Resources

Australia has an enviable history in the successful development of its abundant natural resources.

Australia's export earnings from mineral and petroleum resources rose to a record A$120 billion in 2007-08, an increase of 11.6% over the previous year. This strong performance reflects higher export prices across almost 85% of all minerals and energy commodities exported, along with increased export volumes for just over half. (Source: ABARE's Australian Commodities Report June 2008 Quarterly Report)

There is high potential for further large discoveries of both oil and gas. Offshore exploration began in earnest in the late 1960s and Australia still remains under-explored. Our vast sedimentary basins hold significant opportunities for exploration success and there are many reasons for petroleum exploration and development companies to participate in these opportunities.

Table 1 below sets out Australia's estimated petroleum resources, highlighting Australia's potential as a producer of both oil and gas.

1. Economic Demonstrated Resources are resources judged to be economically extractable and for which the quality and quantity are computed partly from specific measurements, and partly from extrapolation for a reasonable distance on geological evidence.

2. Sub-economic Demonstrated Resources are similar to Economic Demonstrated Resources in terms of certainty of occurrence and although considered to be potentially economic in the foreseeable future, these resources are judged to be sub-economic at present.

Source: Estimates as at 1 January 2006 published in the Oil and Gas Resources of Australia 2005 (in accordance with the McKelvey classification), by Geoscience Australia , 2007.

Exports of oil and gas are valued at over A$21 billion for 2007-08. Australia is currently around 70% self sufficient in the primary production of crude oil and completely self sufficient in the production of natural gas. Australia has traditionally produced premium quality light 'sweet' crudes, low in sulphur, vanadium and nickel contaminants, while containing a high proportion of components suitable for the production of light fuels such as petrol, diesel, kerosene and jet fuel. Given its high quality, Australian crude oil has traditionally commanded premium prices on international markets.

Source: Australian Petroleum Statistics, Issue No. 143, June 2008, published by the Resources Division, Department of Resources, Energy and Tourism, Canberra.

Table 3 shows the internationally benchmarked US Geological Survey (USGS) World Petroleum Assessment (2000), representing the oil and gas likely to be discovered in Australia's major offshore hydrocarbon bearing basins.

The extent of exploration drilling in Australia is relatively low compared with other regions in the world. By the end of 2007, over 9,700 exploration and development wells had been drilled in Australia's vast onshore and offshore areas (see Table 4), about 16 million square kilometres of sedimentary basins.

Source: Geoscience Australia , 2008.

In 2007, 62 exploration wells were drilled in offshore Australian waters. Table 5 shows the new field wildcat success rates for 2004 to 2007

Source: Geoscience Australia , 2008.

There have been continuing discoveries and development of both oil and gas in offshore Australia (see Table 6). About 92% of Australia's oil and 86% of gas production is from offshore resources located in Bass Strait, the North West Shelf and the Timor Sea. It is in the offshore areas that most of the undiscovered resources are thought to exist.

Source: Geoscience Australia , 2008.

The Australian petroleum industry is entrepreneurial, innovative and has achieved significant success as recent development projects under consideration show (Table 7). It is made up of a number of small, medium and large companies, many of whom operate on the international scene. Australia's modern legal framework, petroleum tenement system, favourable taxation regime and economic environment explain Australia's consistent high ranking in international investment surveys.