Billion dollar exploration bid to boost reserves
Majors BHP Billiton, Woodside and Santos Ltd are all increasing their drilling budgets. Many smaller companies such as Origin, AWE, Nexus and Apache, as well as minnows such as Bass Strait Oil Company and Moby Oil and Gas, are planning intensive drilling programs.
Spending on oil exploration in the fiscal year to June 30, 2005, is expected to almost match the industry’s 2002 record of A$1.07 billion, according to the report.
Reports of increased drilling come after the latest official figures showing Australia’s self sufficiency in oil is forecast to slump from around 70% to just 22% within 10 years unless new reserves can be found.
The potential long-term impact of becoming an oil importer has been highlighted by Australian Bureau of Statistics data on Friday, the report said. The data showed import prices rose 2.6% in the September quarter as the cost of mineral fuels jumped 12.4%.
But there are fears that the exploration program may not be sufficient to discover enough oil to supply Australia.
“We are running out of crude oil and we have a greenhouse gas problem,” said Australian Petroleum Production and Exploration Association executive director Barry Jones.
“We ought to be doing something about cutting oil demand and finding new oil fields.”
With onshore and shallow water fields in decline, the federal government has introduced tax incentives for companies undertaking deepwater exploration, but the petroleum industry believes more must be done.
Santos managing director John Ellice-Flint told the Financial Review that most foreign countries offered better fiscal terms for deepwater exploration ttan Australia did.
Australia is not the only country facing these problems. Meanwhile the president of IHS, a US-based upstream oil research and consulting firm, has told Reuters that oil prices would lead to increased exploration around the world.
“People are really thinking this is the real time to expand their exploration budget in a meaningful way,” Ron Mobed said.
US light crude futures has soared so far this year by 68 percent, having jumped by $20 in less than four months, lately spurred on by Gulf of Mexico producing outages that have exacerbated a global shortage of light, low-sulphur crude.
But there may be a silver lining for Australia, said former Western Australian premier Richard Court, now chairman director of Resource Investment Strategy Consultants.
“Ongoing high oil prices will mean that natural gas will become a very attractive option for the mineral processing industry,” Court told the Financial Review.
He added that gas-to-liquids technology could also become more attractive. Mobed told Reuters that Australia, Indonesia, Malaysia, and Sakhalin in Russia would be the hottest natural gas drilling areas in the Asia-Pacific, driven by rising demand from the US and China.
