Chapter 3 Oil - Geoscience Australia · Chapter 3 Oil 3.1 Summary Key messages • Oil is the most widely used primary source of energy globally. It plays a critical role as a transport

AUSTRALIAN ENERGY RESOURCE ASSESSMENT

41

Chapter 3Oil

3.1Summary

K e y m e s s a g e s

• Oilisthemostwidelyusedprimarysourceofenergyglobally.ItplaysacriticalroleasatransportfuelinmostcountriesincludingAustralia.

• Australiahasabout0.3percentofworldoilreserves.AustraliahaslimitedreservesofcrudeoilandmostofAustralia’sknownremainingoilresourcesarecondensateandliquefiedpetroleumgas(LPG)associatedwithgiantoffshoregasfields.

• ThereisscopeforgrowthinAustralia’soilreservesinexistingfields,andfornewoildiscoveriesinbothprovenbasinsandinunder-exploredfrontierbasinswhichareprospectiveforpetroleum.

• Thereisalsopotentialtodevelopalternativetransportfuelssuchasbiofuels,coal-to-liquids(CTL),gas-to-liquids(GTL)andshaleoil.

• Australia’soilconsumptionisprojectedtoincreaseoverthetwonextdecadesbuttherateofgrowthisprojectedtobeslowerthaninthepast20years.Domesticcrudeoilproductionisprojectedtocontinuetodecline.

• Intheabsenceofmajornewdiscoveriesandthedevelopmentofalternatives,Australia’snetimportsofliquidfuelsareprojectedtoincrease,risingtobethree-quartersofconsumptionby2029–30.

3.1.1 World oil resources and market• Oilisanimportantenergysource,accounting

foraround34percentofworldprimaryenergyconsumptionin2007.However,itsimportancehasbeendecliningsteadilysincethe1970swhenitsshareofprimaryenergyconsumptionwasaround45percent.

• Worldprovenoilreserveswereestimatedatsome1.4trillionbarrels(equivalentto8.3millionPJ)attheendof2008.Thisisequaltoaround42yearssupplyatcurrentproductionrates.Thisglobalreservestoproductionratiohasbeenmaintainedataround40yearsforthepastdecade.Australiaaccountedforaround0.3percentofthesereserves.

• Worldoilproductionwasaround30.5billionbarrels(174012PJ)in2008.MajoroilproducersincludeSaudiArabia,theRussianFederation,UnitedStates,IranandChina,withtheMiddleEastaccountingfor31percentoftheworld’sproductionin2008.

• Thecostofoilproductionisexpectedtoincreasewiththedevelopmentofdeeperwaterfieldsandtheuseofenhancedrecoverytechnologies.

• Worldoilconsumptionhasincreasedatanannualaveragerateof1.6percentsince2000,toreach31.6billionbarrels(Bbbl,171236PJ)in2008.

• Thefastestgrowingoilconsumingregionisnon-

OECDAsia,whichincludesChinaandIndia.Atpresentmorethanhalfofworldoilconsumptionisusedinthetransportsector.

• WorldoildemandisprojectedbytheInternationalEnergyAgency(IEA)initsreferencecasetoincreasebyaround1percentperyeartoreach36.8Bbbl(210271PJ)in2030.Demandgrowthisexpectedtobeconcentratedinnon-OECDeconomies.

• Worldoilsupplyisalsoprojectedtoincreaseatanaverageannualrateof1percent.OPEC’soilproductionisprojectedtogrowasissupplyfromunconventionalsourcessuchasoilsands,gas-to-liquids,coal-to-liquidsandoilshale.

3.1.2Australia’soilresources• In2008,Australia’sidentifiedoilresourceswere

estimatedat30794PJmadeupof16170PJ(2750millionbarrelsormmbbl)ofcondensate,8414PJ(1431mmbbl)ofcrudeoiland6210PJ(1475mmbbl)ofLPG(liquefiedpetroleumgas).

• Australiahasonlylimiteddomesticsuppliesofcrudeoil,andreliesincreasinglyonimportstomeet demand.

• CrudeoilexplorationinAustraliahasnotrepeatedtheearlysuccessofthe1960swhenthefirstoffshoreexplorationyieldedgiantfielddiscoveriesintheGippslandBasin.AlthoughAustraliahasover


42

BONAPARTE BASINTotal produced: 3364

Crude oil remaining: 1205Condensate remaining: 2799

LPG remaining: 1193

BROWSE BASINTotal produced: 0


LPG remaining: 1391

CARNARVON BASIN AMADEUS BASINTotal produced: 13 357 Total produced: 112Crude oil remaining: 4839 Crude oil remaining: 24Condensate remaining: 5892 Condensate remaining: 12LPG remaining: 2603 LPG remaining: 0.8

COOPER/EROMANGA BASINSTotal produced: 2856


LPG remaining: 125 BOWEN/SURAT BASINSTotal produced: 289Crude oil remaining: 41Condensate remaining: 12PERTH BASIN LPG remaining: 10

Total produced: 143Crude oil remaining: 76

Condensate remaining: 0.2

BASS BASINTotal produced: 16

Crude oil remaining: 76 GIPPSLAND BASINCondensate remaining: 247 Total produced: 25 536

LPG remaining: 241 Crude oil remaining: 1699Condensate remaining: 753LPG remaining: 646

DARWIN

CANNING BASINTotal produced: 18Crude oil remaining: 0

BRISBANE

PERTH

ADELAIDE SYDNEY

MELBOURNEOTWAY BASINTotal produced: 11

Condensate remaining: 82

HOBART

150°140°130°120°

10°

20°

30°

40°

AERA 3.1

0 750 km

Liquid hydrocarbon (Crude Oil, Condensate& LPG) resources in PJ

Gas pipelineGas pipeline(proposed)Oil pipeline

Past production Petroleum basin

Condensate resources

Crude oil resources

LPG resources

Figure 3.1 Australiancrudeoil,condensateandnaturally-occurringLPGresources,infrastructure,pastproduction andremainingresources

source: GeoscienceAustralia

300crudeoilfields,mostproductionhascomefromonlysevenmajorfields.

• Estimatesofundiscoveredcrudeoilinprovenbasinsrangefrom9996PJ(1700mmbbl)to29588PJ(5032mmbbl)andundiscoveredcondensatefrom4116PJ(700mmbbl)to35480PJ(6035mmbbl).Petroleumpotentialexistsindeepwaterfrontierbasinsbuttheoilresourceremainsunknown.

• Australia’slargestremainingdiscoveredliquidpetroleumresourceisnowthecondensateandLPGintheundevelopedIchthysgasfieldintheoffshoreBrowseBasin(figure3.1).

• Thescopeforenhancedoilrecovery(EOR)fromidentifiedfieldswasestimatedatabout6468PJ(1100mmbbls)in2005.Additionstoresourcesfromfieldgrowthwereestimatedatabout5880PJ(1000mmbbls)in2004.Intheinterveningperiodsomeofthispotentialhasbeen realised.

• Inaddition,Australiahasalargeunconventionalandcurrentlynon-producingidentifiedshaleoil

resourceof131600PJ(22390mmbbl)whichcouldpotentiallycontributetofutureoilsupply ifeconomicandenvironmentalchallengescan beovercome.

3.1.3Australia’soilmarket• Oilandoilproductshavethesecondlargest

share(1942PJor34percent)ofprimaryenergyconsumptioninAustralia,butdomesticprimaryoil(crudeoil,condensateandLPG)productionaccountsforonly6percentoftotalenergyproduction.Australia’snetimportsofoilandoilproductsrepresented45percentofconsumptionin2007–08.

• Australianprimaryoilproduction(crudeoil,condensateandLPG)peakedin2000–01at1546PJ(276mmbbl).Sincethenprimaryoilproductionhasbeendecliningatanaveragerateof5percentperyearto1059PJ(187mmbbl,29.8GL)in2007–08.

• Australiaisanetimporterofoilandoilproducts.In2007–08,Australia’snetimportsofprimaryoilwerearound383PJ(48mmbbl,7.7GL),valuedat $5.5 billion.


43

CHAPTER 3: OIL

3000

2400

1800

1200

600

PJ

0 0

8

16

24

32

40

%

Year

Oil consumption (PJ)

1999- 2000- 2001- 2002- 2003- 2004- 2005- 2006- 2007- 2029-00 01 02 03 04 05 06 07 08 30

Share of totalenergy (%)

AERA 3.2

Figure 3.2 Australia’soutlookforoilconsumptionsource: ABARE2009b;ABARE2010

• Australianrefineriesproduced1557PJ(269mmbbl,42.8GL)ofrefinedoilproductsin2007–08.

• Inthepast,Australiawasanetexporterofrefinedoilproducts.SincetheclosureofthePortStanvacrefineryin2003,Australiahasalsobecomeanetimporteroftheseproducts.In2007–08,Australia’snetimportofrefinedoilwasaround430PJ(94mmbbl,15GL),valuedat$12billion.

