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There are four key drivers to exploration -- geological prospectivity, access to explore, geoscientific information and an appropriate fiscal and regulatory setting.
APPEA has over the past two years put forward comprehensive policy proposals in each of these areas to stimulate exploration. Governments have taken positive steps in some areas but further action is needed in others.
Australia has vast unexplored sedimentary basins whose hydrocarbon potential is as yet unknown. Recognising this, then Prime Minister, the Hon. John Howard, in a speech to the Committee for Economic Development of Australia (CEDA) on 17 July 2006 said, 'Australia remains relatively unexplored, particularly for petroleum in frontier offshore areas. Encouraging further exploration is a high priority for the Government.'
Legislation and regulation
APPEA welcomed the proclamation of the Offshore Petroleum Act 2006 in 2008. This Act was soon amended to incorporate the regulation of greenhouse gas storage (previously Carbon Capture and Storage) to become the world’s first legislative framework to regulate CO2 capture and storage. The Act is now titled the Offshore Petroleum and Greenhouse Gas Storage Act 2006.
APPEA also continues to provide input to various states/NT reviews of specific onshore petroleum legislation to ensure that the rights of the upstream oil and gas industry titleholders continue to be preserved.
Land Access and regulatory processes
It is essential to ensure access to land and sea in a timely fashion to allow for the exploration and assessment of prospective hydrocarbon resources.
Land access once impeded by uncertainties of native title in the early 90s are now becoming less of an issue as States and Northern Territory undertake various successful native title processes under the Right to Negotiate and Indigenous Land Use Agreement processes of the Native Title Act 1993. APPEA continues to call on various State and Northern Territory Governments to facilitate negotiations between applicants for petroleum tenure and indigenous native title holders to reach an agreement in an expedient manner. This will undoubtedly facilitate early exploration activity to be undertaken and lead to the development of petroleum discoveries.
The onshore industry is regulated by legislation that is unique to each state. Security of tenure is paramount to attracting investment in the resources sector and improvements to legislation are continuing to deliver certainty over resources and timely processing of applications. An important aspect of operating onshore is managing landowners and community impacts. The industry recognises the direct and indirect impacts on regional areas through contributions to the social well being and sustainability of communities.
In the offshore while Australia has a leading edge annual acreage release program, more needs to be done to streamline regulatory requirements and provide a more efficient approvals system to allow companies to undertake exploration activities in a timely manner. This is further accentuated by the fact that there are limited windows to contract drilling rigs and seismic vessels in Australia and approvals processes need to be efficient in allowing companies to minimise the costs of exploration.
The present requirement for substantial work program commitments and the lack of flexibility to relinquish exploration permits in good standing if initial results do not warrant a continuation inhibit companies from going into frontier areas. To promote exploration in new areas we need to consider possible incentives which will allow companies to play a significant role in the acquisition of geoscientific data - a role which would complement the work of Geoscience Australia.
Fiscal incentives
Not all Australia's hydrocarbon bearing geological basins are of the same geological maturity as the Carnarvon and Gippsland basins in the offshore or the Cooper and Eromanga basins in the onshore.
Australia's offshore regime is predominantly identical for all mature and frontier basins. The only recent differentiation was made in the 2004/05 Federal Budget when the Australian Government announced an uplift to 150 per cent on petroleum resource rent tax (PRRT) deductions for exploration incurred in designated offshore frontier areas. The industry has remained concerned that the amount of eligible acreage is severely limited, the initiative ceases in 2008 and the benefits will generally accrue to a limited group of potential explorers only.
APPEA, through the Industry Strategy has called for a 175 per cent uplift on corporate tax deductions for exploration as this would apply to larger section of the industry than the previous PRRT-based incentive. Along with calls for continued precompetitive geoscience funding, some improved reconnaissance titling measures and speedy approvals for exploration, it is hoped that the exploration incentive package will be considered favourably by the current Federal Government.
Pre-competitive geoscience activities
While we do not have a control on the natural geological prospectivity of an area, we can certainly aim to have a better understanding of the geology through geoscientific information, enhanced with innovative technological advancements.
The Australian Government's funding for the Big New Oil Program announced in 2003-04 of $61 million over four years runs out in 2006-07. Of this, $25 million is funded to acquire geophysical and geological data targeted at frontier offshore basins, and to upgrade more than half a million data tapes onto modern storage media. Expeditions in the program were conducted in the Bremer Sub-basin off Western Australia, Arafura Basin off Northern Territory and the Capel and Faust Sub-basins in the Pacific Ocean.
This funding was renewed in 2006 through the Prime Minister's 'Energy Initiatives' announcement of August 2006, which noted the high-risk nature of petroleum exploration and the important role of government on providing pre-competitive geoscience information. Announcing the package, the Prime Minister, the Hon. John Howard MP, and the Minister from resources, the Hon. Ian Macfarlane MP, pointed out that Australia remains mostly unexplored in frontier and onshore areas. The Energy Initiatives include $76.4 million over five years to continue offshore geoscience research and, for the first time in many decades, funding of $58.9 million over five years to assess onshore petroleum and other energy sources.
The precompetitive work undertaken by government agencies is pivotal in attracting and promoting exploration activity in Australia and diminishing the level of commercial risk.
APPEA has advocated that this funding for precompetitive geoscience activities warrants extended funding from all Federal and States/NT governments. The importance of such precompetitive geoscience programs was highlighted in a report prepared for APPEA by Dr Trevor Powell in February 2008 (click here to read a copy of the Powell report) . The report provides an aide memoire for governments as to the importance of precompetitive geoscience data towards opening-up new and under-explored geological frontiers.
Petroleum data
The upstream industry is required to lodge with governments petroleum data acquired as a result of work program activities within various titles, both in the onshore and offshore jurisdictions. This data is invaluable for both governments and the industry to assess the future potential for hydrocarbon exploration and development in Australia. APPEA continues to encourage a nationally consistent petroleum data management system to governments. Such a data management system would ideally be available through a virtual library through web portals and be accessible from any part of the world. |
Exploration and Access
