2011 has been another extraordinary year for Australia's resources industries, and in particular the oil and gas sector. This year we have seen record export earnings from mineral and energy commodities of $175 B, and this figure is forecast to rise 21% next year. Export earnings from LNG alone topped $10 B and collectively resource and energy export earning accounted for around 60 % of the national total for all goods and services.

These figures reflect the benefits flowing to Australia from the ongoing demand for our resources in the Asia region and the importance of the sector to Australia's economic prosperity and future growth.

Gas remains a vital commodity to Australia's energy security and that of our trading partners and will play an important role in a cleaner economy, emitting only half the carbon per unit of electricity compared with coal.

The International Energy Agency talks about a Golden Age of Gas and forecasts a rise in global gas production of 50% by 2035 - Australia is set to be one of the main beneficiaries of this.

Australia has enjoyed record investments in LNG, set to continue into 2012 with seven LNG projects under construction representing total committed capital expenditure of over $140 B. These investments put Australia on track to be the world's second largest exporter of LNG behind Qatar in just a few short years.

This year we have seen the $29 B Wheatstone project, the world's first floating LNG facility Prelude and the Australia Pacific LNG Project on Australia's east coast, all sanctioned, and all set to create thousands of jobs for Australians.

This year has also been one of important progress in terms of strengthening safety.

Legislation to establish NOPSEMA and NOPTA has passed the House of Representatives and the Senate and they will be operational from 1 January 2012, delivering on a key recommendation of the Montara Commission of Inquiry.

Australia hosted the International Offshore Petroleum Regulators and Operators Summit in August, which brought together representatives

from governments, regulators and operators in the global offshore petroleum industry. The summit focused on a renewed commitment for leading practices in safety and environment regulation in the sector.

The Government has also been active in implementing measures to address the challenges being faced by industry, chief among which is the emerging shortage of skills and labour. Our $3 B skills and training package in this year's budget, the introduction of Enterprise Migration Agreements for major projects and the expansion of the FIFO program are all targeted at relieving these pressures over the short and longer term.

The Government remains committed to working with regulators, industry and key stakeholders for the responsible management of Australia's oi and gas sector into 2012 and beyond.

Martin Ferguson AM MP Minister for Resources and Energy.

Queensland

There are three CSG to LNG projects currently under construction in Queensland - valued at $45 B.

• Gladstone LNG;
• Queensland Curtis LNG; and
• Australia Pacific LNG.

In 2011 the Queensland Government has taken a number of steps to strengthen environmental protection of the oil and natural gas industry, particularly within the CSG sector.

Highlights for the past year include:

• New land access laws that ensure the rights of landowners in their dealings with resource companies - framework and code established including template contracts that set out guidelines for compensation for landowners;
• Banning the deliberate use of BTEX chemicals in the fraccing process;
• The introduction of new regulations to ensure CSG tenure holders advise landholders of the chemicals to be used in fraccing operations on their property and to provide notice of at least 10 business days before beginning a drilling or fraccing operation;
• The commencement of the CSG-LNG Enforcement Unit to provide landholders and the community with a one-stop shop to respond to safety, land access and environmental concerns and compliance issues;
• The progression of the Strategic Cropping Land policy to protect Queensland's very best cropping land against mining and other development. Legislation was introduced into Parliament on 25 October 2011;
• The declaration of the Surat Cumulative Management Area and expansion of the role of the Queensland Water Commission to model and predict the cumulative impacts of CSG extraction on groundwater within this area. A draft Underground Water Impact Report will be released for public consultation in December 2011;
• CSG Water Management Policy introduced;
• Surat Basin Engagement Committee formed;
• Overlapping Tenures Policy - a review of the tenure framework that regulates exploration and development of Queensland's CSG resources;
• Resource Exploration and Urban areas policy announced;
• CSG Wellhead Safety Program was completed and code of practice introduced;
• Surat Basin Future Directions Statement final report addressing major regional issues including 11 'headline initiatives' was released; and
• The majority of environmental authorities were also granted for the LNG project proposals put forward by QCLNG, GLNG and APLNG. The project proposals cover gas field development in the Surat and Bowen Basins, the construction and operation of three gas pipelines to Gladstone and the construction and operation of three LNG facilities on Curtis Island.

