Petroleum exploration activity in Australia has collapsed in the wake of the plunge in global oil prices over the last 18 months, a period in which the country's crude production has fallen to its lowest level in 45 years, according to a report released Wednesday at an industry conference in Sydney.
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The total number of oil and gas exploration and development wells drilled in Australia almost halved in 2015 to 821 from 1,534 in 2014, the report's author, EnergyQuest CEO Graeme Bethune, told the Australian Domestic Gas Outlook conference.
The number of exploration wells drilled last year dropped to just 54, down from 119 in 2014, he said.
The collapsed oil price had its biggest impact on offshore exploration, where activity crashed in 2015 to just three wells, down from 29 offshore wells drilled in 2014.
Bethune said he believed last year's dearth of offshore drilling was just the beginning of a prolonged period of very low activity in Australia, despite the large take up of new acreage in offshore release programs between 2012 and 2014.
Work programs proposed to win offshore acreage in that period involved total investment of A$1.105 billion ($822 million) in the first three years, but the headline figure included only 12 wells, Bethune said.
Winning bidders loaded most of their proposed spending, amounting to A$1.774 billion and 43 exploration wells, into the secondary, non-guaranteed component of their work programs, which covers years four to six of the permits.
"This effectively gives them, in a low oil price environment, the freedom to severely prune their activity for as long as prices remain low," he added.
Onshore, the decline in exploration wells was less precipitous but still serious.
"The number of onshore exploration wells dropped from 90 to 51, with big declines in all states except Western Australia, where exciting results in the Perth Basin are driving activity," he said.
Exploration spending in Australia fell to A$446 million in the fourth quarter of 2015 from A$1,034 million in Q4 2014, according to Bethune.
"This is Australia's lowest oil exploration spend in a decade," he added. Low oil prices have also driven significant downward revisions of reserves, leading to negative reserves replacement ratios over last year, Bethune said.
The price slump did not hit sales, with Australian oil and gas companies' volumes up 6.8% in Q4 2015. However, revenue realized per barrel of oil equivalent fell by an average 29%.
As a result, Australian companies' total sales revenue, excluding BHP Billiton, plummeted to A$3.3 billion in Q4 2015 from A$4.4 billion in Q4 2014.
OIL OUTPUT AT 76.2 MILLION BARRELS FOR 2015
EnergyQuest estimated Australia produced 76.2 million barrels, or roughly 208,700 b/d, of crude oil in 2015, the country's lowest output since 1970.
Production was down from 83.8 million barrels in 2014, with the biggest decline seen at the mature Gippsland Basin fields off southeastern Australia.
The country's total condensate production fell 8.5% year on year in 2015 to 41.4 million barrels, with lower output recorded in all areas except the Bass and Perth basins.
Condensate output was 1.9% lower in Q4 at 10.6 million barrels, due mainly to lower production from the Gippsland Basin.
The news was more positive for LNG production, with gross production across the country of 30.4 million mt, up 23.5% year on year. Production of LNG in Q4 was 48.3% higher year on year at 9.1 million mt.
Australia's natural gas production increased 12.6% year on year in 2015 to a record 2,634.6 petajoules, and was 26.7% higher in Q4 at 729.4 PJ.
The increases were due mainly to higher output from the Surat and Bowen basins in the eastern state of Queensland, where extensive resources have been developed to supply three new export LNG projects in Gladstone.
Natural gas production was also 4.4% higher year on year in Western Australia at a record 371.7 PJ.
Australia's total production of oil, gas, LNG and natural gas liquids for 2015 was a record 581.0 million boe, EnergyQuest estimated.
The 6.6% year-on-year increase was driven by higher LNG output.