Karoon Gas gets permit for Bight oil drill as greens protest

Karoon Gas has won a permit to explore for oil in the Great Australian Bight amid opposition from green groups.

Karoon Gas chief executive Robert Hosking.

Fresh controversy has broken out over the $1.2 billion-plus hunt in the Great Australian Bight for what could be Australia’s last big oil discoveries after a federal ­government authority issued a new exploration permit in the ­environmentally controversial waters.

The permit to Melbourne-based energy firm Karoon Gas by the National Offshore Petroleum Titles Administrator comes despite oil giant BP, the lead explorer in the Bight, still not being cleared to kick off its own $605 million drilling program, and exploration for oil in the region being the subject of a Senate inquiry due to report back in March next year.

Industry group the Australian Petroleum Production and Exploration Association said it was time to unleash the billions of dollars that could be spent on looking for “big oil” in the Bight, offshore from the South Australian coast.

As well as BP, Norway’s Statoil and Chevron already have permits issued in the offshore waters where some have projected oilfields worth up to $US100 billion ($132bn).

Speaking after the release of figures showing oil exploration expenditure had collapsed to 10- year lows as a result of the slump in oil prices, APPEA chief executive Malcolm Roberts said the fall in exploration spending was alarming.

“Today’s exploration is tomorrow’s production. Companies prepared to invest heavily in exploration should be allowed to get on with the job under proper regulatory oversight,’’ Dr Roberts said.

“Successful oil exploration in the GAB, for example, would ease Australia’s reliance on imported oil and deliver South Australia much-needed new investment and jobs.”

Environmental groups have said they plan to oppose further development in the region.

The Wilderness Society South Australia director Peter Owen told said Canberra “should not be issuing new exploration permits in the GAB because of the “massive opposition to BP’s plans to drill for oil in the Bight’’.

“The Australian government must step in and stop this dangerous fiasco, especially when the Senate is still conducting an inquiry into oil and gas exploration in the Bight,’’ Mr Owen said.

“We should not be expanding the fossil fuel industry into pristine seas where the risk of spills is far greater than we’ve seen before,’’ he said.

BP’s drilling plans in the Bight are more advanced than the other groups and its program there has underpinned the $980m ­construction of a purpose built drilling rig — the Ocean Greatwhite — in South Korea.

The rig is in Singapore undergoing final inspections, but BP’s initial two-well program cannot proceed until it has clearance from another federal authority, the National Offshore Petroleum Safety and Environmental Management Authority.

The National Offshore Petroleum authority recently requested more information from BP on the drilling program, which involves the Stromlo-1 and Whinham-1 exploration wells. BP can take until October 28 to provide the information, or seek an extension.

Campaigning against the BP plans has had added piquancy as the group was the operator of the Deepwater Horizon disaster six years ago in the Gulf of Mexico, where 11 people died and widespread environmental damage was caused.

BP said yesterday the National Offshore Petroleum Authority’s ­request for more information on its environmental plan for drilling in the Bight was neither a rejection nor an acceptance of its plans.

“It is a request to clarify aspects of our plan and for us to provide information that has not been included in the plan,’’ a BP spokeswoman said.

“We will accept the Ocean Greatwhite drilling rig from ­Diamond Offshore Drilling once we are satisfied that it has passed BP’s rigorous global integrated acceptance testing. And we will commence our exploration drilling program once all necessary regulatory approvals are in place, our onshore infrastructure is completed, and our contractors are ready to begin,’’ she said.

The permit grant to Karoon for a modest $26m seismic program is a coup for the company, as unlike the nine wells committed by the likes of BP, Statoil and Chevron in the Bight, it does not include a commitment to drill a well.

Karoon’s newly established leverage over more advanced explorers in the Bight was part of the reason its shares surged 14 per cent per cent to $1.58 yesterday.

It also struck a deal for exclusivity talks with Petrobras to buy stakes in oilfields off Brazil.

Karoon and the oil giants already positioned in the region with exploration permits are betting on the idea that there could be as much as $US100bn of oil to be found.

Global consultant Wood Mackenzie has estimated the region contains a potential resource of 1.9 billion barrels of oil equivalent, with the estimate included in BP’s submission to the Senate inquiry.

“It is too early to say whether SA can emulate this success — but it is certainly a prize worth hoping for,” BP said in its submission.

Standing in the industry’s way are rough seas that halted the last deepwater exploration well in the Great Australian Bight attempted 13 years ago, the Gnarlyknots well by Woodside.