A lack of approvals for seismic exploration and offshore licensing rounds is stoking concerns that Australia's upstream oil and gas sector is in a slow-motion death spiral.  

Speaking at a recent industry forum, EnerGeo Alliance Asia-Pacific representative Simon Molyneux said the stagnation in seismic approvals could curtail future discoveries and is undermining investment in exploration.   

"I'm an explorer. I've noticed about half a dozen [explorers] in the room here. I don't think anybody would say activity's been picking up. So, can you give me some tangible examples of where it's been?"   

A number of industry leaders have recently warned of a looming supply shortfall and  Molyneux is among a chorus of voices highlighting the mounting regulatory hurdles for the sector.   

While the activity of Beach Energy, Amplitude Energy (formerly Cooper Energy) and ConocoPhillips in offshore Victoria signals some momentum, the lack of new acreage awards and seismic approvals has cast a shadow over broader exploration activity.   

Seismic surveying is a critical precursor to drilling, but industry sources indicate approvals are moving at a snail's pace. The federal government's decision not to conduct an offshore license round in 2024 marked a first in recent history, exacerbating concerns about future activity.   

Further complicating the outlook, Canberra has stipulated that commitment activity on newly issued offshore exploration permits must rely on existing seismic data rather than fresh surveys. The announcement last year drew criticism from industry groups, which argue that restricting seismic activity hampers the identification of new prospects and the de-risking of discoveries. The long-term impact is a disruption of gas supply.   

However, some analysts suggest exploration drilling activity is evolving beyond wildcat drilling. Rystad Energy upstream analyst Krishan Pal Birda said the focus is shifting towards infrastructure-led exploration (ILX), which seeks to unlock new resources by leveraging existing infrastructure rather than targeting greenfield projects.   

"Even last year, 2023 was the first year where we awarded no oil and gas exploration acreage. But I still think exploration is shifting towards ILX because given the amount of infrastructure that we already have, it probably makes more sense," Birda told the industry forum.    

There is a case for appraisal activity with rising energy prices, ullage in facilities and advancing technology making previously uneconomic discoveries viable.   

Yet the broader concern remains that Australia's regulatory framework is throttling the level of activity needed to service demand. 

"In order to close that supply and demand gap, we need exploration, and we need a policy and regulatory framework that supports that," Molyneux said. 

Exploration slowdowns are not new. Over the past decade, successive governments have imposed increasingly stringent restrictions on offshore oil and gas activities, intensifying regulatory scrutiny under pressure from environmental groups. More intensive scrutiny and the resultant lack of certainty of approval have made Australia a less attractive destination for upstream investment. 

Global oil and gas majors have responded by reallocating capital to regions with clearer regulatory pathways and more promising geology. Countries such as Guyana, Namibia, Argentina and Cote d'Ivoire are attracting significant investment, while even closer to home, Indonesia and Papua New Guinea are seen as more favourable jurisdictions for exploration. 

Molyneux says seismic surveys are targeted by groups opposed to the fossil fuel sector (who often label the process "seismic blasting"), which sees the surveys as "the tap" that controls the supply of future developments. 

"The environmental movement has recognised that by stopping exploration, they can stop the exploitation of oil and gas in general within Australia," Molyneux said.  

"They see seismic as the place where they can exert the most pressure," he added. 

The environmental impact of seismic exploration and its effect on marine life remains a contentious issue, with ongoing legal challenges and protracted consultation processes delaying project approvals. 

The seismic industry argues that its surveys comply with stringent regulatory standards aimed at minimising environmental impact, with no evidence that surveys following those standards have any significant impact upon marine species populations. Yet, persistent opposition and regulatory uncertainty are stifling investment. 

Prolonged approval delays and operational downtime are making it increasingly uneconomical to deploy seismic vessels in Australian waters, warns Molyneux. 

"Australia has slid down the rankings in terms of regulatory certainty," he said. 

"Our members operate in a globally competitive market. If they can't justify bringing a vessel here, they simply take their business elsewhere." 

In the past, Australia benefited from the ability to build continuous seismic programs, reducing unit time and cost, and environmental impact. However, the current regulatory delays mean that vessels are deployed on an ad-hoc basis, increasing time to deploy, costs and the emissions associated with each activity. 

Industry leaders are calling for greater regulatory certainty and clearer approval timelines. They argue that while community consultation is an essential part of the process, it should not be open-ended or used as a tool to obstruct development. 

"What we need is a framework that provides reasonable certainty for project proponents," Molyneux said.  

"There should be defined periods for assessment, after which a decision is made. If there are legitimate environmental concerns, we need to address them. But objections based on ideological grounds, rather than factual and scientific evidence, should not be allowed to derail the process." 

For now, the oil and gas sector remains in a state of cautious frustration. While companies continue to push for regulatory improvements, many are reluctant to be too vocal in their criticism, fearing further political and environmental backlash. 

As Australia transitions to a more diversified energy mix, gas remains a crucial component of the country's energy security. However, without on-going exploration activity, the industry warns that supply gaps will become inevitable. Whether the government acts to address these concerns remains to be seen, but the stakes are clear: a failure to resolve regulatory roadblocks could lead to higher energy costs and increased reliance on imports in the years ahead.