2013 PESA production and development review

Abstract

The boom in Australian oil and gas development continued in 2013, with record overall investment of $60 billion. This investment resulted from spending on the seven LNG projects under development, together with that on numerous other oil and gas developments. These projects are expected to collectively contribute up to 665 million barrels of oil equivalent (MMboe) to Australia’s oil and gas production, which totaled 513.8 MMboe in 2013. LNG, presently Australia’s seventh largest export, is likely to soon rival the nation’s largest export, iron ore. By the end of 2013, three of the LNG projects under construction—Gorgon, Queensland Curtis LNG (QCLNG) and Gladstone LNG (GLNG)—were more than 70% complete; first LNG will be before the end of 2014 for QCLNG and in 2015 for Gorgon, GLNG and Australia Pacific LNG (APLNG). The other three LNG projects—Wheatstone, Prelude and Ichthys—are close behind. These new LNG projects follow Pluto, Australia’s third LNG project, which commenced production in 2012. A full year of production from Pluto drove increased gas production in 2013. Woodside also completed the North Rankin redevelopment and continued development of the Greater Western Flank, both of which will extend the life of the North West Shelf (NWS) project. A number of other projects also commenced production. In the Carnarvon Basin, oil production began at Santos’s Fletcher-Finucane Field, and at BHP Billiton’s Macedon project, domestic gas production started. In the Timor Sea, PTTEP’s Montara Field began production of oil. In Victoria, the ExxonMobil Kipper-Turrum-Tuna project came online, with the production of gas from Tuna and oil from Turrum. Production of gas from Origin Energy’s Geographe Field (as part of the Otway Gas Project) commenced in mid-2013. Onshore oil production grew in 2013, with the Cooper-Eromanga Basin now producing more oil than any other onshore Australian basin. A major effort is underway to increase production from the western flank oil trend and to develop both the conventional and unconventional gas fields in the Cooper Basin. Spending on the development of new projects probably peaked in 2013 and there is growing concern about a dearth of future projects, with expansion of existing LNG projects and development of new projects being pushed back due to a combination of increased costs and growing international competition. There are also ongoing industry concerns about impediments to onshore gas exploration and development generally.