BP to face Senate over Australian Bight oil and gas drilling plans

Offshore oil exploration in Australia's most prospective frontier basin could be heading the way of onshore gas development in the country's southeast: straight into an environmental roadblock.

Plans by UK major BP to drill for oil and gas in the Great Australian Bight were knocked back by the federal regulator last November, and now the Senate is going to take a look at the proposal, in a move that activists have said means politicians will be doing the work of the government's environment department.

Australia's National Offshore Petroleum Safety and Environmental Management Authority last year ruled that BP's plans to drill four wells in the Bight's Ceduna Sub-basin did "not yet meet the criteria for acceptance under the environment regulations." Oversight of the offshore drilling plans was moved from the environment department to NOPSEMA in 2013.

BP has played down the significance of the rejection, saying it was a normal part of the process of scrutiny and that it had expected to have to work hard to get its environmental clearances.

The company will now have to persuade the politicians, including members of the Australian Greens party, after the upper house of federal parliament referred the drilling plans, and any future oil and gas production in the Bight, to its Senate Standing Committees on Environment and Communications. The committee will be open for submissions until April 1 and will report back by May 12.

The Bight, a vast tract of ocean off Australia's southern coast, is home to an array of marine life, including humpback, blue and southern right whales, southern bluefin tuna, sea lions and great white sharks.

It is regarded as one of the world's prime frontier basins, with potential for big reserves of oil and gas. That promise has seen it attract the attention of a number of other industry heavyweights, including Chevron and Murphy Oil.

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BP is yet to submit a modified environmental plan to NOPSEMA, but is still aiming to get its $600 million drilling campaign underway toward the end of 2016. The company holds its acreage in a joint venture with Norway's Statoil.

BP's plans to drill in the remote region have come under particular scrutiny due to the company's role as operator of the Macondo well in the Gulf of Mexico, which blew out in April 2010, spewing 3.19 million barrels of oil into the sea over 87 days. The well failure caused an explosion on the Deepwater Horizon drilling rig in which 11 lives were lost.

The Wilderness Society, an Australian environmental lobby group, has led the charge against BP's plans, claiming that any oil spill in the Bight could be even worse than in the Gulf of Mexico because of the region's remoteness, rough seas and strong wind and water currents.

According to the Wilderness Society, independent modeling has shown that a spill there could result in the closure of fisheries in the Bight, the Bass Strait and even the Tasman Sea. It claims even a "low-flow oil spill" could impact all of southern Australia's coast, from Western Australia to Victoria, through Bass Strait and around Tasmania.

"BP should not resubmit its application [to NOPSEMA] to drill in the Great Australian Bight until the Senate committee has reported back, unless it wants to treat the Senate and the Australian people with contempt," Wilderness Society South Australia Director Peter Owen said last week. "It's time for BP to properly listen to the deep concerns many stakeholders and affected communities have about this risky project."

So far, offshore oil and gas exploration activity in Australia has been largely unimpeded by concerns raised by environmental activists. The same can't be said of the onshore sector, where state governments have jurisdiction and have shown themselves to be highly sensitive to protestors.

In the southeastern state of Victoria, both the government and the opposition have backed a moratorium on all new onshore gas exploration, both conventional and unconventional. Victoria, which largely depends on conventional gas from Bass Strait for its domestic consumption, has also banned hydraulic fracturing.

In neighboring New South Wales, exploration and development of the state's extensive and badly needed coalseam gas reserves has all but ground to a halt in the face of ongoing protest by lobbyists led by the "Lock the Gate" movement. The NSW government last year instituted a licence buyback which reduced the coverage of petroleum titles from 60% to around 8.5% of the state.

NSW, which produces only 2% of the gas it consumes, has now put in place a framework under which an advisory body is responsible for recommending to the energy minister any new areas to be released for exploration. According to the framework, the body will only consider an area for release after undertaking an assessment of environmental, social and economic factors, as well consulting with the local community.

For BP in the Bight, however, the company will be hoping it is just a matter of getting all its ducks in a row, a process it says is still ongoing. If it does, it will be hoping for more luck with the drillbit than Woodside Petroleum struck with the region's first and only well, the unsuccessful Gnarlyknots-1, in 2003.