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Offshore oil and gas continue to make waves

Image shows an offshore drill rig

Photo by Bloomberg

24th May 2023

By: Esmarie Iannucci

Creamer Media Senior Deputy Editor: Australasia

     

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PERTH (miningweekly.com) – A new report from the Australian Institute of Marine Science (AIMS) has highlighted the growth of Australia’s offshore gas industry.

The AIMS Index of Marine Industry 2023 noted that despite the impact of Covid, offshore natural gas output increased by 11% a year from A$31.9-billion in 2017/18 to A$43.7-billion in 2020/21. 

AIMS CEO Dr Paul Hardisty said the index tracked the emergence of a two-speed marine economy in 2020/1, with marine tourism, commercial fishing and water transport among the subsectors experiencing an overall decline in economic output owing in part to measures introduced to address the spread of Covid-19.

“The pandemic resulted in a range of economic anomalies for the sector, with losses largely offset by increases in output from the offshore gas industry,” he said.

“Despite setbacks, the index shows the marine industry’s significant contribution to Australia’s economic wealth.”

Western Australia emerged as a blue economy powerhouse in the 2023 index thanks to its offshore resources-driven economy, said Hardisty. Output from the marine industry in Western Australia makes up almost half, or 46%, of the total national marine industry output in 2020/21, at A$54.7-billion, and its offshore natural gas production comprised 68% of the state’s marine economic output.

In the year to 2018/19, the economic output of natural gas and oil increased by 51% and 40%, from A$31.7-billion to A$48.0-billion and A$5.6-billion to A$7.8-billion, respectively, while liquefied petroleum gas (LPG) production also grew significantly, by 20%, from A$771-million to A$1.1-billion.  

The index noted that in the two years following 2020/21, output of natural gas declined by 5% a year to A$43.7-billion, and oil production by around 1% a year to A$7.7-billion, while LPG production continued to increase by 12% on average a year over the same period, to A$1.4-billion.  

A key driver of output growth from 2017/18 to 2018/19 was the increase in offshore natural gas production volumes as two significant offshore gas projects in Western Australia, namely Ichthys and Prelude LNG, shipped their first cargoes. 

Natural gas production volumes increased by 25% in one year, from 2 783 PJ to 3 291 PJ.

The index noted that while the Covid-19 pandemic had a limited impact on offshore oil and gas production, it had a more significant impact on oil and gas exploration. In the three years to 2020/21, oil and gas exploration declined by 19% annually on average from A$713-million in 2017/18 to A$376-million in 2020/21.

Private mining new capital expenditure declined by 12% from 2017/18 to 2019/20. At the time, declines in oil and gas prices also contributed to delayed investment decisions, whereby the average realised price of oil and gas declined significantly in recent years, from A$86/barrel of oil equivalent (boe) in 2014 to A$43/boe in 2017. While prices recovered to around A$65/boe in 2020, investment decision-making has lagged, the index noted. Global energy demand declines and rising concerns over environmental issues were also contributing factors to declining investment.

Edited by Creamer Media Reporter

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