BP Backs Out of Great Australian Bight

Great Australian Bight

By MarEx 2016-10-11 10:36:16

BP has announced that it will not proceed with its planned exploration drilling in the Great Australian Bight.

BP had been awaiting environmental approval to begin exploration drilling for two wells off South Australia's west coast about 400 kilometers south-west of Ceduna. Its previous environment plan for the region had been rejected twice by Australia’s National Offshore Petroleum Safety and Environment Management Authority (NOPSEMA).

The decision to halt the project follows the review and refresh of BP’s upstream strategy earlier this year, which included focusing exploration on opportunities likely to create value in the near to medium term. BP has determined that the project will not be able to compete for capital investment with other upstream opportunities in the foreseeable future.

“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. After extensive and careful consideration, this has proven not to be the case for our project to explore in the Bight,” said Claire Fitzpatrick, BP’s Managing Director for Exploration and Production, Australia.

“This decision isn’t a result of a change in our view of the prospectivity of the region, nor of the ongoing regulatory process run by the independent regulator NOPSEMA. It is an outcome of our strategy and the relative competitiveness of this project in our portfolio.”

BP was awarded exploration licenses for four blocks in the Ceduna area in January 2011. Statoil acquired a 30 percent interest in the licenses in 2013, BP remained operator with 70 percent interest.

BP has a contract with Diamond Offshore Drilling for the provision of a new Moss CS60E design semisubmersible drilling rig, which Diamond commissioned Hyundai Heavy Industries to build and is specially designed for use in deep water and harsh marine environments. BP’s decision does not impact the rig contract, and BP and Diamond are exploring alternative locations for the rig Ocean GreatWhite

Fitzpatrick said significant progress had been made to prepare for the exploration work with the support of the community, and federal, state and local governments. “This decision has been incredibly difficult, and we acknowledge it will be felt across the South Australian region. We acknowledge our commitments and obligations, and our priority now is to work with government and community stakeholders to identify alternative ways of honoring these.”

South Australia’s Treasurer Tom Koutsantonis said that every Australian has the right to feel disappointed by BP. “They made a promise to the South Australian Government that they would spend nearly $1.4 billion on exploration of the Great Australian Bight,” he said. “I think they have done a bit of damage to their brand.”

“Today is a very joyous day for the whales, sharks, seals, dolphins, penguins and other incredible marine life that call the Great Australian Bight home,” said Jeff Hansen, Managing Director, Sea Shepherd Australia. “One of the world’s most significant southern right whale nurseries is safe.” 

Other companies including Chevron and Santos are apparently still interested in exploring the Bight. Wilderness Society national director Lyndon Schneiders said all oil and gas companies should follow BP's lead and leave.