ENERGY IN AUSTRALIA NATURAL GAS SEEMS LIKELY TO BE A BIG CONTRIBUTOR

Press, Volume CIV, Issue 30642, 7 January 1965, Page 6

ENERGY IN AUSTRALIA NATURAL GAS SEEMS LIKELY TO BE A BIG CONTRIBUTOR

[By the Melbourne Correspondent of the “Financial Times”) (Reprinted by arrangement> Australian oil explorers are entering on a new year of intensified activity with brighter prospects than at any stage of the search that has been going on since the war. Successful strikes have come faster this last year, thought still not fast enough to make any impression on the mounting bill for petroleum imports.

To the one small producing oilfield at Moonie, in southern Queensland, there have been added three potential fields, and large reserves of natural gas which seem certain in time to capture an important share of the energy market. If the discoveries measure up to their present promise they should bring valuable returns to the more fortunate of the hundred or so companies interested in the search on which £A22 million has been spent in the past year’s accelerated effort. Judgments Vindicated The increased strikes have vindicated the judgment of the experts who believed an intensified drilling programme would bring its rewards despite the disappointments of the last 18 months. Over the year about 200 wells were drilled, equal to the combined totals of the previous two years, and almost one in four wells proved to be a potential producer of oil or gas.

Encouraged by this higher ratio, the exploring companies plan to expand their programmes to 300 wells in 1965. First rewards from the new discoveries will be obtained by the Union Oil Development partnership when its second field—at Alton, 55 miles from Moonie—is linked with the pipeline which has been sending Moonie crude to Brisbane since early last year.

But the most significant developments of the last year were probably the strikes in Western Australia which geologists have described as the world's most favourable nonproducing oil region. After 11 years of failure since the short-lived flow at Rough Range, Wapet has had four strikes in five months at Yardarino near Geraldton, 260 miles north of Perth, and on the desert. Barrow Island, 50 miles off the coast near Onslow. These are far from being established as producing fields but they have upgraded the prospects of Western Australia and stimulated an intensified search not only by Wapet (which has already spent £A24 million in the State) but also by American and French explorers drilling farmout areas on Wapet leases.

Strikes In Queensland

The unexciting progress of oil drilling has been overshadowed during the year by some spectacular strikes of natural gas in Queensland and in the torrid desert regions of Central Australia.

In desolate country at East Mereenie, 120 miles southwest of Alice Springs, Exoil has achieved Australia’s biggest flow of around 40m. cubic feet a day from one well in a 17-mile-long structure in the Amadeus basin. At Gidgealpa, in South Australia, Santos-Delhi has dis-

covered another rich gas field, while near Roma in Queensland the Associated Oil group estimates it has almost sufficient reserves to warrant the building of a pipeline to Brisbane. There seems to be no room for doubt that Australia is on the threshold of great industrial advances based on the natural gas resources. Authorities envisage pipelines extending eventually from Roma to Brisbane and Sydney. and from Central Australia to Adelaide and later to Melbourne and the big industrial centres of New South Wales.

Earlier in the year it seemed reasonably certain that by December decisions would have been made to start either the Roma or the Gidgealpa pipeline. But official surveys disappointingly indicate that neither field has been sufficiently proved. The Roma project received a setback when a Canadian consultant called in by the Queensland Government re-

ported that more than three times the. present reserve would have to be developed to supply a full natural gas service to Brisbane. The consultant forecast problems in promoting a pipeline to supply the limited market for higher-priced gas. But on the longer view, the report optimistically forecast that, although development would take time, it was reasonable to expect a pattern similar to that of Western Canada where excess amounts of oil and natural gas had been developed in less than 10 years. Natural gas, the consultant said, offered the best prospect for a new source of supply for Brisbane gas companies, and should be so abundant that electricity generating stations in 1975 would look to it for fuel. Meanwhile, in South Australia, the delayed proving of Gidgealpa’s reserves could cost the Santos-Delhi group the important power-generat-ing market as the Electricity Trust has to make an early decision on fuel supplies for its new £AISO million Torrens Island station. National Fuel Policy Whatever the immediate prospects may be. most gas authorities in the Eastern States have accepted the in-

evitability of natural gas dominating their industry within the next five or 10 years.

Clearly Australia is entering a fiercely competitive phase in the development of the energy market where the contest between indigenous coal and petroleum and imported crude has* forced the Government to take the first steps towards evolving a national fuels policy. Early in the New Year, the Tariff Board will begin an inquiry into the protection needed for indigenous petroleum if it is to find a market against the competition of cheaper imported crudes.

The Government's assurance that all locally-produced crude will be refined and sold in Australia does not go far enough to remove uncertainties facing the exploration companies after July when the special price agreement for Moonie oil expires. Although Shell, Caltex and Ampol, through their interests in Wapet, may be oil pro-

ducers next year, they will not wish to be placed at a competitive disadvantage by paying the higher price required for local production. Among possible remedies the Tariff Board may examine are subsidies and higher import duties to equalise the prices of local and imported crudes. Offshore Rigs It is indicative of official confidence in the future of the search that the Government has felt able to withdraw exploration subsidies for wells drilled within a fixed radius of proved fields, thus concentrating the £AS million a year payments on areas where prospects have yet to be fully tested. In spite of the protests of the companies, the Government believes the discoveries already made in several basins will provide ample stimulus to carry the search along at a strong pace. Interest will now be focused largely on the beginning of the offshore search in Australia. A 588-ton floating rig has arrived in Victorian waters where it will drill off the Gippsland coast for a joint venture by subsidiaries of Esso and the Broken Hill Pty. Company. Other offshore operations are planned off the coasts of Western Australia, the Northern Territory and Queensland.