AACC 4 May 2017 - Australian State Government Initiatives
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~ 15% of Brent is netback
to the Gladstone LNG Plants
OUTLINE
1. Australian State / Territory Government Initiatives
2. Summary of the South Australia’s Energy Plan
• Plan for Accelerating Exploration (PACE) Gas;
• PACE Royalty Return; and
• Otway Basin PEL Application Area
2. Offshore Bight Basin
3. Synopsis of upstream energy business
Barry Goldstein
Energy Resources Division
Department of the Premier and Cabinet
South Australian State Government
`
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Australian State / Territory Government Initiatives
Generalised Objectives: Investment & regulatory frameworks continuously improved to
foster investment and public trust
Notable Jurisdiction Highlights
Western Australia: Has enabled LNG exports, enabling biggest CCS project in the world
(Gorgon), E-portals for licence dealings and community engagement for petroleum in
unconventional reservoirs;
Northern Territory: Has enabled LNG exports and support for new inter-jurisdiction gas
pipeline;
Victoria: A$10m for geoscience studies of gas both offshore and in onshore conventional
reservoirs;
Queensland: Has enabled LNG exports; Has enabled large scale coal seam gas
development, exploration licence open for bids. Gas found in the new licence reserved
for domestic gas demand.
South Australia: Details follow.
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South Australia Energy Plan
Battery storage and
renewable technology fund:
Australia’s largest battery will be built
in South Australia to store renewable
energy and add stability to supply as
part of a new $150 million Renewable
Technology Fund.
New generation- more competition
The State Government will use its bulk-buying
power to attract new electricity generation to
increase competition and put downward
pressure on prices.
State-owned gas power plant
The South Australian Government
will build its own gas power plant
to have government-owned stand-by
power available in South Australia.
Energy security target
A new target will increase South
Australia’s energy self-reliance by
requiring more locally generated,
cleaner, secure energy to be used in
South Australia.
Local powers over national market
The State Government will legislate to give
the Energy Minister direction over the
market so South Australia’s
best interests always come first if there is
an electricity shortfall..
South Australian Gas incentives
The State Government will offer incentives to
source more gas for use in South Australia,
replacing coal-fired energy from Victoria –
More on next slides.
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South Australia Energy Plan – Gas Incentives
The A$48 million PACE GAS Program is designed to
support to most substantiated ‘shovel-ready’ projects in
South Australian Petroleum Licences with the greatest
likelihood of:
• securing new and significant gas supplies to South
Australian customers from South Australian gas fields
by year-end 2019 (Round One) and 2020 (Round
Two);
• accelerated deployment of new technologies to lift
existing and new well productivity;
• new gas exploration wells in proximity to existing gas
infrastructure; and
• new gas processing, storage and transport facilities.
• Round 1 grants to Senex Energy, Beach Energy,
Strike Energy and Santos Limited
PACE Gas Round Two Applications will be
determined and grants delivered in 2017
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South Australia Gas Incentives
Round 1 PACE Gas grants include:
• A$5.82 million - Senex-Santos Cooper Basin pipelines;
• A$6 million - Beach Energy Otway Basin exploration well;
• A$3.96 million - Santos Cooper Basin re-fracture
stimulation;
• A$6 million - Santos Cooper Basin underbalanced drilling;
• A$2 million - Strike Energy Cooper Basin deep coal pilot
project.
Unrisked sales gas targeted by the 5 PACE Gas grants > 100
PJ with > 1,700 PJ prospective follow-up potential.
Round 2 grants to come
PACE Gas grants simultaneously underpin learnings to reduce
uncertainties and reduce the expected cost of failure.
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South Australia Energy Plan – Royalties for Landowners
The PACE Royalties Return provides 10 % of the
State’s take of royalties to freehold landowners and
perpetual leaseholders with properties that overlie
the proven plus probable (2P) extent of relevant
petroleum discoveries.
• A ‘no worse off’ policy prevails. Existing private
party compensation agreements will remain a
requirement.
• Relevant land title and entitlement to a share of
the State royalty cannot be separated.
• Where a PGE Act licensee or an affiliate is (or
becomes) the property owner, the royalty sharing
arrangement does not apply (or will cease).
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ONSHORE OTWAY BASIN ACREAGE RELEASE (OT2017-A)
The SA Government has called for competitive
work program bids for a new Petroleum
Exploration Licence (OT2017-A) in the Otway
Basin in the State’s South East.
Both conventional and unconventional plays are
recognised in OT2017-A.
Area:
2D seismic:
3D seismic:
Wells in area:
1,734 square km
2,294 line km
87 square km
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Bids close 4PM CST Friday 29 September 2017.
The State Government’s royalty sharing program
will apply to this area.
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Roadmap for Unconventional Gas informed by South Australia’s
Roundtable for Oil and Gas
Conclusions:
Descend cost & ascend productivity curves to be competitive without harm.
Regional sharing of costs mitigates the tyranny of distance for remote operations.
The ROADMAP was informed by a Roundtable of: industry;
governments; peak bodies for protecting environments and
aboriginal people; research institutions & 30 individuals.
>2000 members from > 1100 organizations
The Roundtable for Oil and Gas Projects with 8 working groups
to inform the public and enabling industry cooperation.
Strategic actions:
• Demonstrate where the net present value of cooperation (JVs for
JVs) exceeds the value of go-it-alone planning / investment;
• Local businesses given a ‘heads-up’ to use competence to build
capacity to compete (local skin in the game)
See: http://petroleum.statedevelopment.sa.gov.au/roundtable_for_oil_and_gas
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Master of the Obvious Challenges for Upstream Oil & Gas Projects
• Low oil prices drive reduced upstream petroleum investment world-wide;
• No jurisdictions are immune. Effective investment /regulatory frameworks minimize pain;
• Capital constraints on development to convert reserves/resources to supplies is minimizing
competition between gas suppliers. Not good from public-value perspective;
• High-graded oil and gas plays are still being explored – but at reduced rates;
• Licence holders are re-positioning: All operators seek to lift productivity. All seek to reduce costs,
reducing debts, optimize investment, and some exiting up-, mid-, down-stream;
• Organised opponents of oil and gas exploration and development remain;
• Domestic gas market opportunities remain attractive but are capital and demand constrained;
• Uncertainty from Parliamentary inquiries, local jurisdiction commitments to moratoria/bans for oil
need be overcome.
• Efficient, objective-based regulation and demonstrably compatible multiple land use should be
the common ‘rule’.
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AACC 4 May 2017 - Australian State Government Initiatives
GoTO
to
GO
South
Australia
AUSTRALIA
DRILL A WELL
BINGO
SORTED
Barry Goldstein
Energy Resources Division
Department of the Premier and Cabinet
South Australian State Government
`
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