“However, the growth in production value in the March quarter was entirely due to higher oil prices – up 49% – and the spin-off effects for prices of natural gas liquids and LNG,” EnergyQuest head Dr Graeme Bethune said.
“Australian petroleum production fell by 5.3% to 98 million barrels of oil equivalent for the quarter.”
The decline in oil production was particularly marked, falling by 15.3% to 23.8 million barrels due to a more severe cyclone season than normal and rapid decline in mature oil fields.
“While oil production was affected by cyclones, the March quarter results continue Australia’s downward trend in oil production,” Bethune said.
“This does not augur well for Australia’s petroleum trade deficit in 2006."
Despite the growth in LNG exports, Australia’s petroleum trade deficit leapt from $869 million in the 2004 December quarter to $1.11 trillion at the end of last year.
With oil lower production and higher prices, the deficit looks like growing in 2006 and beyond as Australia becomes more dependent on imports.
On EnergyQuest’s estimates, Australia had proved and probable reserves of oil and natural gas liquids of 1.95 billion barrels at the end of 2005 – about 10 years of production.
“To achieve self sufficiency Australia would need to discover over 200 million barrels of oil each year, but last year there were no significant oil discoveries over 10 million barrels,” Bethune said.
“Most of the increases in company oil reserves came from booking fields discovered some years ago or upwards revisions to reserves in mature fields.”
However the picture is brighter for gas. EnergyQuest’s estimates show that Australia had proved and probable gas reserves of 35,665 petajoules or 33.6 trillion cubic feet at the end of 2005, about 24 years of production.
While booked gas reserves fell by around 3% last year, Australia has additional unbooked gas resources of 94 trillion cubic feet, including large discoveries made last year. Around 54 trillion cubic feet of this huge resource is currently targeted for LNG projects.
The consultancy found that domestic gas production fell by 4% to 193PJ in the March quarter, due to lower customer demand, particularly on the east coast.
In the eastern states, production of conventional gas fell by 12.7%, to 96PJ, but production of coal seam methane, mostly in Queensland, grew by 35.8 % to 18PJ, about 16% of east coast production. However, total eastern states gas production fell by a significant 7.5%.
In Western Australia, gas production grew by 1.8%, reflecting growth in domestic gas and LNG.
LNG production was up slightly, by 2.5% to 2.8 million tonnes, reflecting the start-up of the Darwin LNG Plant.
The report also found that several mature basins were in decline.
Western Australian petroleum production fell by 5% to 62 million boe due to the decline in Carnarvon Basin oil production; Victorian petroleum production fell by 4.5% to 18 mmboe, with falls in production of all petroleum products – oil, gas and natural gas liquids; and Cooper Basin petroleum production fell by 18.7% to 9.6 million boe.
EnergyQuest production and reserves estimates are compiled from a comprehensive database of over 200 company reports and are published in the company’s EnergyQuarterly. The 100-page report provides a detailed and timely breakdown and analysis of Australian production and reserves by company, field and state, for domestic gas, LNG, oil, condensate and LPG.
The report also provides up-to-date estimates of production and reserves in East Timor and Papua New Guinea.
East Timorese petroleum production grew from 6.6 million boe in the 2005 March quarter to 9.4 million boe in the 2006 quarter, due to increased production from Bayu-Undan.
PNG oil production increased from 3.3 million barrels to 4.9 million barrels.
