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The Last Great Unexplored Oil Frontier


Australia is emerging as a massive producer of liquefied natural gas (LNG). Several large and high-profile LNG export terminals are scheduled to be completed over the next few years, boosting Australia’s production and export of the liquefied fuel. Australia has long been an exporter of other natural resources, most notably coal, iron ore, and gold.

But Australia has been a small player when it comes to oil production, with output less than half a million barrels per day.

That could change with the exploration of the Great Australian Bight, a scenic stretch of sea cliffs along Australia’s southern coast. The Bight is prized for its natural beauty, but it also may hold large reserves of oil just offshore. Several oil companies are beginning exploration programs there to see what they can find.

One of the Last Unexplored Basins

The Great Australian Bight is vast, stretching over 800,000 square kilometers along Australia’s southern coast. There have been only a handful of wells drilled in the area, but technological advances since the 1990s now make the region much more viable as a major oil producing region.

BP (NYSE: BP) is the farthest ahead on drilling plans for the Bight. BP thinks the Bight has enormous potential. It has called the Great Australian Bight “the last big unexplored basin in the whole world.” In fact, BP executives have compared the Bight to the Niger Delta in terms of geology and potential resource recovery – something that would be “of global significance.”

BP is looking to drill four wells about 300 kilometers south of Ceduna in South Australia (see map). BP’s drilling program could cost around $1 billion. Statoil (NYSE: STO) controls a 30 percent stake in the program. BP holds 70 percent, but is looking to farm out part of its share to another driller in order to reduce cost and risk. That could bring BP’s share down to around 40 or 50 percent.

While BP has slashed its exploration budget elsewhere, it has decided to move forward with its project in the Bight, a testament to the region’s potential. The first well is expected to be drilled in October 2016 after having delayed it from its original April 2016 start date due to delays in the construction of a new drilling rig. BP is targeting sections EPP 37, 38, 39, and 40 (pictured).

BP is not the only major in the area. Chevron (NYSE: CVX) is finishing up a seismic survey of the region to see what lies beneath. It is looking at a section very close to BP’s acreage. Chevron has EPP 44 and EPP 45. Chevron is much earlier in the game, however. It has the rights to drill two wells, but will be analyzing its seismic survey results before deciding what to do next. 

Bight Petroleum, a small junior company based in Adelaide, secured two exploration permits to two sections, EPP 41 and EPP 42, located farther east in what can be called the Eastern Bight Basin. The acreage is 300 kilometers east of BP’s permits. 2D seismic data shows the potential for 28 billion barrels of oil in Bight Petroleum’s acreage, with potential recovery of around 1 billion barrels. Bight argues that its holdings are favorable compared to its rivals because it will drill in shallower depths and the sections are located closer to shore.

Bight Petroleum also cites the fact that its acreage sits near one well that already showed promising results. There have only been nine wells drilled in the Bight Basin, but one well, the Greenly-1, drilled in the 1990s, proved to have a lot of potential. Owing to the fact that seismic surveying and other technologies were not as advanced then, the project was put on ice because drillers couldn’t zero in with precision. Bight Petroleum now has acreage close to this well and it argues that advancements in 3D seismic surveying since then will allow drillers to hit the pay zone in a way that was much more difficult a few decades ago.

Bight Petroleum, as a small company, will vastly benefit when the oil majors move first and discover more about the prospective resources. Success by BP will lead to a significant boost in the value of Bight Petroleum’s holdings. An estimated eight wells will be drilled before the little junior company moves on its acreage. Bight Petroleum might farm out its prospect to a larger driller in order to move forward on drilling.

Murphy Oil (NYSE: MUR) and Santos (ASX: STO) are conducting seismic surveying on EPP 43. The two companies are working a joint venture on the prospect, and are still in the early stages of exploration.


If BP makes a large discovery, the interest in the region will skyrocket. Australia has a friendly government in place, a stable investment climate, and is positioned to export to the major growth markets of Asia. Australia has a strong track record of producing and exporting commodities. Oil could be added to the list within a few years.

For now, investors have few options, as the oil majors are too diversified to really get exposure to the Bight. Murphy and Santos could be the logical choices here. But obviously, with so little known about the region for now, including what companies like Murphy and Santos will do next, investors should approach this one with caution. Once BP moves forward, the region could open up for more players.


The hype around the Great Australian Bight is huge, as is the potential. It is one of the few frontiers left on Earth that has not been thoroughly picked over.

Still, there are a lot of uncertainties. The data is still in the early stages. Since such a small number of wells have been drilled, the companies are still doing research with seismic surveys. That will hold back the smaller companies. BP will drill first, perhaps followed by Chevron. Only after the results of those drilling projects are in will we have a clearer picture on the Bight’s potential. The drills could turn out to be busts. But they could also yield large discoveries.

Still, the conditions can be tricky. The Great Australian Bight offers high speed winds and rough waters. Drillers also face stiff opposition from environmental groups, who worry that a Deepwater Horizon-style blowout could occur in a region that is so pristine and full of marine life. The Bight is home to whales (including the endangered southern right whales), sharks, sea lions, tuna, and more. While BP says the Bight is one of the last unexplored basins, environmental groups call it one of “the last pristine marine environments left in the world.” That could make policy, not to mention public relations, difficult.


Unlike some other offshore regions of the world, the Great Australian Bight offers something not seen in years. A major offshore basin that has yet to be explored by some of the largest oil companies in the world. Opportunities like this don’t come around all that often anymore.

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