PERTH (miningweekly.com) – The Australian Petroleum Production and Exploration Association (Appea) has said that the latest data by the Australian Bureau of Statistics (ABS), into exploration expenditure, is an "urgent" wake-up call for government and the industry.

The ABS on Monday revealed that total mineral exploration expenditure in the June quarter decreased by 2%, or A$7.1-million, to A$343-million, with exploration in Queensland down by 15.4%, or A$8-million.

Total petroleum exploration expenditure fell 19.4%, or A$7.8-million, to A$318.4-million in the June quarter, with exploration expenditure on production leases falling 31.2%, or A$26.3-million, and exploration expenditure on all other areas falling 12.7%, or A$39.3-million.

Onshore petroleum exploration fell by 35.1%, or A$33.6-million, to A$62-million, while offshore exploration expenditure fell 13.2%, or A$39.6-million, to A$259.8-million.

Appea CEO Dr Malcolm Roberts said on Monday the 2015/16 data confirmed that oil and gas exploration was in free fall.

“Over the last two years, spending on onshore and offshore exploration has fallen by almost two-thirds,” he said.

“While some of this fall reflects lower costs, exploration activity is undeniably at its lowest levels for many years. The number of exploration wells drilled offshore is at its lowest level in almost 20 years; onshore drilling is at its lowest level in 15 years.
 
“The latest data continues a worrying trend that has been evident for many years, even when commodity prices were much higher. If the slide in exploration continues, Australian gas users will face more uncertainty about future supply and higher gas prices.”

Roberts welcomed the Commonwealth initiative to examine the exploration and development framework through the Offshore Resource Management review, especially the focus on frontier regions and less-explored areas that may offer significant untapped potential.

“The A$100-million in new funding for Geoscience Australia, announced in the last federal budget, is also a very important initiative. 

“The recent Council of Australian Governments Energy Council meeting highlighted the urgent need to develop new gas reserves, given the likely supply shortfall in 2019.

“Production from the key basins in South Australia and offshore Victoria will begin to fall from 2017. We must find and develop new supplies of gas to offset falling output from Australia’s long-established gas fields,” Roberts said.  

“The latest exploration data is just one more reason to reject short-term political fixes such as the Victorian government’s ban on onshore gas exploration.”

Last week, Victoria Premier David Andrews put forward a permanent ban on the exploration for and development of all onshore unconventional gas in the state, including hydraulic fracturing and coal seam gas. The Labor government said the proposed permanent legislative ban, which will be introduced to Parliament later this year, is aimed at protecting the ‘clean, green’ reputation of Victoria’s agriculture sector, which employs more than 190 000 people.