• Thetransportsectoristhelargestconsumerofoil,accountingforaround70percentofAustralia’stotaluseofoilproducts.

• InABARE’slatestlongtermenergyprojections,whichincludetheRenewableEnergyTarget, a5percentemissionsreductiontargetand othergovernmentpolicies,consumptionofoil andoilproductsinAustraliaisprojectedtoincreaseby1.3percentperyeartoreach2787PJ(equivalenttoabout473mmbbl)in2029–30.Itsshareofprimaryenergyconsumptionisprojectedtoremainaround 36percentin2029–30(figure3.2).

• Australianproductionofcrudeoil,condensateandLPGisprojectedtodeclineatanaveragerateof2percentperyearto668PJby2029–30.

• Netimportsofoilandoilproductsareprojectedtoaccountfor76percentofconsumptionin2029–30.

3.2Backgroundinformation andworldmarket

3.2.1DefinitionsThetermoilencompassestherangeofliquidhydrocarbonsandincludescrudeoilandcondensate.Liquefiedpetroleumgas(LPG)isconsideredalong

withoilinthisstudy.Oilthathasbeenrefinedintootherproductsisreferredtoasrefinedproducts, oilproductsorpetroleumproducts.

Crude oilisanaturally-occurringliquidconsistingmainlyofhydrocarbonsderivedfromthethermalandchemicalalterationoforganicmatterburiedinsedimentarybasins.Itisformedasorganic-richrocksareburiedandheatedovergeologicaltime.Crudeoilvarieswidelyinappearance,chemicalcompositionandviscosity.MostAustraliancrudeoilsareclassifiedaslightoil.Lightcrudeoilsareliquidswithlowdensityandlowviscositythatflowfreelyatstandardconditions:theyhavehighAPIgravityduetothepresenceoflighthydrocarbons.Heavyoils,ontheotherhand,havehigherdensityandviscosity,donotflowreadilyandhavelowAPIgravity(lessthan20°)havinglostthelighterhydrocarbons.Crudeoilisfoundindepositswithorwithoutassociatedgas;thisgasmayincludenaturalgasliquids–condensateandliquefiedpetroleumgas(LPG).Crudeoilcanalsobefoundinsemi-solidformmixedwithsandandwater(oilortarsands)orasanoilprecursor,alsoinsolidform,calledoilshale.Oilfromoilsandsandoilshaleisknownasunconventionaloil(box3.1).

Condensateisaliquidmixtureofpentaneandheavierhydrocarbonsfoundinoilfieldswithassociatedgasoringasfields.Itisagasinthesubsurfacereservoir,butcondensestoformaliquidwhenproducedandbroughttothesurface(figure3.3).

Liquefied petroleum gas(LPG)isamixtureoflighterhydrocarbons,suchaspropaneandbutane,andisnormallyagasatthesurface.Itisusuallystoredandtransportedasaliquidunderpressure.Inadditiontonaturally-occurringLPG,itisalsoproducedasaby-productofcrudeoilrefining.LPGhaslowerenergy

LPG

C5+

C35

MethaneCH4

2 6

Gas atsurface

3 8

4 10

Liquid atsurface

LNG andSales GasEthane

C H

PropaneC H

Gas insubsurfaceButane

C H

Higherhydrocarbons

Condensateand oil

Liquid insubsurface

AERA 3.3

Figure 3.3 Petroleumresourcesnomenclatureintermsofchemicalcomposition,commercialproduct,physicalstateinthesubsurfaceandphysicalstateatthesurface



44

contentpervolumethancondensateandcrudeoil(AppendixE).

Refined productsincludepetroleumproductsusedasfuels(LPG,aviationgasoline,automotivegasoline,powerkerosene,aviationturbinefuel,lightingkerosene,heatingoil,automotivedieseloil,industrialdieselfuel,fueloil,refineryfuelandnaphtha)andrefinedproductsusedinnon-fuelapplications(solvents,lubricants,bitumen,waxes,petroleumcokeforanodeproductionandspecialisedfeedstocks).

Primary oil consumptionincludesallpetroleumuseddirectlyasfuel–crudeoil,condensate,LPGandpetroleumproducts.

Primary oil productionincludescrudeoil,condensateandnaturallyoccurringLPGpriortouseinrefineries.

Oil shaleisafine-grainedsedimentaryrockcontaininglargeamountsoforganicmatter(kerogen),whichcanyieldsubstantialquantitiesofhydrocarbons.Oilshaleisessentiallyaveryrichthermallyimmaturesourcerock:itrequiresheatingtohightemperaturestoconverttheorganicmaterialwithintheshaletoliquidhydrocarbons–shaleoil.Shaleoilisconsideredanalternativetransportfuel,readilysubstitutableforhighgradecrudeoil.

Oil sands,ortarsands,aresandstonesimpregnatedwithbitumen,theveryviscousheavyhydrocarbonsremainingafterthemorevolatilecomponentsofcrudeoilhavebeenlost.Miningandprocessingisrequiredtorecovertheoil.

3.2.2OilsupplychainFigure3.4providesarepresentationoftheoilindustryinAustralia.Theoilindustryundertakestheexploration,developmentandproductionofcrudeoil,condensateandLPG.Moregenerally,thepetroleumindustryalsoincludesdownstreamactivitiessuchaspetroleumrefining,andthetransportandmarketingofrefinedproducts,as wellasnon-energyproductssuchaspetrochemicals andplastics.

Resources and explorationThesupplyofoilbeginswithundiscoveredresourcesthatmustbeidentifiedthroughexploration.Geoscientistsidentifyareaswherehydrocarbonsareliabletobetrappedinthesubsurface,thatisinsedimentarybasinsofsufficientthicknesstocontainmaturepetroleumsourcerocksaswellassuitablereservoirandsealrocksintrapconfigurations(box3.1).Thesearchnarrowsfrombroadregionalgeologicalstudiesthroughtodetermininganindividualdrillingtarget.

IntheAustraliancontext,governmentshavetakenakeyroleinprovidingregionalpre-competitivedatatoencourageinvestmentinexplorationbytheprivatesector(figure3.5).Companyaccesstoprospectiveexplorationareasisbycompetitivebidding,usuallyonthebasisofproposedworkprogram(thatisintendedexplorationeffort)orbytakingequityin(‘farming-into’)existingacreageholdings.

Development and Processing, Transport,End Use Market

Production Storage

WorldOil tanker Market

Exploration Developmentdecision decision

IdentifiedresourcesUndiscovered

resources

AERA 3.4

Transport

Industrial

Commercial

Residential

Other

Exportmarket

Domesticmarket

Condensate LPG Imports Refinedfrom gas fields petroleum

imports

Resources and Exploration

Oil tankerProject

Oilrefinery

Electricitygeneration

Figure 3.4 Australia’soilsupplychainsource: ABAREandGeoscienceAustralia


45

CHAPTER 3: OIL

1

Indu

stry

100

10 000

100 000

10 000 000

2km

Gov

ernm

ent Regional understanding

Field/prospectIn-

formedactions

Prospect/field/segment

inventory

Risk Uncertainty Explorationpermit

Seismic Seismic Geologyimaging attributes modelling

Play focus

Basin statistics Play risk-field size distance Lead inventory -CHS maps-analogs - success rates

play fairway analysis, stratigraphic drilling Precompetitivestudy

Structural Sequence Petroleumstyles stratigraphy systems

Stratigraphy Basic mapsData Plate-well data -structuremanagement reconstructions-fieldwork -isopachs Documentation

Regional seismicgravity & magnetic

AERA 3.5

Figure 3.5 Theresourcediscoverytrianglesource: GeoscienceAustralia(adaptedfromBP)

Reflectionseismicistheprimarytechnologyusedtoidentifylikelyhydrocarbon-bearingstructuresinthesub-surface.Drillingisthenrequiredtotestwhetherthestructurecontainsoilorgas,orboth,orneither.Theinitialdiscoverywellmaybefollowedbyappraisaldrillingand/orthecollectionoffurthersurveydata(often3Dseismic)tohelpdeterminetheextentofthe accumulation.

Development and productionOnceaneconomicallyrecoverableresourcehasbeenidentified,itisamatterofdecidingwhethertoproceedtodevelopmentbasedonprojecteconomics,marketconditions(oilpricesandcostofextractiontechnologiesandfacilities)andtheavailabilityoffinance.

Thedevelopmentphaseinvolvestheconstructionoftheinfrastructurerequiredfortheproductionoftheoilresource.Dependingonthelocation,thisinfrastructureincludesdevelopmentwells,productionfacilities,agatheringsystemtoconnectindividualwellstoprocessingfacilities,temporarystorageandtransportfacilities.