Victoria

2011 Industry highlights include:

• The release of seven offshore exploration areas at APPEA has attracted strong interest from bidders. An announcement of successful bidders will be made once assessments are completed.
• The $4 B Kipper and Turrum gas and liquids development commenced. The two projects will see the development of about 140 MM barrels of liquids and 1.6 Tcf of gas with the Kipper facility due to be completed in 2012 and Turrum in 2013.
• Successful acquisition of transition zone seismic for the Halladale project. The use of low impact vibes enabled acquisition in a coastal park without impact on environmental values.

Future challenges:

• The growth in gas-fired power will see gas use in Victoria double by 2030. Discovered gas will be insufficient to meet the State's needs beyond this time. The challenge is to find sufficient gas in Victoria by 2020 to enable long term gas contracts to be written. Options are existing conventional gas plays, new conventional gas plays and new unconventional sources of gas.

New South Wales

The NSW Government is inviting input from the community and industry on revised environmental assessment guidelines for mineral and petroleum (including CSG exploration activities.

The guidelines have been developed by NSW Trade and Investment - Division of Resources and Energy, in consultation with the Office of Environment and Heritage, NSW Office of Water and the Department of Planning and Infrastructure.

The guidelines will strengthen environmental assessment requirements for mineral and petroleum exploration activities.

In particular, additional requirements for petroleum exploration activities will help to ensure that these activities are safe and environmentally appropriate.

Other highlights from NSW include:

• Extensive community and stakeholder consultation on strategic regional land use plans since May 2011. A stakeholder reference group consisting of peak industry and conservation groups was established to partner with NSW Government agencies. The group will continue to meet regularly throughout the preparation of the plans, and to finalise the plans after public exhibition. In addition to the work of the reference group, a number of other specific consultation activities have also been undertaken, including regional forums with industry and council representatives, presentations to stakeholder conferences and information sessions with community groups;
• NSW Parliamentary Inquiry into CSG;
• Federal Inquiry into the effects of CSG on the Murray-Darling Basin;
• Santos takeover of Eastern Star Gas;
• Dart Energy takeover of Apollo Gas;
• Banning of BTEX chemicals as additives in CSG drilling;
• Extending the moratorium on fraccing until 31 December 2011;
• Regulation of companies to hold a water license in order to extract more than 3 megalitres of water per year from groundwater sources;
• Banning the use of evaporation ponds in the CSG process; and
• New public consultation guidelines to increase transparency and accountability, after consultation with the Government's Stakeholder Reference Group.

South Australia

• More than 20 companies/joint ventures are now focusing on exploring continuous gas plays with giant discovery potential in South Australia. This is in addition to exploration in conventional oil plays in the onshore frontier Officer and Arckaringa basins, the offshore frontier Bight Basin and in existing proven, commercial, conventional oil and gas plays in the Cooper-Eromanga and Otway basins.
• Exploration in the Cooper Basin reached a new high in 2011 with Beach Energy's Holdfast-1 well flowing gas at up to 2 MMscf/d after a seven stage fracture stimulation of the gas saturated Early Permian succession. Holdfast-1 is the second of two shale gas exploration wells drilled by Beach in the Nappamerri Trough specifically located off structure. Beach has stated that gas desorption from the shales suggests almost 100 Tcf of shale gas in place in PEL-218.
• The presence of a Basin Centred Gas Accumulation (BCGA) in the Nappamerri Trough has been suspected for over two decades. Beach has stated that the Encounter and Holdfast wells confirm the presence of gas in sands outside of structural closure and estimate that gas in place potentially exceeds 200 Tcf in sands across PEL-218.
• Other explorers targeting shale gas in the Cooper Basin are reporting encouraging results from shale core analyses. Senex has stated that the coals and shales cored in the 2011 Vintage Crop 1 conventional oil discovery well are gas charged, the gas is liquids rich and mineralogy is favourable for fracture stimulation. Santos has stated that results from the Moomba 185 shale core analyses are commensurate with US producing shale gas basins.
• Explorers will accelerate appraisal of South Australian Cooper Basin continuous gas plays in 2012. Beach Energy plans to drill a minimum five vertical wells and two horizontal pilot production wells, Senex has three dedicated unconventional gas exploration wells planned, and Santos has commissioned a new stateof- the-art three-rig drilling fleet suited to unconventional oil and gas shale drilling.
• Linc Energy is targeting organic rich marine shales in the Arckaringa Basin for shale oil. Linc's 2011 Arck 1 stratigraphic well intersected around 70 m of organic rich shale (Type I/II kerogen) with very high potential oil yields. Analyses indicate that the shales are at the onset of oil generation (the target maturity window for shale oil plays in North America is 0.6-0.8% Ro). The organic rich shales are laterally extensive and will be an exciting shale oil target if sufficient maturity levels are encountered elsewhere in the basin.
• Unconventional gas resources targeted in South Australia include shale gas, gas in low permeability reservoirs, deep CSG, shallow CSG, gasification of mined coal and underground coal gasification (UCG). With these drivers for commercialising unconventional gas in mind, the South Australian Government has initiated, with industry and the Federal Government, a South Australian Roundtable for Unconventional Gas. The key output from this Roundtable will be a Road Map for Unconventional Gas to inform both industry strategies and government policies to facilitate the efficient deployment of capital, technologies and infrastructure for the commercialisation of unconventional gas in the State to supply:

– domestic gas markets,

– LNG markets; and

– evolutionary markets for synfuel.

• South Australia's Road Map for Unconventional Gas is scheduled to be published in early May 2012, just before the 13-16 May 2012 APPEA Conference in Adelaide.
• Currently 42 organisations are at the Roundtable, including peak industry representative bodies, holders of South Australian petroleum and coal resource licences, several infrastructure enterprises, and key Federal Government agencies - including RET, Geoscience Australia and the CSIRO.
• In the Cooper Basin, nine oil discoveries from 15 oil exploration wells drilled were made in 2011 to end October, a 60% discovery rate. No conventional gas exploration wells were drilled in 2011 to end October.
• Beach Energy has reported that the Bauer Field, discovered on the western flank of the Cooper Basin in August 2011, has the potential to deliver mean recoverable reserves of around 3.5 MMbbl (gross). Bauer 1 encountered a gross oil column of 15 m, with 13 m of net pay in the McKinlay/Namur Sandstone section of the well, one of the largest McKinlay/Namur oil columns found to date on the western flank oil fairway.
• The offshore Bight Basin possibly contains large oil and gas accumulations, which if discovered, would significantly increase energy security locally and nationally. Six exploration permits (EPPs) in Commonwealth waters off the coast of South Australia were awarded in 2011. The two eastern permits located mostly on the continental shelf were awarded to Bight Petroleum, and the four western permits extending from the continental edge to depths up to 4000 m were awarded to BP. Guaranteed exploration programs for the six permits include the drilling of five exploration wells.
• The South Australian Government established a 'petroleum section' back in 1962 when economic gas was discovered in the Cooper Basin we will celebrate Petroleum and Geothermal Division's 50th birthday in 2012.
• Beach Energy gained majority control of Adelaide Energy.

Northern Territory

Petroleum Annual Summary:

• Challis Venture and Jabiru Ventrue have been demobilised and wells are currently being plugged and abandoned;
• Seven wells were drilled (five offshore and two onshore), plus one work over and test onshore well;
• Five geophysical surveys were conducted (one offshore and four onshore);
• Inpex Browse Ltd and Total E&P Australia Pipeline licences were granted;
• 143 Exploration Permit applications (87 received since October 2011 to time of print), have been received in the last 12 months;
• Onshore exploration expenditure is expected to be in the vicinity of $34 M;
• Over 80% of the Territory is now under either application or grant;
• Four onshore permits have been awarded: EP126 - Territory Oil and Gas Limited EP156 - Oilco Pty Ltd EP 171 - Armour Energy Pty Ltd EP 176 - Armour Energy Pty Ltd;
• Two offshore permits awarded in the Ashmore Cartier region: AC/P53 - MEO Australia Ltd AC/P54 - PTTEP Australasia "Ashmore Cartier Pty Ltd"; and
• Six Geothermal Exploration Permits were granted on 23 February 2011. 

Add your comment to this story

Enter your comment here *

Refresh Image
Listen to audio

Full name (will appear on site) *

Email Address *

Location (optional)

Enter the code above*
               Email me if my comment is published