Exploration spending for onshore oil and gas exceeded offshore in 2020, a highly unusual trend, although gas reserves may be in terminal decline, Energy Quest said.
Exploration spending for onshore oil and gas exceeded offshore in 2020, a highly unusual trend, although gas reserves may be in terminal decline, Energy Quest said.
The consultancy said it was the first time onshore exploration spending had exceeded offshore in Australia.
Energy Quest’s report said onshore spending rose 1 per cent to $602 million.
Offshore exploration spending fell 55 per cent to $355 million.
“This is the lowest annual spend in real terms in the ABS series since 1976 (nominal $34.9 million, $224.2 million after adjusting for inflation),” Energy Quest said.
“The consequences of a poor national effort in offshore exploration over the past five years are beginning to flow through to national gas reserve figures.
“Unless there is a major reversal of activity, offshore gas reserves may have already entered a period of terminal decline.”
In Western Australia, there were significant reserve write downs at the Reindeer and Pluto fields, Energy Quest said.
On the east coast, restrictions on onshore drilling have meant fewer new discoveries, with the Victorian government going a step further, planning to ban fracking in the state’s constitution.
Steady year
Energy Quest said the gas market had been steady despite the pandemic.
“It might not have been a gas-fired recovery yet but standing still was a major achievement,” the consultancy said.
“Australian domestic gas consumption was 1,014 petajoules in 2020, down by only 6 petajoules (0.6 per cent) year on year.”
Woodside’s position as the top Australian oil and gas producer came under threat from Santos, the report said.
Woodside produced 24.9 million barrels of oil equivalent, while Santos hit 25.4mmboe.
“Australia exported a record 78.2 million tonnes of LNG in 2020, up from 77.5 Mt in 2019,” the report said.
“This was a good result given the disruptions to Gorgon, the fact Prelude hadn't produced since early February, issues seen at Wheatstone with reduced production, and the COVID-19 destruction of LNG demand, particularly early in the year.
“Looking ahead, we estimate Australian LNG production will increase slightly in 2021 to about 80 Mt (slightly higher than the federal government forecast in the Resource and Energy Quarterly of 79 Mt), with higher contributions from Prelude and east coast LNG producers.”