InAustralia,theoptionsforoffshoredevelopmentincludeafloatingproductionandstorageoffloadingfacility(FPSO)as,forexample,theEnfieldoildevelopmentintheCarnarvonBasin,orbuildingaproductionplatformandpipingtheoilashore,asat

theCliffHeadfieldinthePerthBasin.Wherethepipelineinfrastructureiswellestablished,newcrudeoildiscoveriescanberapidlybroughtonstreamasintheinshoreCarnarvonBasin.Onshore,theoptionsaretolinkintoorextendtheoilpipelinenetworkor,incasesofsmallremotefields,asatBlinaintheCanningBasin,totransporttheoilbyroad.

Theproductionphaseincludesextractingoilfromthereservoirandseparatingimpurities.Attheinitialstageofextraction,thenaturalpressureofthesubsurfacereservoirisgenerallysufficientfortheoiltoflowtothesurface.Ifthereservoirpressureisinsufficient,anadvancedrecoverymethodisusedtoincreasereservoirpressure.

Condensateisacomponentofnaturalgasandisproducedduringgasorcrudeoilfielddevelopment. Insomecasesthecondensateisextractedandthegasisreinjectedinaprocesscalledgasrecycling.

Processing, transport, storage and tradeCrudeoilandcondensateisnotgenerallyusedinitsraworunprocessedform,apartfromsomelight-sweetcrudeoilwithlowsulphurcontentwhichcanbeusedasaburnerfuelforsteamgenerationinindustrialapplications.Themajorityofcrudeoilisprocessedinarefinerytoproducerefinedproducts,suchasgasoline,diesel,aviationfuel,fueloil,

BOx 3.1 PETROLEUMSySTEMSANDRESOURCEPyRAMIDS

Oilaccumulationsaretheproductsofa‘petroleum

system’(MagoonandDow1994).Thecritical

elementsofapetroleumsystemare:

• source–anorganicrichrock,suchasanorganic

richmudstone;

• reservoir–porousandpermeablerock,suchas

sandstone;

• seal–animpermeablerocksuchasashaleor

mudstone;

• trap–asub-surfacestructurethatcontainsthe


46

accumulation,suchasafaultblockoranticline;

• overburden–sedimentsoverlyingthesourcerockrequiredforitsthermalmaturation;and

• migrationpathwaystolinkthematuresourcetothetrap(figure3.6).

Inadditiontothesestaticelements,theactualprocessesinvolved–trapformation,hydrocarbongeneration,expulsion,migration,accumulationandpreservation–mustoccur,andinthecorrectorder, forthepetroleumsystemtosuccessfullyoperateandforoilaccumulationstobeformedandpreserved. Itisessentialthatthesourcerockhasbeenthrough(orisstillwithin)theoilwindow,thezoneinthesubsurfacewheretemperaturesaresufficientforthermalalterationoftheorganicmattertooil.Athighertemperatures,belowthebottomoftheoilwindow,oilstartstobebrokendown(cracked)togas.

Unconventionaloilaccumulationsreflectthefailureorunder-performanceofthepetroleumsystem.Oilshaleisanexamplewhereathermallyimmaturesourcerockhasnotgeneratedandexpelledhydrocarbons.Oilortarsandsoccurwhereconventionalcrudeoilhasfailedtobetrappedatdepthandhasmigratedneartothesurfaceandhasbecomedegradedbyevaporation,biodegradationandwaterwashingtoproduceaviscousheavyoilresidue.

Thepetroleumresourcepyramid(McCabe1998)describeshowasmallervolumeofeasilyextractedconventionalgasandoilisunderpinnedbylargervolumesofmoredifficultandmorecostlytoextract

unconventionalgasandoil(figure3.7).Forthe

unconventionalhydrocarbonresources,additional

technology,energyandcapitalhastobeappliedto

extractthegasoroil,replacingthenaturalaction

ofthegeologicalprocessesofthepetroleum

system.Technologicaldevelopmentsandrisesin

pricecanmakethelowerpartsoftheresource

pyramidaccessibleandeconomictoproduce.The

recentdevelopmentofoilsandsinCanadaandof

shalegasintheUnitedStatesareexampleswhere

risingenergypricesandtechnologicaldevelopment

hasfacilitatedtheexploitationofunconventional

hydrocarbonresourceslowerinthepyramid.

Conv. Conv.Oil Gas

Shale Oil Gas Hydrates

Increased breakevenprice required

Smaller volumes, Increased technologyeasy to develop requirements

Larger volumes,difficult todevelop

Heavy Oil CSG

Tight Gas andOil SandsShale Gas

AERA 3.7

Figure 3.7 PetroleumResourcePyramidsource: GeoscienceAustralia(adaptedfromMcCabe1998andBranan2008)

A A’Trap TrapTrap

Geographic extent of petroleum system

Present day

Overburden Source

Seal Underlying sequence

Reservoir

Top of oil window

Bottom of oil window

Petroleum accumulation

Basement

Stratigraphic extentof petroleum system

AERA 3.6

Figure 3.6 Petroleumsystemelementssource: MagoonandDow1994(modified)


47

CHAPTER 3: OIL

keroseneandLPG.Somecrudeoilandcondensatecanalsobeconvertedintonon-energyproductsandusedasafeedstockinthepetrochemicalindustry.

Oncerefined,end-useproductscanbestoredandtransportedtothedemandcentreviaroad,rail,seaorpipeline.

Around70percentofAustralia’scrudeoilandcondensateproductionoccursoffthenorth-westcoast.Around60percentofthisproductionisexported,reflectingtheproximitytorefineriesinsouth-eastAsia.In2008–09,approximately63percentofAustralia’srefineryinputrequirementswereimported.ThispartlyreflectstheinsufficientcrudeoilandcondensateproductionineasternAustralia,particularlywithinreasonabledistanceofrefineriesinSydneyandBrisbane.

In2008–09,around40percentofAustralia’srefinedpetroleumproductswereimported,primarilyreflectingincreasingdependenceonoverseas

refineriestomeetincrementaldomesticrefinedproductdemand.Some8percentofAustralia’srefineryproductionwasexported,mainlyintheformoftransportfuelsforinternationalcarriers.

end use marketThemajorend-usemarketforrefinedproductsisthetransportsector.Refinedpetroleumproductsaretransportedtolocaldistributionpoints,fromwheretheyaredeliveredeitherdirectlytoendusersortoretailoutlets,predominatelyaspetrol,dieselandLPG.

3.2.3WorldoilmarketTable3.1providesasnapshotoftheAustralianoilmarketwithinaglobalcontext.Australia’sreservesaccountforonlyasmallshareofglobalreserves,andAustraliaisarelativelysmallproducerandconsumer.

Oil reserves and productionWorldprovenoilreserveswereestimatedtobearound1.4trillionbarrels(equivalenttoaround8.3millionPJ),attheendof2008(table3.1).This

Table 3.1 Keyoilstatistics,2008

unit australia2007–08

australia2008

World2008

Reserves PJ - 24284 8257028

Bbbl - 4.2 1408

Shareofworld % - 0.3 100

Production of crude oil, condensate and LPg PJ 1059 - 174012

mmbbl 187 194 30471


Averageannualgrowthfrom2000 % -4.3 1.3

Oil refining capacity kb/d - 734 88627


Consumption of crude oil, condensate and LPg PJ 1417 - -

Averageannualgrowthfrom2000 % -2.4 - -

Consumption of oil and oil products PJ 1942 - 171236a

mmbbl - 342 31586a


Shareofprimaryenergyconsumption % 33.6 - 34.0

Averageannualgrowthfrom2000 % 1.3 - 1.6

Imports of crude oil and other refinery feedstocks PJ 1019 - 98392a

Averageannualgrowthfrom2000 % -0.3 - 1.8

Imports of oil and oil products PJ 1678 - 139109a

kb/d 762 771 67277a

mmbbl 278 282 24556a


Averageannualgrowthfrom2000 % 4.2 - 2.6

exports of crude oil, condensate and LPg PJ 661 - 92842a


exports of oil and oil products PJ 807.7 - 135742a


Note: Bbbl–billionbarrels,mmbbl –millionbarrels,kb/d–thousandbarrelsadaya 2007data source: ABARE2009b;BP2009a;IEA2009a,b


48

amountcouldbeincreasedinthefutureifunprovedoilreservesandresourcescanbeupgradedtoprovenreserves(oilconsideredtoberecoverablewithreasonablecertaintyundercurrenteconomicandoperatingconditions).Atcurrentratesofworldproduction,theestimatedprovenoilreservesareenoughtolastforaround42years.Sincethemid-1980stheglobalreservestoproductionratiohasbeensteadyataround40yearsormore(BP2009a)asproductionisbalancedasnewdiscoveriesaremadeandnewreservesaredevelopedeachyear.

