Chevron Loses Taste for Oil in Great Australian Bight
October 12 2017 - 9:30PM
Dow Jones News
By Robb M. Stewart
MELBOURNE, Australia-- Chevron Corp. has abandoned plans for
deep-water exploration wells off Australia's southern coast, the
second oil major to be squeezed out of the Great Australian Bight,
citing low oil prices.
The U.S. company said its exploration program in the Bight had
failed to compete for capital against other projects in its global
portfolio. It follows BP PLC's decision a year ago to halt its own
exploration efforts there, saying the project didn't stack up
financially.
Nigel Hearne, managing director of Chevron Australia, said the
decision to halt exploration was not due to regulatory, community
or environmental concerns. "We are confident the Great Australian
Bight can be developed safely and responsibly and we will work
closely with the interested stakeholders to help realize its
potential," he said.
The Bight is seen as one of the most prospective oil frontiers
in Australia, possibly rivaling the southeastern Bass Strait, where
Royal Dutch Shell PLC and BHP Billiton Ltd. have pumped more than 4
billion barrels of crude and some 8 trillion cubic feet of gas over
about 40 years.
Much of the area marked for exploration in the Bight, which
stretches about 1,000 miles between the states of South Australia
and Western Australia, lies in a marine reserve, home to whales and
sea lions. It's a rich fishing ground and lures tourists who come
to view great white sharks from diving cages. Yet it is known for
extreme weather, and environmental groups have warned of risks to
wildlife and the coast in the event of a deep-sea well blowout.
Greenpeace said Chevron's decision was a signal for Norway's
state-owned Statoil ASA--the remaining energy major in the Bight,
having revived BP's drilling plans in June--to abandon the area.
"The coastal communities of southern Australia have dodged another
bullet, but the threat of Statoil still looms," Nathaniel Pelle, a
campaigner for the environmental group, said Friday.
Like Chevron, BP had stressed its decision to leave the Bight
was commercial, despite coming weeks after Australia's oil-and-gas
regulator requested more information on how the British oil giant
planned to manage environmental risks there.
In late 2013, Chevron bought two exploration licenses in the
Bight, covering a total of more than 12,000 square miles. The
company said early seismic surveys had been promising and it had
planned four exploration wells. In a submission to Canberra this
year, Chevron estimated each well could cost 100 million Australian
dollars (US$78.2 million), though in Australia only 14% of wells
drilled typically lead to production.
Chevron said it remains focused on Western Australia, where it
has invested billions of dollars in natural-gas operations. Last
week. the company took stakes in three offshore exploration blocks
in the Northern Carnarvon Basin, while its Wheatstone project began
producing liquefied natural gas this week. It also ramped up LNG
output at its Gorgon project on Barrow Island in March.
The Australian Petroleum Production and Exploration Association,
an industry lobby group, said Chevron's decision was a reminder
that investment in developing Australia's energy resources can't be
taken for granted. It estimates onshore and offshore oil-and-gas
exploration in the country is at 30-year lows, due to difficult
market conditions and rising regulatory costs.
Write to Robb M. Stewart at robb.stewart@wsj.com
(END) Dow Jones Newswires
October 12, 2017 22:15 ET (02:15 GMT)
Copyright (c) 2017 Dow Jones & Company, Inc.
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