BP has pulled the plug on its controversial $1.4 billion Great Australian Bight oil drilling project
TREASURER Tom Koutsantonis has demanded BP compensate SA for abandoning its $1.4 billion offshore drilling program in the Great Australian Bight, or make new investments in the state. VOTE NOW
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READ BELOW: Ceduna shifts hopes for a windfall
READ BELOW: Debate - for and against Bight drilling
TREASURER Tom Koutsantonis has demanded BP pay compensation to South Australia for abandoning plans for its $1.4 billion offshore drilling program in the Great Australian Bight, or make new investments in the state.
The oil and gas giant’s shock decision to cancel the project was welcomed by environmental groups.
BP promised to invest in new projects in Australia to avoid paying hundreds of millions of dollars’ worth of compensation to the Federal Government – but there has been no clear commitment for that money to end up in SA.
Federal Resources Minister Matt Canavan said he was “very interested to speak with BP about the future opportunities in SA” but he was unwilling to provide any further certainty to the state about the level of investment it should expect.
BP had guaranteed to undertake exploration worth about $605 million and drill four exploration wells in 2016-17. Another $832 million in expenditure was not guaranteed.
Mr Koutsantonis condemned BP’s decision and said the company should be required to propose other exploration projects in the state, or pay compensation to SA.
“The people of South Australia were expecting this investment. We were the ones who were going to have to put up with the environmental risks,” he said.
“If they want to remain in good standing, that money should be spent in the Cooper Basin, the Otway Basin, to improve the country’s domestic gas market or oil market.
“The reputational damage BP has done to itself is immense. If you’re any developed country anywhere in the world, how can you believe anything BP says ever again?”
Environment groups welcomed the decision saying they opposed drilling in the Bight because of fears an oil spill could devastate large parts the SA coastline.
BP must launch other exploration activities to avoid paying hundreds of millions worth of compensation to the Federal Government under a “Good Standing Agreement”.
It announced yesterday that it would not proceed with its controversial exploration project in the Bight because it wanted to focus on other projects.
Several other companies are interested in exploration projects on the same area.
The drilling was to occur in waters controlled by the Federal Government.
Mr Canavan said BP must meet its legal commitments when it surrendered the Bight exploration permits.
“We expect BP to propose other areas of exploration that will make good the surrendering of these commitments, and I’ll be very interested to speak with BP about the future opportunities in South Australia,” Mr Canavan said.
Santos, Chevron and Murphy Oil have all proposed exploration in the Bight.
BP’s managing director for exploration and production in Australia, Claire Fitzpatrick, said the Bight project was cancelled because it could not compete for capital investment with upstream opportunities in the company’s global portfolio in the foreseeable future.
But Ms Fitzpatrick said she hoped another company would develop resources in the area.
“People move in and out of basins over a long period of time. While I hoped I would make a discovery, I sincerely hope someone else does and in 10 years’ time I’m trying to work out how to get back in,” she said.
Ms Fitzpatrick said opposition by environmental groups had had no impact on BP’s decision.
“It doesn’t play in the decision and that’s on the basis of being fairly unemotional – you make business decisions based on whether they make commercial success, do they fit with our portfolio where we compete for capital,” she said.
BP would look for other opportunities in Australia to remain competitive, she said.
“We’re very keen to remain in good standing with the Australian Government and what happens now is we will enter into conversations both with our partner Statoil and, more importantly, with the Government on how we can achieve maintaining that good standing,” Ms Fitzpatrick said.
“We believe there will be other opportunities in Australia that will in fact be both competitive and help underpin our strategy.”
Australian Petroleum Production and Exploration Association SA director Matthew Doman said BP’s decision was disappointing but he was hopeful that other companies would pursue exploration in the Bight.
“The resource potential of the Great Australian Bight remains significant and the economic and energy benefits of developing those resources will be substantial,’’ Mr Doman said. “Success in the Bight would ease Australia’s reliance on imported oil and deliver South Australia much-needed new investment and jobs.”
Greens Senator Sarah Hanson-Young and Nick Xenophon Team MP Rebekha Sharkie said BP’s decision was a victory for communities across the Fleurieu Coast.
Wilderness Society SA director Peter Owen said the Federal Government should rescind all other drilling leases in the Bight.
“We can’t afford to put at risk this pristine wilderness area, home to one of the world’s biggest southern right whale nurseries, our fishing and tourism industries and our coastal way of life,” he said.
