Supermajor BP has dropped its deep water drilling plans in the Great Australian Bight, offshore South Australia.
The project will not be able to compete for capital investment with other upstream opportunities in its global portfolio in the foreseeable future, the firm says.
BP's plans for drilling in the Great Australian Bight have faced a series of hurdles, with the National Offshore Petroleum Safety and Environmental Management Authority (NOPSEMA) having first requested more time to assess BP's environmental assessment for its plans, then rejecting the plan and asking BP to submit another one, and most recently, requesting more information from the oil major.
BP’s proposed Great Australian Bight plan originally consisted of drilling four exploration wells. Drilling on the first two wells, using a new-build semisubmersible mobile offshore drilling unit in 1150-2250m water depth, was originally due to start in Q4 this year.
Australia's industry body, the Australian Petroleum Production & Exploration Association (APPEA), has said it is disappointing BP has chosen to drop its Great Australian Bight drilling program.
The organization, said: "Today’s decision by BP not to progress its exploration drilling program in the Great Australian Bight is disappointing for South Australians who would have benefited from the economic activity the project promised."
BP says its decision to halt its Great Australian Bight plans follows a review of its upstream strategy earlier this year, which included focusing exploration on opportunities likely to create value in the near to medium term, primarily from its existing upstream positions.
Claire Fitzpatrick, BP’s managing director for exploration and production in Australia said the company has informed federal and state governments of its decision.
She said the decision isn’t a result of a change in view of the prospectivity of the region, nor of the ongoing regulatory process run by NOPSEMA.
“We have looked long and hard at our exploration plans for the Great Australian Bight but, in the current external environment, we will only pursue frontier exploration opportunities if they are competitive and aligned to our strategic goals." Joint venture partner Statoil has accepted the decision, says BP.
Commenting on BP’s announcement, NOPSEMA said: “The environment plans submitted by BP for drilling in the Great Australian Bight remain under assessment by NOPSEMA. This assessment process will proceed until the environment plans are withdrawn by BP. NOPSEMA has not received a withdrawal request.”
APPEA Director South Australia Matthew Doman said: “BP’s decision is a stark reminder that global investment in Australian resource projects cannot be taken for granted. But the resource potential of the Great Australian Bight remains significant and the economic and energy benefits of developing those resources will be substantial."
Doman said Chevron, Murphy Oil, Santos and other companies proposing exploration in the Bight would continue to pursue their plans, under the highest environmental standards, and only after appropriate community consultation and scrutiny by NOPSEMA.
BP's Bight story
BP was awarded exploration licenses for four blocks in the Ceduna area of the Great Australian Bight in January 2011. Seismic data was acquired in the area in late 2011 and early 2012.
The firm had planned to commence drilling in the area in 2016-17, but faced several setbacks. BP’s proposed drilling program has attracted significant community interest, including criticism from The Wildness Society – a national, community-based, environmental advocacy organization.
The society was concerned about the safety of marine life in the Great Australian Bight, including white sharks, blue and southern right whales, southern bluefin tuna, Australian sea lions, white-bellied sea eagles and albatross.
In October 2015, BP submitted its environmental plan to NOPSEMA, to drill four deepwater wells in exploration permits EPP 37, 38, 39 and 40, all within the Ceduna 3D seismic survey area. Following its review, in November 2015, NOPSEMA rejected BP’s drilling proposal, stating that the plan did not meet the criteria for acceptance under the environment regulations.
This year in May, NOPSEMA gave BP the green light to modify and resubmit its environment plan. Additionally, in July 2016, NOPSEMA granted BP’s request for an extension of the timeframe for resubmission so they may address the matters raised by NOPSEMA in the assessment.
In August 2016, BP submitted its second environment plan to drill two of the four wells that were originally proposed in the first environment plan. Late last month, NOSEMA sent a request to BP asking for further information relating to its two-well plan, which is still under assessment.
Furthermore, BP has a contract with Diamond Offshore Drilling for the provision of a new Moss CS60E design semisubmersible drilling rig, the Ocean GreatWhite, which Diamond commissioned Hyundai Heavy Industries to build. Specially designed for use in deep water and harsh marine environments such as the Great Australian Bight, BP said its decision will not impact this rig contract.