PERTH (miningweekly.com) – Exploration rates in the oil and gas sector have fallen to decade lows on the back of declining oil and gas prices.

Energy analyst EnergyQuest on Wednesday revealed that the total number of exploration and development oil and gas wells drilled in Australia nearly halved between 2014 and 2015, falling from 1 534 in 2014 to just 821 in 2015, including exploration wells falling from 119 to 54.

“In that time, exploration spending fell from A$1.03-billion in the fourth quarter of 2014 to A$446-million in the fourth quarter of 2015,” EnergyQuest CEO Dr Graeme Bethune said.

“This is Australia’s lowest oil exploration spend in a decade.”

Bethune said the low oil prices had driven significant downward revisions of reserves, leading to negative reserves replacement ratios over the year just gone.

However, he noted that the price slump did not affect sales, with Australian oil and gas sales volumes up 6.8% in the fourth quarter of 2015, compared with the previous corresponding quarter.

Revenue realised per barrel of oil equivalent; however, fell by an average 29%.

This saw total sales revenue (excluding BHP Billiton) plummet from A$4.4-billion in the fourth quarter of 2014 to A$3.3-billion in the fourth quarter of 2015, a drop of A$1.1-billion.

Bethune pointed out that the collapsed oil price had its worst impacts off Australia’s coastline, with offshore exploration activity crashing last year to just three wells sunk – nine times lower than the 29 offshore targets drilled in 2014.

He added that last year’s drought in offshore drilling was just the beginning of a prolonged period of very low Australian offshore activity, “despite the large take-up of new acreage in offshore release programmes between 2012 and 2014”.

“A survey by EnergyQuest of work programmes to win offshore acreage in this three-year period shows explorers have guaranteed to spend a total of A$1.1-billion in the first three years - but this impressive headline figure includes only 12 wells,” Bethune said.

“In addition, winning bidders loaded most of their proposed spending ($1.7-billion and 43 exploration wells) into the secondary, non-guaranteed component of their work programmes.

“This effectively gives them, in a low oil price environment, the freedom to severely prune their activity for as long as prices remain low.”

Bethune said that onshore, the decline in exploration wells was less precipitous but still serious.

“The number of onshore exploration wells dropped from 90 to 51, with big declines in all states except Western Australia, where exciting results in the Perth basin are driving activity.”

Meanwhile, EnergyQuest reported that Australia’s liquefied natural gas (LNG) export revenue was growing steadily as production from the country increased.

Gross Australian LNG production in 2015 was 30.4-million tonnes, an increase of 23.5% year-on-year and up 48.3% at 9.1-million tonnes in the final quarter.

Overall, Australia’s natural gas production increased by 12.6% in 2015 to a record 2 634.6 PJ and by 26.7% in the fourth quarter to 729.4 PJ, owing mainly to increased Surat-Bowen basin production.

Australian petroleum production in 2015 was a record 581-million barrels of oil equivalent, 6.6% higher year-on-year.