Whenever we hear about energy and
rich oil and gas reserves the Middle East region, Russia and the United States
strike our minds. Nobody may imagine that Oceania and Australia sit atop huge
oil and gas deposits. Australia is forecast to become an energy giant in coming
years. Over recent years, the Australians have invested heavily in their oil
and gas fields in the hope of upgrading their standing in global markets.
Given the significance of increased
production of energy carriers by Australia for markets, we try to review this
issue from various aspects.
Dreams and Challenges
Australia is known to be home to
natural resources like iron (3rd world ranking), nickel (2nd
world ranking), coal (1st world ranking) and gold (2nd
world ranking); however, it occupies the 29th position in terms of
oil reserves as it accounts for seven percent of the world oil reserves.
Australia first moved in the 1900s
to extract oil from its western areas. The first exploration well was drilled
near Warren River. After that, oil was explored in 1919 in Fitzory region,
where oil extraction officially started in 1946. Although the bulk of
Australia's oil reserves lie in its offshore west, central Amadeus and Cooper
oil regions are of high significance.
Australia has seen its production
drop over recent years. Its oil production fell from around 800,000 b/d in 2000
to 550,000 b/d in 2010 and to 270,000 b/d in 2017. However, there are estimates
about increased oil production in Australia in coming years. Australia's energy
company Linc Energy has announced existence of huge untapped shale oil reserves
in the country. According to the company, the shale oil is situated on 30,000
square miles in Arckaringa Basin amounts to 233 billion barrels. Leading oil
producer Saudi Arabia is estimated to have proven reserves of about 263 billion
barrels of crude oil.
If the upper end estimates are
correct then it means that the Arckaringa Basin is six times larger than
Bakken, seventeen times the size of the Marcellus formation, and 80 times
larger than the Eagle Ford US shale deposits.
basins in Australia stretching from coastal Queensland to Western Australia’s
far northwest contain recoverable shale resources of as much as 437 trillion
cubic feet of gas, all of which was previously inaccessible because it is
contained in shale formations, which could be unlocked by “hydraulic fracturing.”
It means that
Australia is rich in untapped hydrocarbon reserves which could be of great help
to global energy supply in coming years.
heavily in liquefied natural gas (LNG) production and exports, the Australian government
hopes to claim the top ranking in this market in the near future. Australia's
LNG production capacity was around 16.3 million tonnes a year in 2000, but two
LNG projects were launched in 2006 and 2012 to raise the country's production
capacity to 24.3 million tonnes a year.
hope to increase their LNG production capacity to 85 million tonnes in 2017 by
completing seven more projects. That means Australia would outperform Qatar
which is currently the leading LNG producer with an annual output of 77 million
companies have invested $60 billion in LNG projects in recent years as part of
their efforts to win toeholds in Asian energy market. Reaching such an
objective will not go ahead smoothly. Over recent years, most LNG projects in
Australia have experienced cost overruns. For instance, the initial $37 billion
investment envisaged for the Gorgon project was revised up to $54 billion due
to cost overruns.
What has added
to the complexity of commissioning LNG projects in Australia is the sharp
decline in oil prices in recent years.
The oil price
fall has pushed LNG sellers to show more flexibility in negotiations for
marketing their products. Consequently, oil majors become reluctant to finish
their incomplete projects.
In addition to
the Gorgon project whose startup has been delayed many times, Wheatstone LNG
and Prelude are facing uncertainty.
Due to lack of
infrastructure needed for shale industry development, Australia is currently
slow in extracting shale oil and gas. However, similar to what happened after
the US shale extraction, shale oil and gas recovery in Australia could largely
affect global markets.
factors like stable political atmosphere, transparent economic system,
financial support by investors and entrepreneurs, specialized and skilled
manpower, proper infrastructure in more areas, rich hydrocarbon reserves,
untapped offshore and onshore fields and geographical proximity to Asia's
growing demand could turn Australia into a country which would captivate oil
set to become a hydrocarbon giant in the near future. That would guarantee
energy security in the country and upgrade Australia's standing in global
forecast to become a main supplier of energy to China, India, South Korea and
By Shuaib Bahman
Courtesy of Iran Petroleum