Abouttwo-thirdsoftotalworldreservesarelocatedintheMiddleEast.Fourofthefivecountrieswiththeworld’slargestreserves–SaudiArabia,Iran,IraqandKuwait–areinthisregion(figure3.8).SaudiArabiaaloneaccountedfor19percent(1552320PJ,264Bbbl)ofworldreserves.Canadahasthesecondlargestshareofworldoilreserves,thoughoilsandstotallingsome887880PJ(151Bbbl)accountforaround80percentofthesereserves.TheAsiaPacificregionaccountedfor3percentofworldoilreserves.ThelargestoilreservesinthisregionarelocatedinChina.

Australiaisrankedtwenty-seventhintheworldintermsofprovenoilreserves,accountingforaround0.3percentofglobalreserves.

Canada

Kuwait

Libya

Australia

Saudi Arabia

Iran

Iraq

Venezuela

United Arab Emirates

Russian Federation

Kazakhstan

300250200150100

a) Oil reserves, end 2008

0 50

Billion bbls

China

Australia

Saudi Arabia

Russian Federation

United States

Iran

Mexico

Canada

Kuwait

Venezuela

United Arab Emirates

40003000200010000

b) Oil production, 2008

AERA 3.8

Million bbls

Figure 3.8 Worldoilreservesandproduction,majorcountries,2008

source: BP2009a;IEA2009a

Worldtotaloilproductionin2008wassome30.5Bbbl(equivalenttoaround174012PJ).Productionofcrudeoilrepresentsmorethan90percentoftotaloilproduction,whichincludescrudeoil,condensate,LPGandunconventionaloil.ThemajoroilproducersarelocatedintheMiddleEast,witha31percentshareofworldproduction.SaudiArabiaisthelargestsingleproducer,accountingforaround13percentofworldproduction(figure3.8).TheRussianFederationisalsoamajorproducer(12percent).OtherFormerSovietUnioncountries(particularlyAzerbaijan,KazakhstanandTurkmenistan)andAfrica(particularlyAngolaandSudan)arealsobecomingimportantoilproducingregions.Overtheperiod2000to2008,productionfromthesetworegionsgrewatanaverageannualrateofaround7percentand5percentrespectively.

Australiaisonlyasmalloilproducer,accountingfor0.6percentoftotaloilproductionin2008.

Petroleum refiningBecausevirtuallyalloil,conventionalandunconventional,needstobeprocessedbeforeenduse,refinerycapacityandthroughputaresignificant

Australia

World

OECD

Non-OECD

OPEC

604020

a) Oil share of primary energy consumption

0

%

0 20 40 60

b) Transport sector share of oil consumption

80

%

World

OECD

Non-OECD

OPEC

Australia

1971 2007AERA 3.9

Figure 3.9 Oilshareoftotalenergyconsumptionandtransportsectorusage

source: IEA2009a;2009b


49

CHAPTER 3: OIL

Table 3.2 Worldrefinerycapacitiesandpetroleumproduction,2008

Refinery capacities (kb/d)

share of world capacity (%)

Refinery output (kb/d)

share of world production (%)

AsiaPacific 25098 28.3 22653 28.0

NorthAmerica 21035 23.7 21567 26.7

Europe 17007 19.2 16071 19.9

FormerSovietUnion 8079 9.1 6172 7.6

MiddleEast 7592 8.6 6493 8.0

LatinAmerica 6588 7.4 5434 6.7

Africa 3228 3.6 2466 3.0

World 88 627 100.0 80 856 100.0

australia 734 0.8 684 0.8

Note: Includescapacityandproductionfromunconventionaloilsource: BP2009a;IEA2009a

indicatorsofsupplyofenduseproducts.Table3.2summarisesworldrefiningcapacityandproduction,byregion.

Thelargestshare,accountingforaround28percentofworldrefinerycapacityandoutput,isintheAsiaPacificregion.China,Japan,IndiaandtheRepublicofKoreaarethemajorproducersofrefinedproductsintheregion,althoughJapanandtheRepublicofKorearelyalmostentirelyonimportedcrudeoil.ThelargestsingleproduceristheUnitedStates,accountingformorethan20percentofworldproductionofoilproducts.Australiaaccountedforlessthan1percentofworldrefiningcapacityandproduction.

Consumption Oilisanimportantenergysource,currentlyaccountingforaround34percentofworldprimaryenergyrequirements.However,itsshareofprimaryenergyhasbeendecliningsteadilysincethe1970sfromaround45percent(figure3.9).Worldoilconsumptiongrewatamoderaterateofaround1.5percentperyearbetween1971and2008whereasprimaryenergyconsumptiongrewat2.2percentperyearoverthesameperiod.

Morethan50percentofworldoilconsumptioniscurrentlyusedinthetransportsector,comparedwithlessthan40percentintheearly1970s(figure3.9).Incontrast,theglobalsharesofoilconsumptionintheindustryandelectricitygenerationsectorshavebeensteadilydecliningoverthepasttwentyyears.In2007,theindustryandelectricitygenerationsectorsaccountedfor8percentand7percentrespectivelyoftotaloilconsumption.Around14percentofworldoilconsumptionisusedasnon-energyfeedstock.

Figure3.10showsworldoilconsumptionbyregion.NorthAmericaandtheAsiaPacificarethemajorconsumingregions,responsiblefornearly60percentofworldoilconsumptionin2008.Oilconsumptioninnon-OECDcountrieshasgrownmorerapidlythantheworldaverage,atanaveragerateof3percentperyearbetween1971and2008.Thefastestgrowingoilconsumingregionisnon-OECDAsia,growingatan

30

25

20

15

10

5

Billio

n bb

ls

0200720011995198919831977

a) Oil consumption, by region

1971

Year

Non-OECDOECD Asia Pacific

Europe

Africa OECD Europe

Former Soviet Non-OECDUnion Asia Pacific

OECD NorthLatin America

America

Middle East

Australia

Brazil

Canada

United States

China

Middle East

Latin America

Japan

Africa

India

Russian Federation

Germany

Korea

France

0 2000 4000 6000 8000

b) Oil consumption, 2008

AERA 3.10

Million bblsFigure 3.10 Worldoilconsumptionsource: IEA2009a


50

Table 3.3 Worldoiltradebyregion,2008

shares To

% asia North Pacific america

europe Latin america

africa australasia unknown World exports

From

MiddleEast 63 18 19 8 60 12 11 37

Africa 8 19 22 27 7 1 0 15

FormerSoviet 4 4Union

47 4 1 1 40 15

NorthAmerica 1 31 5 42 2 2 6 11

AsiaPacific 19 1 1 12 4 80 8 10

LatinAmerica 3 17 4 0 2 0 0 7

Europe 1 8 0 7 24 0 34 4

Australasia 1 0 0 0 0 0 0 1

Unknown 0 2 2 0 0 4 0 1

Worldimports 40 26 25 3 3 2 1 100

source: BP2009a

averagerateofmorethan5percentperyearoverthesameperiod.

Australiaisrankedtwenty-secondintheworldintermsofoilconsumption,accountingforaround 1percentoftheworldtotal.Almost70percentisconsumedinthetransportsector,while8percent isusedasnon-energyfeedstock.

TradeGiventhesignificantseparationofmajorproducingandmajorconsumingcountries,thereisasubstantialleveloftradeinoil.OverthepasttwentyyearsoiltradehasincreasedasoilproductionreservesintheAsiaPacificregionandNorthAmericafailedtokeeppacewithgrowthindemand.Inthemid-1980s,around40percentofworldoilconsumptionwassuppliedthroughinternationaltrade.Thisincreasedtoaround65percentin2008.

Worldoiltradein2008was67.3millionbarrelsperday(IEA2009a).ThelargestexportregionwastheMiddleEast,whichaccountedforaround37percentofworldoilexports(table3.3).AfricaandtheFormerSovietUnioncountriestogetheraccountedfor30percentofworldoilexports.Thelargestimporterofoil,theAsiaPacificregion,accountedforaround40 percentofworldoiltradein2008.NorthAmericaandEuropetogetheraccountedforabouthalfof worldtrade.

In2008,around63percentofAsiaPacificoilimportsweresourcedfromtheMiddleEastandregionaltradewithintheAsiaPacificaccountedforafurther19percent.InNorthAmerica,31percentofimportsaresourcedfromwithintheregion,specificallyoilexportsfromCanadaandMexicototheUnitedStates.SignificantquantitiesofoilareimportedintoNorthAmericafromLatinAmerica,theMiddleEastandAfrica.ThemajorityoftheEurope’simportsaresourcedfromtheFormerSovietUnion,AfricaandtheMiddleEast.

Australiaisanetimporterofcrudeoilandcondensateandofrefinedoilproducts,butisanetexporterofLPG.Sincethemid-1990s,Australia’simportsofcrudeoilfromtheMiddleEasthavebeengraduallydecliningandhavebeenincreasinglysourcedfromSouth-EastAsia,mainlyfromVietnam.

