East coast gas crisis spurs rise in exploration drilling
The east coast gas crisis appears to have spurred a sharp increase in exploration drilling among Queensland’s liquefied natural gas producers, as they scurry to deliver additional supply in the face of ongoing political pressure for action.
Figures released yesterday by the Australian Bureau of Statistics showed a slight increase in the total petroleum exploration spend across the country, which has been sitting at historically low levels in recent years.
Total petroleum exploration expenditure during the June quarter was up 4.7 per cent at $355.6 million on a seasonally adjusted basis, with a 24.3 per cent increase in activity in Queensland responsible for much of the growth.
The ABS figures also showed an ongoing recovery in mineral exploration as spending hit its highest levels in almost three years.
The Queensland petroleum data suggests the industry has responded to the gas market concerns on the east coast by increasing its exploration activity.
In April, Malcolm Turnbull announced new regulations that would allow the government to intervene and limit east coast LNG exports if the producers were not doing enough to supply domestic markets.
The apparent lift in Queensland gas exploration follows a string of recent announcements from east coast gas companies looking to improve deliveries into the domestic market, with the likes of Royal Dutch Shell, Origin Energy, Santos and Senex Energy all committing to new drilling or development initiatives.
A spokesman for the Australian Petroleum Production and Exploration Association said that despite the increase in Queensland, total oil and gas exploration spending across Australia remained at historically low levels. He said the total annual onshore exploration spend for financial 2017 was $427m, down from $1.25 billion in 2014-15, while the 2017 offshore exploration spend of $950m was down from $2.54bn over the same time frame.
“In terms of the east coast market, the evidence clearly shows the industry is responding to the need for more supply,” the spokesman said. “The fundamental problem remains restrictions on access to resources and the continuing high cost of exploration and development.”
Mineral exploration, meanwhile, has continued its post-downturn recovery with a further 9.9 per cent increase in spending on drilling, led largely by the ongoing surge in activity by the booming West Australian gold sector.
The increase in mineral exploration spending is being outpaced by the increase in the total amount of exploration when measured in the number of metres drilled, with the total distance at its highest quarterly level since September 2012.
On top of the wider recovery in the gold sector, which is enjoying some of its highest bullion prices on record, activity among the nation’s junior mineral explorers has been helped by government incentives.
WA’s Labor government recently agreed to extend the Exploration Incentive Scheme, under which the government helps to co-fund so-called “greenfields” drilling in unproven areas, while the Turnbull government at the weekend announced a $100m Junior Mineral Exploration Tax Credit that allows small companies to pass on exploration-linked tax losses as credit to their Australian investors.
Kane Moyle, acting deputy chief executive of the Chamber of Minerals and Energy in WA, said the latest ABS data added to the sense that the industry was recovering. “Whichever way you look at the metrics, in today’s data everything is trending upwards after a long period of downward trend in exploration,” he said.
“Given the long-term future of the resources sector does rely on a healthy level of exploration to discover new assets and develop the mines of the future, this is all encouraging.”
Wednesday, September 06, 2017
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