LOOKING AHEAD: Concerns over oil security worry Australians
| Published date | 01 December 2016 |
| DOI | http://doi.org/10.1111/oet.12445 |
| Date | 01 December 2016 |
LOOKING AHEAD
Concerns over oil security worry Australians
Australians are becoming concerned about the secu-
rity of their oil supplies as production f alls and rener-
ies close. e se arch for oil is being hamp ered by low
global prices and renersface large expenditures to meet
new environmental regulations. Foreign reners mean-
while are poised to ta ke an increasing share of Australia’s
domestic market.
Production down
Australia’s oil and natural gas liquids (NGL) production
has been falling since 2000 when it hits 809,000 bpd. By
2015, it had fallen by over a half to 385,000 bpd. Over
the same period, consumption increased by a h, to
1,006,000 bpd, causing net imports to rise more than
one-and-a-half times to 621,000 bpd.
In that time, there have been several attempts to stem
or even reverse the decline in output. e years 2007
and 2011 saw a reversal in the fall in production but
in neither case was it prolonged into the following year.
According to some industry estimates, Australia has
proven reserves of on ly 1.2bn bbl, su cient for just over
eightyears’productionatexistinglevels,makingany
furtherincreaseinoutputunlikelyatpresent,although
other, more optimistic estimates give a rather higher
reserves: production ratio of 28.3:1 (see Tab le G ).
Drilling disappointments
A good deal of hope was recently invested in explo-
ration o the southern coast in the Great Australian
Bight. e pro spect att racted t he attention of a num-
ber of internationa l oil companies along with Australian
players, such as Santos.e region was estimated to have
nearly 2bn boe of hydrocarbon resources. In October
this year, however, one of the main potential explorers,
BP, announced it would not proceed with its planned
drilling program.
InanotherblowtoAustralianupstreamprospects,
ExxonMobil put a number of the oil assets in its
joint-venture with BHP Billiton, which produces oil
and gas in the Bass Strait, up for sa le. e upstream
business has been badly hit by low global oil prices
and exploration has plunged sharply, particu larly o-
shore. Many of the country ’s oilelds are in long-term
natural decline, including those in the Bass Strait, o
south-eastern Australia.
All is not lost, however, since the production of nat-
ural gas is rising and with it the output of NGL. NGL
now accounts for about 45% of Australia’s total liquids’
production, at 175,000 bpd. e continuing growth of
liqueed natural gas (LNG) production [1] is giving rise
Table G
Australia: Oil Prole 2015/2016
Proven Reserves∗(1) 1.19 bn bbl
(2) 4.00 bn bbl
Reserves Remaining†(1) 8.5 years
(2) 28.3 years
(bpd)‡
Production (2) 385,000
Consumption (2) 1,006,000
Net Trade 621,000
∗As of 1.1.16
†Based on 2015 production
‡2015. Includes NGL
Totals rounded
Source: (1) Oil & Gas Journal
(2) BP Statistical Review of World Energy (2016)
Table H
Australia: Rening Developments, 2003-2016
Company Renery Capacity Status
(bpd)
ExxonMobil Port Stanvac 78,000 Closed in 2003
Shell Clyde 79,000 Closed in 2012
Caltex Kurnell 135,000 Closed in 2014
BP Bulwer Island 102,000 Closed in 2015
BP Kwinana 146,000 Open
Viva Energy Geelong 120,000 Open
Caltex Lytton 109,000 Open
ExxonMobil Altona 85,000 Open
Total Capacity Closed 394,000 bpd
Total Capacity Remaining 460,000 bpd
Source: Australian Institute of Petroleum; Australian Press
to the production of increasing quantitiesof gas conden-
sate. In 2017, there could be an additional 135,000bpd
of NGL from two new LNG developments, at Ichthys
andPrelude,bytheendoftheyear,raisingAustralia’s
total output of liquids to somewhere like 430,000 bpd
by that time. e increase, like the previous ones men-
tionedabove,isnotlikelytolastlongandliquids’
production is forecast to have fallen ba ck once more
by 2019 or 2020.
Renery woes
Rening is also in decline in Australia. Since 2003, half of
its reneries have clos ed, leaving it with only four, with a
combined capacityof 460,000 bpd, compared with a total
productdemandofover1mnbpd(see Tab le H) . Imp ort s
of rened products have soared as a result.
e remaining four reneries face a number of envi-
ronmental costs and 2015’s closure of the Bulwer Island
© 2016 John Wiley& Sons Ltd
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