World oil market outlookInitsreferencescenario,theIEAprojectsworlddemandforprimaryoil–andthesupplytomeetthatdemand–tobothgrowby1percentperyear,from29645mmbbl(169297PJ)in2008to36820mmbbl(210271PJ)in2030(table3.4).

Oildemandinnon-OECDeconomiesisexpectedtogrowatafasterratethaninOECDeconomies.By2030,non-OECDeconomiesareexpectedtorepresentmorethanhalfofworldoildemand,upfrom41percentin2008.

ThemajorityoftheincreaseisexpectedtobesuppliedbyOPECcountries,wheresignificantprovenreservesofconventionalcrudeoilexist.OPEC’sshareofworldoilsupplycouldincreasefromaround44percentin2008to52percentin2030.

Some52percentoftheoilwasusedinthetransportsectorin2008.Thisshareisexpectedtorisefurtherto57percentin2030.Viablealternativesfortransportfuelsareexpectedtoremainrelativelylimitedthroughouttheoutlookperiod,whiletheshareofoiluseinothersectors,includingindustryandelectricitygeneration,isexpectedtodeclinefurther.

Productionofconventionaloil,includingcrudeoilandcondensate,isexpectedtoslowtowardstheendoftheoutlookperiod.Tomeetoildemand,increasedproductionisexpectedtocomefromunconventionalsources,mainlyoilsands,extra-heavyoil,gas-to-liquidsandcoal-to-liquids.Asaresult,theshareofunconventionaloilisexpectedtorisefrom2percentin2008to7percentin2030.


51

CHAPTER 3: OIL

Table 3.4 WorldoiloutlookfromIEAreferencecasea

unit 2008 2030

World oil supply PJ 169 097 210 271

mmbbl 29610 36820

ShareofOPECsupply % 43.7 52.2

Shareofsupplyfromunconventionaloil

% 2.1 7.0

Annualgrowth2008–30 % 1.0

World primary oil demand

PJ 169 297 210 271

mmbbl 29645 36820

Shareofnon-OECDdemand

% 41.3 53.4

Shareoftransportsector demand

% 52.0 57.0

Annualgrowth2008–30 % 1.0

a Dataareconvertedfrommillionbarrelsperdaytomillionbarrelsbymultiplyingwith350,factorthatisconsistentwithBP(2009a).source: IEA2009c

TheIEAprojectsworlddemandforenergytogrowmoreslowlyunderits450scenarioinwhichcountriestakecoordinatedactiontorestricttheriseinglobaltemperaturesto2°CandstabilisethegreenhousegasesintheEarth’satmospheretoaround450partspermillioncarbondioxide-equivalent(IEA2009c).UnderthisscenariotheIEAprojectsoildemandtogrowatanaveragerateof0.2percentperyeartoreach31240mmbblin2030(down15percentonthereferencecase).IntheIEA’s450scenariodemandgrowthisdrivenprimarilybyChina(averaging2.7percentperyear)andtoalesserextentotherdevelopingcountrieswhiledemandreducesintheUnitedStatesandotherOECDcountries.InthisscenariotheIEApredictssavingsintransportfuelconsumptionthroughefficienciesandgreateruse ofelectricandhybridvehiclesandagreatercontributionfromsecond-generationbiofuels after2020(IEA2009c).

3.3Australia’soilresources and market

3.3.1CrudeoilresourcesAustralia’scrudeoilresourceswereestimatedat8414PJ(1431mmbbl)asat1January2009.Crudeoilrepresents27percentofliquidpetroleumresourceswiththeremainderbeingmadeupofcondensate(16170PJ,53percent)andnaturally-occurringLPG(6210PJ,20percent)(figure3.11).

Asshownintable3.5,mostofAustralia’sidentifiedcrude oil resource is in the economic demonstrated resource(EDR)categoryandonlyasmallvolumeisconsideredsub-economicgivencurrentrelativelyhighoilprices.

LPG6210 PJ Crude oil

1475 mmbbl 8414 PJ1431 mmbbl

Condensate16 170 PJ

2750 mmbbl

AERA 3.11

Figure 3.11 Australia’sliquidpetroleumresourcesbyenergycontentandvolumeasat1January2009

source: GeoscienceAustralia2009a

ResourceclassificationismorefullydiscussedinAppendixD,butnotethatEDRareresourceswiththehighestlevelsofgeologicalandeconomiccertaintyandincluderemainingprovedplusprobablecommercialreservesofpetroleum.Sub-economicDemonstratedResources(SDR)areresourcesforwhichprofitableextractionhasnotyetbeenestablished.InferredResourcesarethosewithalowerlevelofconfidencethathavebeeninferred frommorelimitedgeologicalevidenceandassumedbutnotverified.

Anadditionalbutuncertainresourceisrepresentedbythevolumesofcrudeoilthatcouldbeproducedfromexistingfieldsbytheapplicationofenhancedoilrecovery(EOR)technologiessuchasmisciblegasflooding(e.g.usingnitrogenorcarbondioxide).Thesemethodscanincreasetheoilrecoveryfactorsignificantlybeyondthe30–50percenttypicallyrecoveredusingcombinedprimaryandsecondrecoverymethods.However,EORdependsheavilyontheavailabilityandcostofmisciblegases(Wrightetal.1990)andisnotcurrentlyundertakenatanyAustralianoilfield.Reservesgrowth(GeoscienceAustralia,2001,2004,2005)inexistingfieldsisanotherpotentialsourceofadditionalcrudeoilresources.

Table 3.5 AustraliancrudeoilresourcesrepresentedasMcKelveyclassificationestimatesasat1January2009

Crude Oil Resources PJ mmbbl

EconomicDemonstratedResources 6950 1182

Sub-economicDemonstratedResources

1464 249

Total 8414 1431



52

Most(72percent)oftheremainingidentifiedcrudeoilresourceislocatedintheCarnarvon(4839PJ)andBonaparte(1205PJ)basins.Despiteits40yearsofproduction,theGippslandBasinremainsasignificantresource(1700PJ)withsmallervolumesinanumberofonshore(Cooper-Eromanga,Bowen-SuratandAmadeus)andoffshore(Browse,PerthandBass)basins(figure3.12).

WhilecrudeoilresourcesareidentifiedacrossninebasinsandthroughmuchofthestratigraphiccolumnthesignificantvolumesarerestrictedtotheoffshoreMesozoicbasinsonthenorthwestmarginandinBassStrait.Theonshorebasinscontributeonlyabout5percent of the total crude oil resources.

Australia’sremainingidentifiedcrudeoilresourcesaredwarfedbypastproductionwhichhascomemainlyfromafewsuper-giantfieldsintheGippslandBasinandtheBarrowIslandfieldintheCarnarvonBasin,alldiscoveredinthe1960s(figure3.13).Manysuchsmalleroilfieldshavebeenfoundsince,mostlyintheCarnarvonandBonapartebasins.Theimpactoftheseinitialdiscoveriesoncrudeoilresourcesandthereservestoproductionratioisillustratedinfigures3.14and3.15.

Thereservestoproduction(R/P)ratiohasbeenrelativelysteadyataround7to10yearssincethe

1980s.However,itmustberecognisedthatbothproductionvolumesandreserveshavedeclinedmarkedlyinrecentyears.Todate,around80percentofthecrudeoilreservesdiscoveredinAustraliahavebeenproduced.

3.3.2CondensateresourcesCondensateexistsasahydrocarbongasinthesub-surfacereservoirthatcondensestoalightoilatthesurfacewhenagas(oragasandoil)accumulationisproduced.CondensatenowrepresentsmorethanhalfofAustralia’sremainingliquidhydrocarbonresources.In2008thedemonstratedcondensateresourcetotalled16170PJ(2750mmbbls)mostofwhichwasassessedasEDR(table3.6).

Table 3.6 AustraliancondensateresourcesrepresentedasMcKelveyclassificationestimates asat1January2009

Condensate Resources PJ mmbbl



3610 614

Total 16 170 2750


BONAPARTE BASINProduced: 2540

Remaining: 1205

BROWSE BASINProduced: 0

Remaining: 82

CANNING BASINProduced: 18Remaining: 0

CARNARVON BASINProduced: 8643 AMADEUS BASINRemaining: 4839 Produced: 100

Remaining: 24

COOPER/EROMANGA BASINSProduced: 1629Remaining: 370

BOWEN/SURAT BASINSProduced: 194Remaining: 41

PERTH BASINProduced: 141Remaining: 76

GIPPSLAND BASINProduced: 21 929Remaining: 1700

BASS BASINProduced: 0

Remaining: 76

DARWIN

BRISBANE

PERTH

ADELAIDE SYDNEY

MELBOURNE

HOBART

150°140°130°120°

10°

20°

30°

40°

AERA 3.12

0 750 km

Total production calculated(as at 2008 in PJ)Remaining resource (EDR + SDR)calculated (as at 2008 in PJ)

Oil basin

Crude oil

Oil pipelineOil pipeline(proposed)

Figure 3.12 Australia’sknowncrudeoilresources,bybasinandoilpipelinessource: GeoscienceAustralia


53

CHAPTER 3: OIL

AsmostAustraliancrudeoilsarelight,sweetcrudesandareverysimilartothecondensateproducedfromgasfields,bothareconsideredtohaveequivalentenergyvaluepervolume(5.88PJ/mmbbl)inthisreport.

