Australia’s gas exploration and production opportunities

With international LNG exports and domestic consumption increasing the demand for Australian gas, significant opportunities exist for the local sector. Gas Today takes a look at what will be driving the next wave of exploration and development.

In a period of rapid growth, it is essential that Australia’s vast gas resources are developed fast enough to keep up with demand, both domestic and international.

With the opening up of Australian gas to international markets through the establishment of the country’s LNG export sector, conventional producing regions, unconventional gas development and innovative exploration will become paramount to opening critical new supply channels.

According to the Australian Energy Market Operator’s (AEMO) 2015 Gas Statement of Opportunities report, analysis indicates that sufficient commercially viable reserves and resources are available to satisfy projected gas demand for at least the next 20 years.

However, to ensure that gas consumption can be met, new gas reserves need to be developed.

With more than 40 onshore and offshore basins awaiting in-depth exploration to determine their full potential, according to the Federal Department of Industry, Innovation and Science, there are plenty of opportunities.

So, where are the new areas being developed by explorers and producers?

ONSHORE OPPORTUNITIES

Australia’s gas market has changed dramatically from the isolated and declining east coast domestic market of 2000.

Increased exploration and development activity to fuel Queensland’s three exporting LNG plants – Australia Pacific LNG (APLNG), Santos GLNG and Queensland Curtis LNG (QCLNG) – along with improved pipeline connections between natural gas resources and their markets, have resulted in a fundamental shift to market demand for gas.

As a result of this shift, exploration for hydrocarbons in unconventional reservoirs, such as shale and tight gas, alongside conventional gas resources, are continuing to be an important onshore exploration target for Australia’s gas industry.

Geoscience Australia has stated that key opportunities for onshore exploration include:

  • Cooper Basin (Queensland/South Australia)
  • Canning Basin (Western Australia)
  • Georgina Basin (Northern Territory)
  • McArthur Basin (Northern Territory)

The Cooper Basin is presently Australia’s largest onshore conventional gas and oil producer, and it has seen a strong revival in unconventional exploration targeting Permian plays in recent years.

Key players in the basin include Santos, Origin Energy, Beach Energy, Drillsearch and Senex Energy, supplying markets in South Australia, New South Wales and Queensland from over 160 gas fields situated in the basin.

Meanwhile, the NT’s McArthur Basin, flagged as Australia’s answer to the shale gas boom in the United States, has so far seen limited exploration, due largely to its remote location and limited infrastructure.

However, the likes of Santos, Origin and INPEX have shown interest in the basin, while the Northern Gas Pipeline, linking the NT to the east coast gas market, is likely to attract further investors.

Unconventional resources

According to the Council of Australian Government’s (COAG) Energy Council Gas Supply Strategy, over 40 per cent of the gas which flows to consumers in the eastern market comes from CSG, with 98 per cent of this CSG coming from Queensland.

The CSG reserves also support the significant investment in Queensland’s LNG industry, while the role of gas from unconventional reservoirs is set to grow, with eastern Australia’s CSG resources being 4–7 times larger than conventional resources in the region.

Key players in unconventional gas exploration include Beach Energy, Origin Energy, QGC, Santos, Senex Energy and Strike Energy.

OFFSHORE POTENTIAL

While oil and gas discoveries in Australia’s offshore basins have been concentrated on the North West Shelf (which includes the Northern Carnarvon, Browse and Bonaparte basins), and Bass Strait (featuring Gippsland, Otway and Bass basins), and Bass Strait, featuring the Gippsland, Otway and Bass basins, discoveries outside of these areas have continued to present incredible opportunities for the Australian industry.

According to the Department of Industry, approximately 95 per cent of Australia’s petroleum production comes from offshore basins.

As of 2015 – nearly 60 years after the first Australian exploration permit was granted in 1959 in Victoria’s Gippsland Basin – there were 189 offshore exploration permits, 58 retention leases and 92 production licences in operation in offshore basins.

However, with only around 20 per cent of Australia’s offshore basins currently covered by petroleum titles, explorers remain primarily focused on finding resources close to existing discoveries.

The basins to watch

A Geoscience Australia spokesperson told Gas Today that for significant discoveries to be made in offshore Australia, the petroleum exploration industry will need to move away from the established producing areas into the frontier regions, including deeper water and geographically remote areas.

The offshore continental ribbons of the South Tasman Rise off southern Tasmania and the Lord Howe Rise, offshore southeastern Australia, have also been singled out.

“In addition, the petroleum exploration industry will need to look at basins with known petroleum occurrences in new ways, to discover new play types,” the spokesperson said.

Given the costs involved with developing these remote basins, as well as the technological challenges in offshore exploration, industry appetite for these areas remains low.

Geoscience Australia has indicated that while a number of basins are currently considered to have moderate levels of prospectivity, industry confidence could improve with more data becoming available.

REALISING THE FULL POTENTIAL

The International Energy Agency (IEA) has forecast that global demand for gas will increase by 50 per cent between now and 2040. Therefore, linking Australia’s domestic and international gas markets has presented a unique opportunity to further develop the nation’s gas resources.

The IEA’s 2015 Medium-Term Gas Market Report suggests Australia’s gas production will accelerate at an average of almost 15 per cent per annum between 2014–2020, due to major LNG projects coming online, eventually overtaking Qatar as a world leader in LNG production.

In line with this outlook, exploration of established and frontier basins to meet this demand will be critical to ensure Australia’s gas industry reaches its full potential.

 

Key developing basins

Outer Exmouth Basin (Western Australia)
North Perth Basin (Western Australia)
Eyre Basin (Western Australia)
Deep water offshore Gippsland Basin (Victoria)
Deep water Otway Basin (Victoria)
Sorrell Basin (Tasmania)

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