm Roberts, said rising LNG exports are underpinning Australia’s economic growth but the continuing fall in petroleum exploration is alarming.
“$200 billion has been invested in new LNG projects which will soon see Australia become the world’s leading LNG exporter.
Thousands of long-term, high wage jobs and more than $16 billion in export revenue have been generated,” Dr Roberts said.
“However, petroleum exploration is at its lowest level since the March quarter 2006.
“Today’s exploration is tomorrow’s production. Companies prepared to invest heavily in exploration should be allowed to get on with the job under proper regulatory oversight.
“Successful oil exploration in the Great Australian Bight, for example, would ease Australia’s reliance on imported oil and deliver South Australia much-needed new investment and jobs,” he said.
The findings of the ‘Resources and Energy Quarterly’ report follows the equally disturbing data contained in a recent Australian Bureau of Statistics of petroleum exploration expenditure study.
Mr Roberts said the 2015-16 ABS data confirmed that oil and gas exploration in Australia – onshore and offshore – “is in free fall.”
“Over the last two years, spending on onshore and offshore exploration has fallen by almost two-thirds,” he said.
“While some of this fall reflects lower costs, exploration activity is undeniably at its lowest levels for many years. The number of exploration wells drilled offshore is at its lowest level in almost 20 years; onshore drilling is at its lowest level in 15 years.
“The latest data continues a worrying trend that has been evident for many years, even when commodity prices were much higher. If the slide in exploration continues, Australian gas users will face more uncertainty about future supply and higher gas prices.”
Highlights from the Office of the Chief Economist report includes:
- The value of Australian LNG exports is forecast to increase by 41% to $23 billion in 2016-17;
- Australia’s LNG export volumes are forecast to increase by 40% to 51 million tonnes in 2016-17;
- An additional 15 million tonnes of LNG export capacity is expected to be completed by mid-2017, bringing total operational capacity to about 66 million tonnes;
- Gas production is estimated to have increased 23% in 2015-16 to around 82 billion cubic metres, driven by higher CSG production; and
- Australia’s gas production is forecast to rise to 104 billion cubic metres in 2016-17, as LNG export capacity continues to increase.
“Capturing future growth and investment opportunities must remain a priority for all governments to build on a decade of extraordinary resource achievement,” Dr Roberts said.