Condensateresourcesarelocatedacrosstenbasins,buttheoffshorebasinsalongtheNorthWestShelf–Bonaparte,BrowseandCarnarvon–contain92percentoftheresource(figure3.16).Similarly,thebulk of this resource is contained in a small number ofgiant‘wet’gasfields.TheundevelopedIchthysgasresourceintheBrowseBasin,forexample,isestimatedtocontain3099PJ(527mmbbls)or19percentofAustralia’scondensateresources;andis

thelargestliquidhydrocarbonresourcefoundsincetheBassStraitoilfieldsintheGippslandBasinin the1960s.

ProportionallytheCarnarvonBasingasfieldstendtobeleanerincondensatethanthoseintheBrowseandBonapartebasinsduetothedominanceof thesuper-giantdrygasaccumulationsofIo-Jansz andScarborough.

Theidentifiedcondensateresourcehasanenergycontentthatislessthan10percentthatoftheassociatedgasresource,buthasstrategicimportanceasitconstitutesmorethanhalfof

0

3000

2500

Cru

de o

il di

scov

ered

per

ann

um (m

mbb

l)

2000

1500

1000

500

0

600

500

400

300

200

Cum

ulat

ive

num

ber o

f dis

cove

ries

100

1960 1965 1970 1975 1980 1985 1990 1995 2000 2005

Year

AERA 3.13

Discoveries (cumulative number)Crude oil (annual discovered volume mmbbl)

Figure 3.13 Australia’scrudeoildiscoveries,annualdiscoveredvolume(bluecolumns)andcumulativenumber ofdiscoveries,1960–2008


Crude resources

Crude EDR

01964

16 000

14 000

12 000

10 000

PJ 8000

6000

4000

2000

1968 1972 1976 19841980 1988 1992 1996 200820042000

AERA 3.14

YearFigure 3.14 Australiancrudeoilresourcesandeconomicdemonstratedresources(EDR),1964–2008source: GeoscienceAustralia


54

Australia’sliquidfuelresource.Accesstothisresourcerequiresdevelopmentofthegiantwetgasfieldswhichinseveralcasesalsocontainconsiderablevolumesofcarbondioxide(CO

2).

Australia’scondensateresourceshavegrownsubstantiallysincethediscoveryofthesuper-giantandgiantgasfieldsalongtheNorthWestShelfintheearly1970s(NorthRankinintheCarnarvonBasin,

01964 1968 1972 1976 19841980 1988 1992 1996 200820042000

80

70

60

50

Year

s

40

30

20

10

AERA 3.15

YearFigure 3.15 Australiancrudeoilreservestoproductionratioinyearsofremainingproduction,1964–2008source: GeoscienceAustralia


Remaining: 2799


Remaining: 6286

CARNARVON BASINProduced: 3365Remaining: 5892

AMADEUS BASINProduced: 6Remaining: 12

BOWEN/SURAT BASINSProduced: 48Remaining: 12COOPER/EROMANGA BASINS

Produced: 585Remaining: 88

PERTH BASINProduced: 2

Remaining: 0.2

OTWAY BASINProduced: 11

Remaining: 82

GIPPSLAND BASINProduced: 1182Remaining: 753

BASS BASINProduced: 11

Remaining: 247

DARWIN

BRISBANE

PERTH

ADELAIDE SYDNEY

MELBOURNE

HOBART

150°140°130°120°

10°

20°

30°

40°

AERA 3.16

0 750 km

CondensateTotal production calculated(as at 2008 in PJ)Remaining resource (EDR + SDR)calculated (as at 2008 in PJ)

Gas basin

Gas pipelineGas pipeline(proposed)

Oil pipeline

Figure 3.16 Australia’sknowncondensateresourcesbybasin,andgasandoilpipelinessource: GeoscienceAustralia


55

CHAPTER 3: OIL

ScottReef(Torosa)intheBrowseBasin,SunriseintheBonaparteBasin).ThebigstepinthecondensateEDRin2008(figure3.17)islargelyduetothepromotionofIchthysintothiscategory.

TheEDRtoproductionratioofcondensatesince1980hasmostlybeenbetween20and50years,apartfromapeakintheearly1980s(figure3.18). In2008atcurrentlevelsofproductionAustraliahadabout30yearsofcondensatereservesremaining.

3.3.3LPGresourcesTheidentifiedresourceofnaturally-occurringliquidpetroleumgas(LPG)in2008wasestimatedat6210PJ(1475mmbbls),mostofwhichwas

assessedasEDR(table3.7).LPGrepresents20percentofAustralia’sliquidhydrocarbonresourceinenergycontentterms.LPGislessenergydensethancrudeoilandcondensate.Hence,thoughAustralia’snaturally-occurringLPGnowvolumetricallyexceedsthecrudeoilresource,thecrudeoilhasahigherenergycontent(8414PJin1431mmbblsofcrudeoil,comparedwith6210PJin1475mmbblsofLPG).

LPGisamixtureoflighthydrocarbonsthatisnormallyagasinsubsurfacereservoirsandatthesurface.However,LPGisstoredandtransportedasaliquidunderpressureandformspartofAustralia’sliquidfuelsupply.InadditiontotheLPGoccurringnaturallyingasandoilfields,LPGisalsoproducedduringtherefiningofcrudeoil.

1964 1968 1972 1976 19841980 1988 1992 1996 20082004

AERA 3.17

2000


Condensate EDR

0

16 000

14 000

12 000

10 000

PJ

8000

6000

4000

2000

18 000

YearFigure 3.17 Australia’sidentifiedcondensateresourcessource: GeoscienceAustralia

1972 1976 19841980 1988 1992 1996 200820040

2000

100

AERA 3.18

Year

s

50

YearFigure 3.18 CondensateEDRtoproductionratioinyearsofremainingproductionsource: GeoscienceAustralia


56

Table 3.7 Australiannaturally-occurringLPGresourcesrepresentedasMcKelveyclassificationestimatesasat1January2009

LPg Resources PJ mmbbl



1597 379

Total 6210 1475

Naturally-occurringLPGresourcesareidentifiedineightbasins(figure3.19).ThedistributionofLPGissimilartothatofcondensatewiththeCarnarvon,BrowseandBonapartebasinsagaindominating(85percentoftheremainingresource).TheresourceintheGippslandBasinremainssignificant(10percentofthetotal)eventhoughthisrepresentsonlyaboutaquarter of the initial resource.

In2008atcurrentlevelsofproduction,Australiahad20yearsofnaturally-occurringLPGremaining.


3.3.4 Shale oil resourcesAustraliahassignificantpotentialunconventionaloilresourcescontainedinoilshaledepositsinseveralbasins.Oilshaleisessentiallyapetroleumsourcerockwhichhasnotundergonethecompletethermalmaturationrequiredtoconvertorganicmatterto

oil.Inaddition,thefurthergeologicalprocessesofexplusion,migrationandaccumulationwhichproduceconventionalcrudeoilresourcestrappedinsubsurfacereservoirshavenotoccurred.Theunconventionalshaleoilresourcecanbetransformedintoliquidhydrocarbonsbymining,crushing,heating,processingandrefining,orbyin situheating,oilextractionandrefining(box3.2).

Australia’stotalidentifiedenergyresourcecontainedinoilshalewasestimatedat131600PJ(22390mmbbl)in2009(table3.8).However,allofthiswasclassifiedaseitherrecoverablecontingent(84600PJ,14387mmbbl)orinferred(47000PJ,8003mmbbl)resources.Thisisalargeunconventional oil resource.

