“Australia must step up oil exploration"

Press, Volume CXIII, Issue 33413, 20 December 1973, Page 19

“Australia must step up oil exploration"

(.V.Z. Press fiLsnociotxon—CopyrightSYDNEY. December 18. Australia might soon find itself in an energy crisis unless more oil was discovered in the country, said the chairman of Ampol Exploration. Ltd. (Mr \V. M. Leonard).

He called on the Federal; Government to encourage; and assist in the search foroil by increasing the price of; indigenous crude oil nearer] to world parity and introduc-! ing a tax depletion allowance. Mr Leonard was addressing; the annual meeting of Ampol Exploration, He told less than 35 share-1 holders at the meeting that) group net profit for the year! to September 30 was $2,722,615 —about the samel las last year. Tax concessions Mr Leonard said that the company had sufficient-funds I only for up to two years I further exploration. “A depletion allowance would enable us to continue the search for many years without further recourse to our shareholders or without withholding dividends,” he; said. He described a depletion allowance as tax concessions for genuine explorers. This had proved successful in the United States. Mr Leonard said that Austfalian crude was grossly] (underpriced in today’s; I circumstances, and the 1 !Government should “forth-.

Iwith bring indigenous crude ’oil prices nearer world i parity.” Higher prices The average price of] j indigenous crude oil dejlievered to Australian re-] (fineries was about $2.30 a! I barrel, while Middle East 1 ’crude today cost in excess |of ss.oo—and the way prices were rising it would unidoubtedly increase. | “In fact, some 80m barrels lof Iranian crude were sold a week or so ago at prices lin excess of $lO a barrel,” I Mr Leonard said. i An increase in the price ]of Australian crude would I undoubtedly cost the consumer more for petroleum products. But he believed that if the choice were between energy I starvation, with the con- ; sequent adverse impact on the economy, and a higher price, the public would prefer (the latter.

I He supported the Federal ' Government’s plan to set up ;a Petroleum and Minerals Authority, and urged private j enterprise to do the same. Energy crisis On the world energy crisis, I Mr Leonard said the cut in (crude oil supplies by the !Arab nations was producing “a profound effect on the ] economies and social well- ; being of most of the world. I “So far, the impact on {Australia has been slight, ■but, if the energy shortage .persists for any length of I time, which we believe it will, and if further discoveries of oil are not made in Australia, then our dependence of foreign crude will inevitably become . greater and greater, coupled ; with the uncertainty of even , procuring adequate requirements,” he said. “It is becoming extremely urgent, therefore, that the L search for oil should be , accelerated as a matter of national concent. I “Even if found in commercial quantities within the . coming year, it would take -I probably until 1979-80 to ; i produce, transport, and . market offshore discoveries.” Mr Leonard estimated that

by then Australian current reserves would satisfy less than 25 per cent of the' nation’s demand. Wapet’s planned drilling of] prospective structures in the] offshore Carnarvon basin of] Western Australia had been I disrupted by the non-arrival [of the drilling ship ] Dalmahoy. ] The vessel was now due to arrive next month, and if Ino bunkering or other difficulties arose, drilling should I begin in February. “Despite the disappointing results of last year’s exploration. Wapet participants have budgeted to spend a further s22m in 1974 on their operations in Western Australia,” Mr Leonard said. Large funds needed j Included in the programme I is the drilling of six offshore I wells in the Perth and (Carnarvon basins, costing |slom. Onshore drilling would I be conducted in the Canning,

Carnarvon and Perth basins. Several development wells had been planned for the Barrow Island and DongaraMondarra areas. Perhaps no other pointer could demonstrate the magnitude of funds required in the search for and production of oil than to state that Wapet’s 1974 programmed expenditure of s22m would bring the group’s exploration and production expenditure in Western Australia to a total of $277m, he said.