Analysis: It’s unlikely anyone will drill the Great Australian Bight in the next decade, if ever
If the biggest oil companies in the world don’t want to drill for oil in The Great Australian Bight, no one will.
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No one’s going to drill for oil in the Great Australian Bight in the next decade, if ever.
After three of the biggest oil companies in the world spent at least tens of millions of dollars on environmental plans and trying to win over hearts and minds, they’ve all walked away.
BP, Chevron and now Equinor – previously known as Statoil – have all had a swing and a very big miss.
And the argument has been the same every time – it’s not environmental and community concerns, the project just doesn’t stack up commercially.
That doesn’t make much sense.
In order for that argument to hold water, you’d need to believe that some of the best financial analysts across three of the largest corporations on the planet looked at their projects and decided to spend a fortune trying to get them approved, and then so radically changed their assumptions about the oil price or the global economy projecting years into the future that all of a sudden they were not worth the trouble.
In the case of the Equinor it was the exact same project that BP itself said wasn’t worth it just four years before.
The real story is most likely a mix of community pressure and the inability to get anyone else to share the financial risk.
The opponents to drilling in The Bight have been organised and vocal, and done an excellent job getting their message out not just to South Australians and Australians but to the world – including Norwegian citizens.
The argument – why are we drilling for oil in deep waters in a pristine environment when we’re trying to decarbonise the world’s economy – is a simple and persuasive one.
It does gloss over the fact that we’re going to be reliant on oil for years to come, but what oil company CEO wants to take on that battle?
The risks of drilling are very low – if Australia’s oil and gas regulator is to be believed and there’s no reason to think it shouldn’t.
But the reputational downside of any environmental damage would be huge.
And for South Australians who didn’t stand to benefit directly from eventual employment or business links to the project, the benefits were doubtful.
We stood to bear all of the environmental risk, while every cent of the royalties went to the Federal Government.
And Equinor itself admitted that the benefits to the State economy in at least the exploration phase would be minimal.
There are two other projects on the books, being run by Bight Petroleum and Murphy Oil, in collaboration with Santos, but they’re in their infancy, and you’d be courageous to forecast they’ll make it past the early stages.
In light of the best efforts, and failure, of the big three oil companies to make a go of drilling in The Bight, you can confidently cross it off your list of things to occupy your mind for a decade at least, if not indefinitely.