Table 3.8 AustralianshaleoilresourcesrepresentedasMcKelveyclassificationestimatesasat1January2009

shale Oil Resources PJ mmbbl


84600 14387

InferredResources* 47000 8003

Total 131 600 22 390

* Thetotalinferredresourcedoesnotincludea‘totalpotential’ lowgradeshaleoilresourceoftheToolebucFormation,Queenslandestimatedtobeabout9061100PJ(equivalentto1541000mmbbls,245000GL)byBMRandCSIROin1983.source: GeoscienceAustralia2009b


Remaining: 1193 DARWIN


Remaining: 1391

CARNARVON BASINProduced: 1349Remaining: 2603

AMADEUS BASINProduced: 6

Remaining: 0.8

COOPER/EROMANGA BASINS BOWEN/SURAT BASINSProduced: 47Produced: 642Remaining: 10Remaining: 125

BRISBANE

PERTH

ADELAIDE SYDNEY

MELBOURNEGIPPSLAND BASINProduced: 2427

BASS BASIN Remaining: 646Produced: 5

Remaining: 241

HOBART

150°140°130°120°

10°

20°

30°

40°

AERA 3.19

0 750 km

LPG produced in PJ

LPG remaining resourcein PJ

Gas basin

LPG resources

Gas pipelineGas pipeline (proposed)Oil pipelineOil pipeline (proposed)

Figure 3.19 Australia’sLPGresourcesbybasinsource: GeoscienceAustralia


57

CHAPTER 3: OIL

BOx 3.2 SHALEOIL

ResourcesOilshaleisasignificantbutlargelyunutilisedsourceofhydrocarbons(shaleoil).Totalworldin-situshaleoilresourceswereestimatedin2005(thelastyearforwhichworldoilshalemarketdataareavailable)tobearound16.62millionPJ(2826billionbbl)in27countries(WEC2007).MostoftheresourceislocatedintheGreenRiveroilshaledepositintheUnitedStates.TheUSGSestimatestheGreenRiveroilshaletocontain1525billionbarrelsofoilin-placeinsomeseventeenoilshalezones(Johnsonetal.2009).OthercountrieswithsignificantshaleoilresourcesaretheRussianFederation,theDemocraticRepublicofCongo,Brazil,Italy,Morocco,Jordan,AustraliaandEstonia.Thetotalrecoverableshaleoilresourcewasestimatedatabout6.27millionPJ(1067Bbbl).Australiaisestimated tohaveabout1.3percentofworldrecoverable shale oil resources.

ProductionSmallscaleproductionofhydrocabons(kerosene,lampoil,fueloil,andotherproducts)fromoilshalebeganinseveralcountriesinthelate1800sincludingAustraliawithproductionfromthetorbanitedepositsatJoadjaCreeknearLithgowandatGlenDavis(bothinNewSouthWales)from1865.ThisproductioncontinuedthroughWorldWarIIuntil1952.Therewasalsoproductionintheperiod1910–34fromtheMerseyRivertasmanitedepositsinTasmania.ProductioninmostwesterncountriesceasedafterWorldWarIIbecauseoftheavailabilityofcheapersuppliesofconventionalcrudeoil.However,productioncontinuedinEstonia,thethenUSSR,ChinaandBrazil,peakingat46Mtofoilshaleperyearin1980(WEC2007).Totalrecordedshaleoilproductionin2005wasabout5.014mmbbl,comprising2.529mmbblfromEstonia,1.319mmbblfromChinaand1.165mmbblfromBrazil.In2008productionofshaleoilwaslimitedtoEstonia,China,andBrazilwithseveralcountries,includingIsrael,Morocco,ThailandandtheUnitedStates,investigatingthepotentialproductionofshaleoiloruseofoilshaleinelectricitygeneration(WEC2009).

Geology and extraction OilshaledepositsrangeinagefromCambriantoCenozoicandwereformedinawiderangeofdepositionalenvironmentsrangingfromfreshwaterandsalinepondsandlakescommonlyassociatedwithcoastalswamps(includingpeatswamps)tobroadmarinebasins.Oilshaleshaveawiderangeoforganicandmineralcompositionsandareclassifiedaccordingtotheirdepositionalenvironment,eitherterrestrial,lacustrineormarine.Terrestrialoilshalesarecomposedmostlyofresinsandotherlipid-rich(naturally-occurringmoleculesthatincludefats,waxesandsterols)organicmatterandplantmaterial.Lacustrineoilshales(knownaslamosite

andtorbanite)containlipid-richmaterialderivedfromalgae,whereasmarineoilshales(tasmaniteandmarinite)arecomposedoflipid-richderivedfrommarinealgaeandothermarinemicro-organisms.

Theorganicmatterinoilshale(whichcontainssmallamountsofsulphurandnitrogeninadditiontocarbon,hydrogenandoxygen)isinsolubleincommonorganicsolventsandismixedwithvariableamountsofmineralmatter,mostlysilicateandcarbonateminerals.Therearecurrentlytwomainmethodsforrecoveringoilfromoilshale.Thefirstinvolvesmining(commonlybyopen-cutmeans)andcrushingtheshale,andthenretorting(heating)it,typicallyintheabsenceofoxygen,toabout500°C.Alargenumberofoilshaleretortingtechnologieshavebeenproposedbutonlyalimitednumberareincommercialuse.Asecond,morerecentapproachinvolvesin-situextractionofshaleoilbygraduallyheatingtherocksoveraperiodofyearstoconvertthekerogen.Bothapproachesrelyonthechemicalprocessofpyrolysiswhichconvertsthekerogenintheoilshaletoshaleoil(syntheticcrudeoil),gasandasolidresidue.Conversionbeginsatlowertemperaturesbutproceedsfasterandmorecompletelyathighertemperatures.

Renewedinterestinshaleoilinrecentyearshaspromptedongoingresearchintoextractiontechnologies.Alargenumberoftechnologieshavebeenproposedandmanytrialledtoproduceshaleoil.AreportbytheUnitedStatesDepartmentofEnergysummarisesthosecurrentlybeinginvestigatedtoproduceshaleoil(USDOE2007).In-situmethodsincludeinjectinghotfluids(steamorhotgasses)intotheshaleformationviadrillholesorheatingusingelementsorpipesdrilledintotheshalewiththeheatconductedbeyondthewalls.Otherapproachesrelyonheatingvolumesofshaleusingradiowavesorelectriccurrents.In-situextractionhasbeenreportedtorequirelessprocessingoftheresultantfuelsbeforerefiningbuttheprocessusessubstantialamountsofenergy.Bothmethodsusesubstantialamountsofwaterandtypicallyproducemoregreenhousegasesthandoesextractionofconventionalcrudeoil.Currentlyover30companiesintheUnitedStatesareinvestinginthedevelopmentofcommercial-scalesurfaceandin-situprocessingtechnologieswithseveralcompaniestestingin-situtechnologiestoextractshaleoilatmorethan300mdepth(USDOE2007).

AustraliaThereisnooilbeingextractedfromoilshaleinAustralia.From2000to2004,theStage1demonstration-scaleprocessingplantattheStuartdepositnearGladstoneincentralQueenslandproducedmorethan1.5mmbblofoilusingahorizontalrotatingkilnprocess(AlbertaTaciuk


58

Process).Nooilhasbeenproducedsince2004.Thedemonstrationplantachievedstableproductioncapacityof6000tofshaleperdayandoilyieldtotalling4500bblsperstreamdaywhilemaintainingproductqualityandadheringtoEnvironmentProtectionAuthorityemissionslimits.ThedemonstrationplantproducedUltraLowSulphurNaphtha(ULSN),accountingforabout55to60percentoftheoutputandLightFuelOil,about40to45percentofoutput.TheULSN,whichcanbeusedtomakepetrol,dieselandjetfuel,hadaverylowsulphurcontentoflessthan1partpermillion.

SinceacquiringtheStuartoilshaleproject,QueenslandEnergyResourceshasundertakenadetailedtestingprogramofprocessingofthe

QueenslandoilshaleatapilotplantinColorado,UnitedStatesandsuccessfullydemonstratedtheuseoftheParahoIIverticalkilntechnologytoextractshaleoil(WEC2009).Thecompanyiscurrentlyexaminingaproposalfortheconstructionofasmall-scaletechnologydemonstrationplantattheStuartsiteusingtheParahotechnology(www.qer.com).

In2008,theQueenslandGovernmentprohibitedshaleoilminingattheMcFarlane(formerlyCondor)depositnearProserpinefor20years.TheQueenslandGovernmentiscurrentlyundertakingatwo-yearreviewonwhethertheoilshaleindustryshouldbedevelopedinthestate.OtherAustralianoilshaleindustrydevelopmentsaresummarisedelsewhere(GeoscienceAustralia2009b).

ThemajorityofAustralianshaleoilresourcesofcommercialinterestarelocatedinQueensland,inthevicinityofGladstoneandMackay(figure3.20).ThickCenozoiclacustrineoilshaledeposits(lamosite)ofcommercialinterestarepredominantlyinaseriesofnarrowanddeepextensionalbasinsnearGladstoneandMackay.From1999to2003,oilwasproducedatademonstration-scaleprocessingplant(referredtoastheStuartOilShaleProject)attheStuartdeposit

intheNarrowsBasin,nearGladstone.Theoilshalesaregradedfromabout60litrespertonneatzeropercentmoisture(LTOM)toover200LTOM,comfortablyabovethe50LTOMcut-offgenerallyregardedastheminimumrequiredforprofitableoperation.

