Saturday Aug 18, 2018

PetroEnergy Information Network

Sunday / 10/15/2017 12:00:00 AM / 11:40
Service : Gas
News Id : 279045
Reporter : 763

Australia, New Energy Giant

(Sunday, October 15, 2017) 11:40

TEHRAN, (Shana) -- Whenever we hear about energy and rich oil and gas, reserves in 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.

 

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.

Furthermore, Six 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.

Investment in LNG

Investing 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.

The Australians 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 tonnes.

The Australian 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.

Future Giant

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.

Significant 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 investors.

Australia is 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 energy markets.

Australia is forecast to become a main supplier of energy to China, India, South Korea and Japan.

 

By Shuaib Bahman

 Courtesy of Iran Petroleum