Future Gas Strategy: consultation paper

CRICOS Provider Code 00301J

Gas strategy Submission
Requirement to stimulate and facilitate gas exploration offshore
The Future Gas Strategy aims to
 support decarbonisation, including reaching our target of 43% reduction in emissions below
2005 levels by 2030 and net zero by 2050
 promote Australia's energy security and affordability
 maintain Australia’s trade relationships, ensuring we remain a reliable and trusted supplier
of Liquified Natural Gas (LNG) to our region to our region and build our clean energy exports
 help our trade partners on their own paths to net zero.
The last three require significant excess gas reserves to be available for domestic and international supply.
The consultation paper predicts gas delivery to fail to meet demand in 2026 on the east coast and
2029 for the west coast and hence fail for Australia’s gas requirements to 2050. This means that substantial new gas reserves are required to be discovered in Australia. The offshore setting, for which the Federal Government is responsible, is key to this discovery. Unfortunately, the current legislative and procedural regime has shut down the petroleum exploration industry. Twenty years ago, there were around 10 wells drilling at any one time in offshore Australia with around half being exploration, another quarter being appraisal. Currently there are none. The gas supply gap will therefore not get filled for the 2050 target or beyond for Australia or foreign countries that require gas to fill their energy transition to net zero. Note that Australia and most other countries require gas as part of their energy mix post 2050 so our export LNG industry will be required long into the future.
The exploration to production process is set out below:
1. the identification of prospective areas.
2. raising of capital.
3. the application for a five year licence.
4. The granting of a licence with a work program.
5. Geological and geophysical studies to identify specific areas to explore.
6. Geophysical surveys including seismic surveys.
7. Interpretation of the geophysical data and reassessment of the geological understanding
and prospectivity.
8. Either contract a rig to drill the resultant prospect; acquire more seismic data; or relinquish
the block as uncommercial for exploration.
9. If a well is drilled it commonly has a 20% or more chance of success so there needs to be
around ten exploration wells per year to ensure hydrocarbon discoveries occur.
10. When a discovery is made the field needs to be assessed for commerciality and if viable a
basic development concept and appraisal program is devised.
11. Further seismic, drilling, assessment of reserves, development planning and commerciality
are then assessed.
12. Once extensive development planning has been performed and commerciality determined a
production licence is obtained and the final design phase is undertaken.
13. Final Investment Decision is made and the facility build, development drilling and baseline
seismic survey acquired.
14. Production begins.
This process takes 10-20 years. At each above data acquisition stage NOPSEMA approval is required.
This takes approximately one year for each activity and longer for the field development plan. That is around 6-10 years of the time period. Prior to NOPSEMA’s existence, approvals were not on the critical line for any part of the process except the field development plan approval.
Note that near field exploration is a much quicker process as subsurface geological complexity is understood and infra structure is nearby, but these are rarely significant in size and will not fill the supply gap. The supply gap can only be filled with major new field discoveries and green field developments. Onshore exploration is much quicker and is the state /territory domain but reserves are also smaller so they significantly improve but not fill the supply/demand gap.
Note that there are still very prospective exploration areas offshore with many areas lacking recent seismic and drilling data. The prospective Houtman sub basin, analogous to the Nth Carnarvon Basin still totally unexplored.
To re-create a viable offshore gas exploration industry in Australia to fill the gas supply gap to 2050
(and beyond) the following issues need to be addressed:
 Government acknowledgement of the role in Junior explorers in identifying opportunities in
offshore exploration and development that then attracts larger players to invest in their
ideas. This group is a fundamental building block in the hydrocarbon industry that is now all
but missing. Government regulations and guidelines should foster this group in applying for
offshore blocks despite their limited funding.
 The Australian petroleum industry is seen as being of high sovereign risk to the local and
international investment community for a number of regulatory reasons:
o The petroleum sector is beset with dealing with many government departments and
external interest groups. Small companies do not have the resources to navigate this
approvals maze. The delays on the Scarborough and Barossa projects highlight that
the major companies are unable to navigate this maze either. Ideally, a single
government department section should oversee all petroleum matters and be
responsible for dealing with other government departments as well as external
stakeholders. Alternatively, a single point government facilitator needs to be
appointed to every application with responsibility to ensure timely compliance by
government, industry and third parties.
o NOPSEMA are inconsistent in their review of applications to drill or develop. Before
their inception 30 days was required to gain approval to drill a well or record seismic
in offshore Australia. Nowadays it is one to three years. This has substantially
increased the cost and risk of doing business to the extent that approval is now
commonly required before contracting a rig or seismic vessel which usually takes a
further 12 months to procure. This can be longer than the commitment framework
of the licence so is untenable. NOPSEMA should be moved under NOPTA with new
guidelines to support the industry to be successful, not shut it down with
inconsistently managed bureaucracy.
o A lack of government clarity and commitment to the long term viability of the
petroleum industry. Offshore developments require billions of dollars and one to
two decades of lead time. This investment will not occur without a decades long
government commitment to the industry. Through legislation, the government
needs to clearly highlight to the world that it needs a certain amount of gas to be
discovered and developed over the coming decades to meet energy requirements
leading to 2050 net zero targets and beyond.
Again, I highlight that consultation document forecasts show that production from existing and new developments will not meet Australian demand for gas to 2050 as part of their net zero emission targets or beyond. A viable gas exploration industry for offshore Australia no longer exists and needs to be rebooted if Australia is to have competitive cheap energy for many decades to come.
Electrification of Australia
Without new gas supplies to underpin electricity supply in the near future Australia will need vast amounts of green energy, nuclear or new coal fired electricity. The current plan for large solar and wind arrays with large batteries is one solution but green tape and red tape add massive delays so the current high prices will only increase further causing inflation and economic decline for Australia and a loss of living standards for all Australians. The only viable rapid solution I have seen to date is proposed by Dr Saul Griffiths and is outlined in his books and on his website: https://www.rewiringaustralia.org/
In short, rather than subsidising big business to build big power production, subsidise to put excess solar production on the rooves of houses and businesses together with batteries to not only replace their energy supply with roof top solar but for export. An oversupply of electricity would underpin cheap Australian energy and exceed demand for households, business and big industry. Under such a plan a return to 10c / Kwhr is very doable and would underpin high energy industry to return to
Australia and/or expand.