Australia: Rich in Commodities but not Oil
Australia is rich in commodities, including fossil fuel and uranium reserves. It is one of the few countries belonging to the Organization for Economic Cooperation and Development (OECD) that is a significant net energy exporter, sending nearly 70 percent of its total energy production (excluding energy imports) overseas, according to data from Australia's Bureau of Resource and Energy Economics (BREE). However, Australia retains a surplus of all its energy commodities except oil. Australia's dependence on oil imports has increased to fill the growing gap between domestic consumption and production.
According to the Oil & Gas Journal (OGJ), Australia held more than 1.4 billion barrels of proved oil reserves as of January 1, 2014. Geoscience Australia reported economic reserves, which include proved and probable commercial reserves, of nearly 3.8 billion barrels, composed of 0.9 billion barrels crude oil, 1.9 billion barrels condensates, and 0.9 billion liquid petroleum gas (LPG) as of December 2012.
Most Australian crude oil is a light, sweet grade, typically low in sulfur and wax, and therefore higher in value than the heavier crudes. The majority of reserves are located off the coasts of the states of Western Australia, Victoria, and the Northern Territory. Onshore basins, mostly found in the Cooper Basin, account for only 5 percent of the oil resources. Western Australia (including the Bonaparte Basin straddling Western Australia and Northern Territory) has 72 percent of the country's proven crude oil reserves, as well as 92 percent of its condensate and 79 percent of its LPG reserves.
Australia's overall oil production has declined since 2000, although additions through condensate production and smaller crude oil developments are expected to offset declines in mature fields over the next few years.
Petroleum and other liquids production totaled 447,000 barrels per day (bbl/d) in 2013, of which about 44 percent consisted of crude oil, 31 percent lease condensates, and 14 percent liquid petroleum gas (LPG). The remaining 11 percent is from refining gains and biofuels.
The share of crude in the total oil stream has declined over the past decade and has been gradually replaced by condensates and liquids associated with natural gas production. Australia's total liquids production peaked at 828,000 bbl/d in 2000 and has declined overall since then.
According to the Australian Petroleum Production and Exploration Association (APPEA), liquid fuels production will continue to decline over the long term unless more fields are discovered and Australia is able to tap into more deepwater plays. Production from new, smaller offshore fields has not been able to offset declines from mature basins in the past several years. However, production additions from upcoming condensate and other smaller projects are expected to stem overall production declines over the next few years.
Australia's main frontier for oil exploration has moved in recent years to the deepwater area of the Timor Sea, although the nearby Carnarvon Basin and the Bonaparte Basin off the coast of Western Australia remain the busiest areas in terms of overall drilling activity. The offshore waters of Western Australia made up 69 percent of the total oil, condensate, and NGL production in 2012, according to APPEA. After a spike in drilling activity in the past decade, particularly in condensate fields, several significant discoveries are beginning production in these basins. The Gippsland Basin in the southern Victoria state still remains a significant source of oil production, comprising 18 percent of oil production in 2012, although production has declined since the 1980s.
A number of small offshore fields containing light and heavy sweet crude oil are under development and scheduled to come online by 2015. However, some of these fields are expected to have short lives of less than 10 years, signaling the need for greater offshore oil field development.
Condensate production, averaging about 140,000 bbl/d over the past several years, is a liquid fuel similar to light crude oil that is produced from natural gas fields. Production of condensate is expected to boost Australia's overall petroleum liquids production in the next few years. Several onshore and offshore LNG projects, some of which have condensate reserves, will support the country's natural gas exports by 2017.
The Crux field in the eastern section of the Browse Basin could add about 36,000 bbl/d of liquids and process natural gas for the upcoming Prelude LNG terminal. Other fields such as Gorgon, Wheatstone, and Ichthys are expected to augment condensate production by 2018. Ichthys, a gas field heavy in condensates, could reach a peak production of 100,000 bbl/d by 2020. Altogether, these new LNG projects could boost condensate production by an estimated 200,000 bbl/d by 2020.
The Northwest Shelf Project (NWS), one of the world's largest liquefied natural gas projects, is a significant source of Australia's light oil, LPG, and condensate production. Output at some of the fields is declining, and Woodside, the operator, is attempting to prolong the production life of the Northwest Shelf oil fields beyond 2020 by developing the remaining 88.2 million barrels of proved and probable reserves. Woodside installed the Okha floating production, storage, and offloading (FPSO) facility in 2011 as part of an oil redevelopment project to replace the Cossack Pioneer FPSO.
Australia's consumption of petroleum and other liquids has exceeded domestic production for several decades. Australia's petroleum consumption has risen modestly at about 2 percent per year since 2002, reaching more than 1.1 million bbl/d in 2013. The transportation sector is the country's largest oil consuming sector, consuming nearly 70 percent of the market share in 2013, according to Australia's BREE. Other key consumers are the manufacturing sector, the mining sector, the residential sector, and the agriculture sector. In the past few years, the country's focus on developing its vast hydrocarbon reserves and exporting energy commodities has boosted petroleum consumption required to operate remote mines and extract resources.
Australia is a net importer of both crude oil and oil products because its consumption of both energy sources exceeds overall production. In 2013, net crude oil imports were 253,000 bbl/d, and net product imports were 325,000 bbl/d, according to the Australia's Bureau of Statistics data. The country's northern and northwestern regions rely on oil product imports resulting from the lack of sufficient regional refining capacity, while the eastern side imports crude oil for its refineries and domestic markets. Singapore supplies about 47 percent of Australia's oil product imports, with the most of the remainder coming from refiners in Japan and South Korea. Most crude oil imports are from Malaysia, United Arab Emirates, and Indonesia, which altogether produced about 48 percent of the total imports in 2013. Another 20 percent of crude oil imports comes from West Africa, as Nigeria, Congo, and Gabon have increasingly supplied crude oil to Australia in recent years.
Because the majority of Australia's oil production is located off its Northwest coast away from its refineries in the East, Australia exports the bulk of its crude oil and condensates to other Asian refineries or to countries using direct crude burning in electric power plants such as Japan. According to the Australian Bureau of Statistics, in 2013, Australia exported 220,000 bbl/d of crude oil and condensates, sent primarily to Singapore, South Korea, China, Japan, Thailand, and Malaysia. Australia exports small quantities of oil products, mainly LPG.