Ceduna shifts hopes for a windfall
By Erin Jones
THE Ceduna community is optimistic drilling exploration in the Great Australian Bight will proceed and create economic and job windfalls for the Eyre Peninsula, Mayor Allan Suter says.
The local council now pins its hopes on the other four oil companies proceeding with their drilling projects in the Bight after BP yesterday abandoned its $1.4 billion project to search for oil 300km southwest of Ceduna.
Mr Suter said he was “hopeful” other companies would progress with explorations.
“Are we disappointed at the decision?” Mr Suter said. “Yes, but there are four other companies looking at drilling in the bight so we just have to watch this space and hope that it comes to something.”
About 25 Ceduna businesses and 25 local workers will be affected by BP’s decision, according to figures detailed on its website.
“It would be fair to say every business would be affected to some extent,” Mr Suter said.
“If they had made a massive discovery that would have been huge for local jobs and, not only the state, but for the country.”
BP’s exploration drilling program, which had not yet been approved by Federal Government environmental regulators, was to start in summer with each of its wells taking 45-170 days to drill.
In a statement yesterday, BP said it would not proceed with the project following a review of its “upstream strategy” to focus exploration on opportunities likely to create value in the near to medium term.
Mr Suter said transport facilities needed in Ceduna to support such explorations were nearly complete, thanks to BP’s $10 million investment at the Ceduna Airport to include a helipad, hanger and administration offices.
Resources and Energy Minister Tom Koutsantonis said BP’s decision was disappointing for the Ceduna community, which would have been an important supply base for the project.
“BP made it clear that this decision has nothing to do with the prospectivity of the Bight which has the potential to contribute greatly to local economies and SA as a whole, and other companies are still seeking to explore and develop projects in the area,” he said.
Companies wanting to drill offshore near the Bight’s sensitive marine zones faced opposition from the Clean Bight Alliance Australia.
THE DEBATE OVER BIGHT DRILLING
It’s got great potential
By Matthew Doman
BP’S decision not to drill in the Great Australian Bight is disappointing for South Australians who would have benefited from the economic activity the project promised.
The international environment for the oil and gas industry is challenging and companies are regularly reviewing their plans. This is a stark reminder that global investment in Australian resource projects cannot be taken for granted.
However, the potential of the Great Australian Bight remains significant.
Success in the Bight would ease Australia’s reliance on imported oil and deliver SA new investment and jobs.
Australia already imports 80 per cent of the oil we use, and if new discoveries are not made soon, we’ll be totally dependent on imported oil within a decade.
Fortunately, Chevron, Murphy Oil, Santos and other companies will continue to pursue their plans.
Any activity in the Bight will only proceed under the highest environmental standards, and only after extensive consultation.
With proper regulatory oversight, there is no reason a safe, sustainable offshore petroleum industry should not be possible for SA.
The oil and gas industry recognises that activist scare campaigns have fuelled concern about exploration in the Bight. That’s why we are committed to working with the community to address their questions and concerns.
Matthew Doman is SA director of the Australian Petroleum Production & Exploration Association
Bight’s too big a risk for all
By Peter Owen
ALL oil and gas companies should follow BP’s lead and leave the Great Australian Bight after the petroleum giant announced it was quitting its operations in the Bight’s pristine waters.
If BP, with all its experience, could not produce an acceptable drilling plan for Australia’s offshore oil and gas regulator, NOPSEMA, after three attempts, the remaining companies exploring in the Bight will be wasting their shareholders’ money trying to pursue this folly.
This decision shows that it’s too expensive to establish the
significant and costly risk-management and clean-up capacity infrastructure needed to protect our communities from the enormous spill risks associated with drilling in this part of the world.
Chevron, Santos, Murphy and Karoon, which received its permit just last week,
will face the same massive costs and increasing community opposition
that BP experienced.
The Australian Government must now step in and terminate BP’s leases, rescind all exploration permits in the Bight basin and properly protect the Bight from destructive industries.
We should not be expanding the fossil fuel industry into pristine but treacherous seas where the risk of spills is far greater than we’ve seen before. A rapid transition away from this industry is our only hope for a liveable climate. It’s time to end the dangerous fiasco of oil and gas exploration in the Great Australian Bight.
Peter Owen is SA director of the Wilderness Society