tap new oil wells or pay a heavy price

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    February 24, 2008

    The Federal Government has backed a push to open new frontiers for Australia's oil and gas supply, warning that failure to discover the next big oilfield could cost the country up to $27 billion a year.

    A report by the Australian Petroleum Production and Exploration Association has found that only a quarter of Australia's oil and gas reserves have been explored, and without further oil discoveries, Australia faces a trade and energy crisis.

    Australia's crude oil and condensate production has declined from nearly 100% of Australia's needs in 2000 to just over 60% today.

    Without significant new discoveries, it will decline to an anticipated 32% by 2017.

    That translates into a decline in the petroleum and petroleum-products trade balance from a surplus of $900 million in 2000, to a deficit of $13.7 billion today and a projected $28 billion deficit in 2017.

    The report has been welcomed by Energy Minister Martin Ferguson, who signalled that the Rudd Government would offer substantial incentives to help producers pay for expensive exploration efforts.

    "Australia has many unexplored frontiers," Mr Ferguson said. "The most obvious sedimentary basins and the best prospects for oil that's easy to get at and cheapest to produce have been explored."

    The report's author, Dr Trevor Powell, one of Australia's leading geoscientists, said he was convinced of vast untapped oil reserves.

    "At present, just 17% of Australia's offshore sedimentary basins and 26% of potentially prospective onshore basins are covered by petroleum permits," he said.

    "There are more than 50 sedimentary basins in Australia, of which 12 are currently producing oil or gas and four have reserves deemed non-commercial."

    Dr Powell said new crude oil discoveries were essential for maintaining the economic benefit of petroleum supply, which reached $22.7 billion in 2006, with governments receiving $8.1 billion in taxes and royalties.

    "Given the maturity of Australia's oil-producing areas, only the discovery of a substantial new oil province can arrest the decline in reserves and production."

    The most likely potential oil fields include the Arafura Sea off northern Australia, the remote eastern frontier regions such as the Faust, Capel and Fairway basins of the Lord Howe Rise and the continental shelf area south of Tasmania.

    Onshore, they include the Canning, Georgina, Warburton, Darling, Gunnedah and Simpson basins in central Australia.

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