Great Australian Bight drilling could create 1500 jobs, billions in tax revenues, oil industry claims
DRIlLING for oil in the Great Australian Bight could create more than 1500 jobs in South Australia for four decades, and billions in tax revenue per year, a report commissioned by the industry claims.
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PETROLEUM development in the Great Australian Bight could create more than 1500 jobs in South Australia for four decades, and billions in tax revenue per year, a report commissioned by the industry claims.
The report, to be released on Monday, is based on “a number of assumptions” however, including that three separate projects with a combined resource of 1.9 billion barrels of oil equivalent liquids are developed.
Currently the most advanced project — Norwegian company Equinor, previously named Statoil — does not have a defined resource, and says on its website: “We are early in the exploration phase and we do not know if there is oil or gas present’’.
The Australian Petroleum Production and Exploration Association report, prepared by ACIL Allen Consulting, has modelled two scenarios, with the high case generating as much as $7.7 billion in Commonwealth and State taxation per year.
The overwhelming majority of this, under current taxation arrangements, would go to the Federal Government, as offshore projects come under the federal petroleum resource rent tax.
South Australia would be eligible for payroll tax, estimated to be worth at least $41.7 million per year ($147.2 million in the “high” case), or $1.7 billion over four decades.
“Successful oil exploration in the Great Australian Bight could see creation of over 2200 jobs in South Australia and generate up to $7 billion in annual tax revenue to Federal and State governments,’’ APPEA says.
“The study examines two possible production scenarios from the exploration permit areas granted by the Australian Government: a ‘base’ case scenario of a resource of 1.9 billion barrels of oil equivalent liquids, as was estimated by Wood Mackenzie in 2015, and a ‘high’ production scenario of 6 billion barrels, a resource equivalent to Bass Strait.
“The low case development could see the creation of 1361 jobs in South Australia during the development and construction phase, and an average 826 jobs over the 40 years between 2020 and 2060.
“In the event that resources in The Bight did prove comparable to Bass Strait, that would rise to 2116 SA jobs during construction and an average 1521 jobs over the next 40 years.
“The economic stimulus provided by development in The Bight, could see the creation of an additional 821 jobs nationwide over the life of the projects in the low case, rising to 3442 jobs in the upside case.’’
The “high case” scenario assumes that four projects are developed with a combined resource of 6 billion barrels of oil.
Even in the low case scenario, the investment needed would be $70 billion, rising to $170 billion in the high case. The modelling assumes production will start in 2028.
Equinor plans to commence drilling in The Bight at the end of next year — subject to approval by the federal regulator NOPSEMA — after energy giants BP and Chevron shelved their plans in 2016 and 2017.
Other companies including Karoon Oil, Bight Petroleum and Murphy Oil also hold exploration permits in the area.
There is strong opposition to the plans to drill, with many environmental groups and councils expressing their concerns.
APPEA director SA & NT Matthew Doman said the report confirmed the potential for significant benefits.
“While still in its very early stages, successful oil exploration and development in The Bight could bring a new wave of much-needed private sector investment in South Australia, delivering jobs and economic opportunities for decades to come.
“The benefits of this activity would be widely spread, including in key regional centres such as Port Lincoln and Ceduna, where onshore facilities and services were likely to be based.
“With proper regulatory oversight, South Australia can have a safe, sustainable and successful offshore petroleum industry, as has been the case in Victoria and Western and Northern Australia for several decades.’’
The modelling assumes the use of a Floating Production Storage and Offloading (FPSO) facility, rather than piping oil and gas back to the mainland.
THE TWO CASES
Base Case
■ Three proponents of different sizes are assumed to produce 1.9 billion barrels of oil equivalent liquids over the economic life of the ventures,
■ The additional oil exploration and development will increase employment in South Australia by an average of 826 FTE jobs per year over the study period, with an average of 697 FTE jobs during production between 2028 and 2060
■ It is projected that the South Australian economy — as measured by Gross State Product (GSP) — will increase on average by A$5.8 billion per annum over the study period, and by A$237 billion over the study period.
High Case
■ Four proponents of different sizes are assumed to produce 6 billion barrels of oil equivalent liquids over the economic life of the ventures.
■ The additional oil exploration and development will increase employment in South Australia by an average of 1521 FTE jobs per year over the study period, with an average of 1443 FTE jobs during production between 2028 and 2060.
■ It is projected that the South Australian economy — as measured by Gross State Product (GSP) — will increase on average by A$18.4 billion per annum, and by A$755.4 billion over the study period.
■ The exploration and construction phase of the development will also see significant job creation in South Australia, with an average of 2116 FTE jobs created per annum between 2020 and 2030.
cameron.england@news.com.au
