Australian offshore oil exploration booms amid dwindling reserves

Jan 27, 2003 01:00 AM

ExxonMobil and Woodside Petroleum are heading up the biggest deepwater oil and gas exploration in Australia in five years as the country seeks to replenish dwindling energy reserves. Analysts say ExxonMobil, the world's biggest publicly traded oil company, and rivals may increase oil and gas exploration spending by 13 % to as much as Australian $ 1 bn ($ 589 mm) through June 30, drilling in some cases at sites hundreds of miles from shore and more than a mile deep.
"We haven't had this sort of string of drilling activity taking place for quite some time," said Barry Jones, executive director at the Australian Petroleum Production and Exploration Association. Any more big fields found in Australia will likely be in these areas. "This is high-risk, high-play stuff," he said.

Australia needs to find more oil to prevent its fuel import bill jumping by as much as 8.6 bn Australian $ a year by 2010, Jones said. The country's last big oil find was the 200 mm-barrel Laminaria field in the Timor Sea in 1995.
Kerr-McGee, the fourth-biggest independent oil and gas producer in the United States, and Australia's top three oil companies, BHP Billiton, Woodside Petroleum and Santos, all plan ocean wells in areas like the Great Australian Bight in the south and the Timor Sea in the north.
The Great Australian Bight is "one of the last rolls of the dice for Australia" in terms of potential oil discoveries, said Agu Kantsler, Woodside's director of new ventures. Woodside aims to find as much as 2 bn barrels of oil and gas during the next decade.

Wells also are planned in the outer North West Shelf and outer Browse Basins off north-western Australia and in the outer Otway Basin. The drilling is aided by the arrival in Australia of two, deepwater drilling rigs from the United States and a surge in oil prices that makes costly drilling in deepwater fields more likely to turn a profit. Asian benchmark Tapis crude, which closed at $ 32.83 a barrel, has averaged $ 27 a barrel over the past three years, 51 % higher than for the previous three years.
"With oil at $ 25 to $ 30 a barrel, it's much easier to convince your board to put money into doing 2-D or 3-D seismic (oil surveys), and having done that, 18 months down the track, you usually want to be drilling something," said Peter Strachan, energy analyst at D.J. Carmichael in Perth.

GlobalSantaFe's Glomar Jack Ryan deepwater rig will drill at least four wells, including one just completed at ExxonMobil's Jansz gas field on the outer North West Shelf, said Strachan. Exxon said Jansz could be the largest gas field ever discovered in Australian waters.
The vessel will also drill a $ 50 mm well for Woodside in deep water in the Great Australian Bight, about 325 km (200 miles) off the coast of southern Australia. Gnarlyknots will be the first well Woodside will drill in three remote permits it secured together with Anadarko Petroleum and Canada's EnCana in 2000.
"It's 300 km from shore, that part of the ocean has really tough operating conditions," said Rob Millhouse, Woodside's public issues manager.

In the year ended June 30, companies spent about Australian $ 884 mm on oil and gas exploration in Australia, according to the Australian Bureau of Statistics. That may rise this year because of the deepwater spending, said Jones at the exploration association.
ExxonMobil may increase spending on exploration and production outside North America by 13 % this calendar year as companies shift from the United States because it offers fewer prospects, Lehman Brothers said in a report.

GlobalSantaFe said an index it uses to measure the profitability of its rigs rose 10 % in December in Southeast Asia, while it fell 2.5 % in the Gulf of Mexico where drilling activity has remained depressed. Even with the oil price rise, the pick-up in drilling has been limited in part by consolidation among major oil companies, said GlobalSantaFe's COO, Jon Marshall. That is not the concern at Kerr-McGee's Wigmore and BHP Billiton's McGuinness wells in the remote northern Browse Basin.
"If they find things up there it's going to be pretty exciting," Strachan at D.J. Carmichael said. Santos drills the first well in its deepwater permits in mid-2003 in the outer Otway Basin between Victoria and Tasmania, together with Unocal and Inpex. Santos may drill up to three wells in this area in the second half of the year in deep waters, the company said.

Source: The International Herald Tribune
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