Speaking at the annual PESA review of the Australian exploration scene at APPEA 2016, PESA member Stephen Keleman said Australia was no orphan in facing low levels of exploration, and was largely reflecting the global pullback.
"Globally, 2015 had the lowest addition of oil reserves in almost 60 years, reflecting both reduced activity and opportunities around the world, although having said that there were significant gas discoveries made," Keleman, Santos' manager unconventional resources growth, said.
But for 2015 just $2.72 billion was spent on exploration drilling, with $1.8 billion spent for nine exploration wells in offshore basins, down 44% from 2014, while the balance was spent on drilling just 38 onshore wells, down more than a third.
While there were discoveries in both the onshore and offshore areas, there were no new play discoveries, and while the onshore strike rate was high with around 77% of wells cased and suspended, the discoveries were small.
The picture heading into the first half of 2016 is likely to be worse, although Buru Energy has had some positive indications in the Anderson and Ungani formations, while in the Cooper Basin those few wells that were drilled maintained a high success rate.
Drilling being down is one thing, but acreage awards were also down.
There were 29 offshore blocks offered in 2015 but just 12 were awarded, down from 19 in 2014, and most of those were single well commitments. Taking into account the number of relinquished blocks, Australia saw a net loss of about 14 offshore blocks.
Onshore just eight permits were awarded, down from 13 in 2014, but that was compounded by an environment in which there was a dramatic exit of the Australian onshore space by a number of majors, primarily Statoil in the Georgina Basin in the NT, ConocoPhillips and PetroChina in the Canning Basin, Chevron Corporation in the Cooper Basin, and Quadrant Energy in the Canning Basin.
The New South Wales government's buy-back program was also enacted, leading to a loss of 20 permits in that state, including the Metgasco leases where there had been CSG pilot wells and demonstrated gas flows, while Victoria remain in a state of paralysis.
IN terms of seismic, at least in the offshore space, activity levels remained robust, primarily off northern Western Australia, with a number of very large multi-client regional surveys.
"Seismic is generally the lead indicator of future drilling activity, and the high level of offshore seismic suggests a general view positive for new plays and prospects," Keleman said, perhaps fed by the emerging Triassic play.
There were seven surveys run in 2015, down from 19 in 2014, but in terms of lines shot there was almost 43,000sq.km shot compared to 53,000sq.km the year earlier, and the average survey in 2015 was about double the size of 2014 shoot.
In terms of 2D, some 7000km was shot in the offshore, and improvement of the year earlier.
Onshore the story was not as good. The number of 3D surveys halved and there was also a reduction in the area covered, an average of 2800sq.km in 2015, down from 4200sq.km in 2014.
"Interestingly, there was no 2D seismic run in 2015, not only for the first time since for the past 20 years, but maybe for the first time since exploration began in Australia in the 1970s."
Keleman said that suggests that onshore drilling will remain at relatively low levels, and will focus on testing the existing, proven known plays, particularly given that drilling was essentially dominated by the Cooper Basin (20), with some wildcat wells drilled in the Canning Basin (6), Perth Basin (5) and the Greater Macarthur Basin (2).
BG also drilled the Moa-1 and Magnetic-1 wells seeking tight gas in the Bowen-Surat Basin, seeking long term supplies to meet its hungry LNG plants at Gladstone.
On the offshore were were five wells in the North West Shelf area, resulting in Quadrant's Roc-1 discovery and Shell's Auriga West-1 discovery.
There were two wells offshore Victoria, the Sea Lion-1 duster in the Gippsland Basin and Speculant-1 which was drilled on an onshore area to test the offshore Otway Basin.
In terms of fraccing, the outlook is not good for the long-term health of the unconventional sector, which was already struggling due to limited equipment.
Fraccing levels fell 75% from 2014, and were down 90% on 2013 levels, and of the wells that were fracced, some 70% were in the Cooper Basin, where the much hyped unconventional potential appears to be losing its sheen.
"Together with the withdrawal of the majors and the decline in the farm-out market, there are emerging concerns about Australian unconventional targets, including the effectiveness of fraccing in Australia, the general absence of North American style quality shale plays, the general absence of hydrocarbon liquids and the low heating value of the gas given the presence of CO2 and other inerts," Keleman said.
He said 2015 was a year of adjustment to commodity prices and new cost regimes, and he said aside from the high level of offshore seismic, the potential fraccing of the Macarthur Basin and a discovery in the Great Australian Bight could serve to help reinvigorate Australian exploration.
