Very interesting figures on oil production coming out of Australia last week. Showing the nation may be on the verge of a petro-crisis.
Adelaide-based analysts EnergyQuest released their quarterly review of the Aussie oil and gas sector. Noting some stunning changes in production during 2013.
Most notably, oil production across the nation took a tumble. With crude output falling 18.6% as compared to 2012, to 71.9 million barrels.
That figure is even more eye-catching when viewed in a historical context. Being the lowest level of oil production Australia has seen since 1970.
EnergyQuest noted a similar and striking pattern of decline in reserves replacement for Aussie oil. Reporting that replacement rates actually flipped into negative percentages during the past year.
That presumably means that producers failed not only to find more oil--but that they actually suffered negative revisions to previously-booked reserves.
This steep decline in output and reserves is even more urgent when viewed against local crude demand. Which saw Australia consume 346 million barrels of crude oil and transport fuels for 2013, against production of just 140 million barrels of oil and liquids.
This suggests a major supply crunch is in the works here. Which could signal an opportunity in the making.
Australia isn't short on oil prospects. Numerous targets have been shaping up in plays like the Georgina Basin that straddles the Northern Territory and Queensland. Major players like Statoil, Total and Santos have committed to sending as much as $545 million here over the coming years to test new fields.
A lot of this effort is being directed toward unconventional targets like tight sands. The kinds of plays that are very sensitive to taxation and local fiscal regimes for exploration. The recent gloomy production figures may be just the thing to push governments here to improve such terms--giving a lift to the sector, and perhaps making this a go-to locale in the race to unfurl unconventional technology globally.
Nothing's written in stone yet, but it appears the drivers are in place to make this a hot exploration area. Keep an eye out.
Here's to meeting demand,
By Dave Forest
Dave is Managing Geologist of the Pierce Points Daily E-Letter. More