BP exits oil drilling in Great Australian Bight

Image: www.bp.com

BP has opted out of its exploration drilling program in the Great Australian Bight (GAB), sparking frustration from the South Australian Government.

The company was awarded exploration licenses for four blocks in the Ceduna area of the GAB in 2011; retaining 70 per cent while joint venture partner Statoil retained the other 30 per cent.

The withdrawal comes after the company reviewed their upstream strategy earlier this year which included a focus on exploration on opportunities to boost their existing upstream positions.

They decided the GAB drilling program “will not be able to compete for capital investment with other upstream opportunities in its global portfolio in the foreseeable future”.

Claire Fitzpatrick, BP’s managing director for exploration and production, Australia said, “We have looked long and hard at our exploration plans for the Great Australian Bight but, in the current external environment, we will only pursue frontier exploration opportunities if they are competitive and aligned to our strategic goals.

“After extensive and careful consideration, this has proven not to be the case for our project to explore in the Bight.”

Fitzpatrick added that the decision did not result from a change in their view of the oil prospects in the region, nor from the regulatory process from the National Offshore Petroleum Safety and Environmental Management Authority (NOPSEMA).

“It is an outcome of our strategy and the relative competitiveness of this project in our portfolio,” she said.

The company also said they would work with government and community stakeholders to find alternative ways of honouring their commitments and obligations following the withdrawal.

The South Australian Government has expressed frustration with the decision as it could have economic ramifications for the state, the ABC reports, with the Federal Government planning to discuss what alternative future projects BP aims to invest in throughout Australia.

South Australian mineral resources minister Tom Koutsantonis said, “To remain in good standing with the Commonwealth Government and the South Australian Government, to explore for other titles, they need to make amends and that’s what we will be discussions with them about now.”

The South Australian Chamber of Mines and Energy (SACOME) considered the move “disappointing” for the state.

“While it is disappointing to see BP withdraw, those in the industry will understand and acknowledge the difficult decisions that have to be made in the current commodities climate,” SACOME acting chief executive Nigel Long said, adding that the decision should turn away from the region’s high prospects for oil and gas.

“It is our hope that once the competitiveness of frontier regions improves that BP will return to better understand the prospectivity and eventually develop a new oil or gas field for South Australia.”

In contrast, Greenpeace welcomed the withdrawal, saying BP “should never have considered drilling for oil” in the area in the first place.

“This news will be especially welcomed by the local communities near the waters of the Great Australian Bight like the tourism operators, oyster farmers and fishers who rely on it for their livelihoods,” Greenpeace Australia pacific oceans campaigner Nathaniel Pelle said.

He also called for an end to oil exploration in the GAB from other companies that also have exploration permits in the region.

In January, BP announced cuts to 4000 crude production roles this year following falling oil prices.