Australian E&D activity to surge in 1998

Australian oil and gas companies are demonstrating strong confidence in the industry's exploration and production sector.

According to the Australian Petroleum Production & Exploration Association Ltd. (Appea), the country's domestic exploration spending is expected to jump to $1.6 billion (Australian) in 1998 from $1.2 billion last year.

Following that trend, the number of exploration wells spudded in Australia will rise by 13% from 1997 levels. Development expenditures will also reach a new high-$1.4-1.7 billion-this year.

Forecast overview

Appea Exec. Dir. Barry Jones pointed out that the Australian petroleum industry's upstream activities had a value of $8 billion/year and generated $4 billion in annual export revenues.

The upstream sector also contributed nearly $2 billion/year in tax revenues to the national treasury and indirectly is responsible for 15,000 domestic jobs, he added.

Appea's annual forecast shows that exploration and production companies favor Western Australia's offshore Carnarvon basin. The basin will capture 50% of Australian industry's exploration spending this year and 36-60% of its offshore development expenditures.

Onshore, Australia's Cooper/Eromanga basin in southwestern Queensland and northeastern South Australia continues to be the strongest performing region-claiming nearly 60% of onshore exploration outlays and 80% of development efforts, Appea data show.

Jones noted that continuing growth in the country's gas markets, coupled with added market competition, is encouraging E&P companies to delineate and develop previously discovered gas reserves. He pointed out that uncertainty over the "unresolved native title issue" has prompted companies to "concentrate their onshore exploration and development activities on petroleum titles issued before the High Court's Wik Decision in late 1996."

More exploration slated

The following breakout illustrates the surge in exploration in Australia this year:

About 74-91 wildcats will be drilled offshore, along with 12-24 appraisal wells.
About 84-92 wildcats will be drilled onshore, along with 23-42 appraisal wells.
Offshore exploration spending is expected to total $1.01-1.3 billion this year, while onshore exploration outlays are forecast to total $230-269 million.
Plans call for acquisition of 28,622-35,037 line km of 2D seismic offshore and 5,120-6,300 line km of 2D onshore.
Operators will shoot 9,151-14,151 sq km of 3D seismic offshore and 835-950 sq km onshore.

Development action up

Development drilling in Australia also will increase this year, as the following breakout shows:

Offshore, plans call for 44-58 development wells.
Onshore, operators will drill 57-67 development wells.
Offshore development outlays are projected to total $447-806 million.
Onshore development spending is expected to reach $910-942 million.

Regional breakout

Following is a regional breakout of activity in Australia's key oil and gas E&P areas:

Western Australia

Offshore plans calling for drilling as many as 68 wildcats, plus 15 appraisal wells, and acquiring as much as 24,557 line km of 2D and 8,696 sq km of 3D seismic at a cost of as much as $903 million.
Operators spending as much as $514 million for offshore development.

Victoria

A significant drop in onshore exploration activity, with only one well slated and exploration spending plans of only $700,000.
A slight rise in drilling activity offshore, with as many as 32 development wells to be drilled and total development outlays pegged at $224 million.

Northern Territory

Increased exploration offshore, with up to 6,400 line km of 2D seismic, up to 15 exploration wells, and expenditures of $191 million.
Increased development offshore, with up to four development wells, and expenditures up to $367 million.

Queensland

Continued strong levels of onshore exploration, with up to 2,750 km of 2D seismic data, up to 35 wildcats and 32 appraisal wells, and expenditures of about $86 million on exploration.
Significant development program onshore, with 28 wells and expenditures of $389 million.

South Australia

Onshore exploration continues at high levels, with an outlay of up to $88 million.
Onshore development activity increases, with up to 18 wells and spending of as much as $377 million.

Tasmania