Australia as an oil and gas exploration destination: how do we compare?

Abstract

Discoveries in Australia averaged 890 MMboe, primarily gas, over the past five years. Against a diminishing global trend Australia doubled its global contribution in 2014. Companies are now seeking to reduce CAPEX by 30–40% and will focus on lower risk commitments. Australian exploration is considered within this context of low oil prices.

Australian contract awards have held steady for four years, mostly to Australian companies. International operators were attracted to deepwater blocks, while pulling out of some shale opportunities. Australia’s high labour costs, tightening tax treatment and onshore access risks are balanced by strong rule of law, potential to repatriate production and capital, and an absence of NOCs.

The North West Shelf already expects vast, continuous gas production through 2045. Much depends on unsanctioned projects to clear the discovery backlog. Exploration can add reserves to these projects, however, new explorers may need to buy into production or hold a very long view. Meanwhile an initial oil discovery has not been repeated by subsequent wildcats. These opportunities are compared with East Africa, the Atlantic Margins and Russia.

Australia’s onshore basins have not proven commercial for shale liquids yet. Unconventional techniques in ‘not so tight’ mature basins offer upside even as companies reduce drilling spend. These opportunities are contrasted with similar plays in North America.

Australian frontiers offer a variety of opportunities for different risk appetites and bid commitments remain flexible. These plays will be contrasted with analogues from around the world. Overall, Australia’s exploration opportunities continue to suit some investors, even as exploration spend is driven down by low priced oil.