Australia is known in the world of commodities mostly for its large supplies of iron ore, but the country is also actively exploring for oil and gas in its onshore and offshore areas, as it tries to break the increased cycle of dependency on imported oil.
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Australia is a net importer of oil, which is obviously the main motivator of the increased exploration and development. Its oil production peaked in 2000 at 828,000 barrels per day, and the country imported 391,000 barrels per day in 2008 to meet its needs. This number has been increasing for years, and the country has not been self sufficient in oil since 1985.
One major development area is the Bass Strait project off the Southeast coast of Australia. Exxon-Mobil (NYSE:XOM) first starting producing oil and gas here in 1969, and the company just announced that it expects another 30 years of production from here. In July 2008, Exxon said it was investing $1.1 billion in this area, and expected to get 270 million barrels oil equivalent (BOE) from the investment. Another $1 billion is being invested to develop the natural gas resources in the area. ExxonMobil owns 50% of this project, with BHP Billiton (NYSE:BHP) a partner on some of the fields in the Bass Strait.
Even with the significant year over year drop in oil prices, however, Australia is still moving forward to develop its resources. Chevron (NYSE:CVX) and Royal Dutch Shell (NYSE:RDS.A) were just awarded deepwater development rights off the coast of Western Australia in an area called the Carnarvon Basin.
The Carnarvon Basin is already one of Australia's most productive areas, where hundreds of offshore wells have already been drilled. Santos Ltd. (OTC:STOSY), an Australian listed company, has interests in ten producing fields here already, so clearly there is potential for Chevron and its partners in this area.
Not all companies exploring and developing here are successful. Murphy Oil (NYSE:MUR) has been exploring in a block in offshore Western Australia. Earlier in the year, the company announced that this well was non-commercial and would be abandoned.
Other companies are moving out entirely. Gastar Exploration Ltd. (NYSE:GST), a U.S based micro cap energy company sold all of its interests in several different exploration blocks in Australia for $240 million. The company plans on focusing on its acreage in shale plays in the U.S.
Although blessed with other natural resources, Australia is wasting no time in exploring and developing its oil and gas resources as its existing fields decline as they enter maturity. This effort must continue if they want to reach a goal of energy independence. (For a primer on the oil industry, refer to our Oil and Gas Industry Primer.)
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