OilshaledepositsofvaryingqualityalsooccurinNewSouthWales,Tasmania,andWesternAustraliainsedimentarysequencesofPermian,Cretaceous

DARWIN

McFarlane

Julia Creek RundleBungobine

Duaringa Stuart

Alpha

Yaamba Nagoorin

Nagoorin South LowmeadBRISBANE

PERTH

ADELAIDE SYDNEY

MELBOURNE

HOBART

150°140°130°120°

10°

20°

30°

40°

AERA 3.20

0 750 km

Shale oil

Demonstrated Resources Undifferentiated (in PJ)

Inferred resources (in PJ)

Oil shale basin

Oil shale occurence

Figure 3.20 DistributionofAustralianindicatedshaleoilresourcessource: GeoscienceAustralia


59

CHAPTER 3: OIL

andCenozoicage.Therewassomemodestscaleproductionfromtwoofthesedepositsforperiodsuptothe1950s.

Apotentialshaleoilresourceofapproximately1541000millionbarrels(9061086PJ)wasestimatedfortheToolebucFormationinnorth-westernQueenslandbythethenBureauofMineralResources(nowGeoscienceAustralia)andtheCSIRO(OzimicandSaxby1983).TheToolebucFormationisverywidespreadbut,atanaverage37LTOM,theresourceisconsideredverylowgrade.Itisnotcountedamongtheresourcesintable3.8.

3.3.5TotaloilresourcesAustralia’soilresourcesarepredominantlymadeupofconventionalliquidhydrocarbons.Crudeoilreservesareindecline,butthereisasubstantialremainingresourceofcondensateandnaturally-occurringLPGassociatedwithundevelopedoffshoregasfields.Oilshaledepositscontainalarge,unconventionalresourcewhichdoesnotcurrentlyaddtoAustralia’sliquidfuelsupplies.Apartfrom

enhancedoilrecovery(EOR),optionsforfutureliquidfuelsupplyalsoincludegas-to-liquids(GTL),coal-to-liquids(CTL)andbiofuelswhicharediscussedinotherchaptersinthisassessment.

AERA 3.21

Increased breakevenprice required

Increased technologyrequirements

Smaller volumes,easy to develop 8414 PJ

(~1400 mmbbls)Crude oil

Largervolumes, 22 380 PJdifficult todevelop (~2700 mmbbls condensate,

1500 mmbbls LPG)

131 600 PJ (~22 000 mmbbls)Contingent and inferred resource Shale Oil

6468 PJ1100 mmbbls

(estimate of scope for EOR in discovered fields)

Figure 3.21 Australianoilresourcepyramidsource: GeoscienceAustralia(adaptedfromMcCabe1998andBranan2008)

BONAPARTE BASINTotal produced: 3364


LPG remaining: 1193

BROWSE BASINTotal produced: 0


LPG remaining: 1391

CARNARVON BASIN AMADEUS BASINTotal produced: 13 357 Total produced: 112Crude oil remaining: 4839 Crude oil remaining: 24Condensate remaining: 5892 Condensate remaining: 12LPG remaining: 2603 LPG remaining: 0.8

COOPER/EROMANGA BASINSTotal produced: 2856


LPG remaining: 125 BOWEN/SURAT BASINSTotal produced: 289Crude oil remaining: 41Condensate remaining: 12PERTH BASIN LPG remaining: 10

Total produced: 143Crude oil remaining: 76

Condensate remaining: 0.2

BASS BASINTotal produced: 16

Crude oil remaining: 76 GIPPSLAND BASINCondensate remaining: 247 Total produced: 25 536

LPG remaining: 241 Crude oil remaining: 1699Condensate remaining: 753LPG remaining: 646

DARWIN

CANNING BASINTotal produced: 18Crude oil remaining: 0

BRISBANE

PERTH

ADELAIDE SYDNEY

MELBOURNEOTWAY BASINTotal produced: 11

Condensate remaining: 82

HOBART

150°140°130°120°

10°

20°

30°

40°

AERA 3.22

0 750 km

Liquid hydrocarbon (Crude Oil, Condensate& LPG) resources in PJ

Gas pipelineGas pipeline(proposed)Oil pipeline

Past production Petroleum basin


Crude oil resources

LPG resources

Figure 3.22 Australiancrudeoil,condensateandnaturally-occurringLPGresources,infrastructure,pastproductionandremainingresources



60

Table 3.9 Crudeoil,condensateandLPGMcKelveyclassificationestimatesbybasinasat1January2009

mcKelvey Basin

Class.

Total energy

PJ

Crude Oil

PJ mmbbl

Condensate

PJ mmbbl PJ

LPg

mmbbl

EDR Carnarvon 12464 4405 749 5457 928 2602 618

EDR Browse 3957 0 0 3957 673 0 0

EDR Bonaparte 4131 676 115 2264 385 1191 283

EDR Gippsland 2626 1353 230 629 107 644 153

EDR Other 945 516 88 253 43 176 42

Total eDR 24 123 6950 1182 12 560 2136 4613 1096

SDR Carnarvon 868 434 74 434 74 0 0

SDR Browse 3797 82 14 2327 396 1389 330

SDR Bonaparte 1063 529 90 534 91 0 0

SDR Gippsland 470 348 59 122 21 0 0

SDR Other 473 71 12 193 32 209 49

Total sDR 6671 1464 249 3610 614 1597 379

Total eDR + sDR 30 794 8414 1431 16 170 2750 6210 1475


Theresourcepyramid(figure3.21)highlightshowasmallervolumeofmorereadilyaccessible,highqualityresourcesareunderpinnedbylargerbutlessaccessibleresources.However,theseunconventionaloilresourcescomewithdevelopmentcostsandrisks.Technology,priceandtheirownenvironmentalimpactscaninfluenceaccesstothem.

ConventionalhydrocarbonliquidresourcesarelocatedacrosstenbasinsbutmostremainingresourcesareintheCarnarvon,BrowseandBonapartebasins(table3.9).TheinitialliquidresourcesoftheCarnarvonBasinwerenearlyequivalenttothoseofthecrudeoil-richGippslandBasin(figures3.22and3.12).

3.3.6Oilmarket

Oil productionMostofAustralia’scurrentcrudeoilproductionisfromthematureoilprovinces–theCarnarvonandGippslandbasins–whichin2007–08accountedfor62percentand18percentrespectivelyofcrudeoilproduction.TheGippslandBasinalsoaccountsforalmosthalfofAustralia’snaturally-occurringLPGproduction,althoughthishasbeendecliningsteadilysinceproductionpeakedinthemid-1980s(figure3.23).

Australia’sannualcrudeoilproductionprogressivelydeclinedbetween1985–86and1998–99from1102PJto738PJ(187.4to125.2mmbbl,29794to19905ML).However,followingthestart-upofanumberofnewoilfields,includingtheLaminaria/Corallina,Elang/KakatuaandCossack/Wanaeafields(alloffshorenorth-westernAustralia),oilproductionincreasedrapidly,peakingat1209PJ(205.7mmbbl,32704ML)in2000–01.Sincethen,crudeoilproductionhasdeclinedatarateof7percentperyear,to697PJ(117mmbbl,18602ML)in2007–08.

Domesticproductionofcondensateincreasedfromaround36PJ(6.1mmbbl,1096ML)inthefirstyearofproductionin1982–83to257PJ(43.7mmbbl,6949ML)in2007–08,withproductionreaching316PJ(53.7mmbbl,8544ML)in2002–03.Naturally-occurringLPGproductioninAustraliaalsoincreasedfromaround80PJ(19mmbbl,3021ML)in1979–80to125PJ(29.7mmbbl,4721ML)in2005–06,mainlyfromtheCarnarvonBasininWesternAustralia.In2007–08,LPGproductiondeclinedto105PJ(25.6mmbbl,4072ML).

Overthepastfouryears,anumberofoilprojectshavebeendeveloped,withsixfieldsintheCarnarvonBasinandoneeachinthePerthandBonapartebasins.Theeightfieldshaveaproductioncapacityinexcessof350thousandsofbarrelsperday(kbpd,table3.10).

TheCliffHeaddevelopmentrepresentsthefirst–andcurrentlytheonly–offshoreproducingoilfieldinthePerthBasin.TheCliffHeadfieldismodestinsize(around10mmbbls),theaccumulation’ssizehavingbeenreviseddownwardsfollowingfurtherappraisaldrilling.Thedecisiontodevelopthefieldoccurredduringaperiodofrisingoilpricesthathelpedoffsettheimpactofthisappraisaldrilling.TheEnfield,StybarrowandVincentfields,alllocatedinthedeeperwatersoftheoffshoreExmouthSub-basin,CarnarvonBasin(figure3.24),signaltheadditionofasignificantnewoilproducingareaforAustralia:recoverablecrudeoilvolumesacrossadozenfieldstotalaroundhalf a billion barrels.

Incontrasttothenearly6billionbarrelsofconventionaloilproducedinAustraliasincethe1960s,onlyafewmillionbarrelshavebeenproducedfromoilshale.Therewasintermittentandsmallscaleproductionfrom1865to1952whentherewasnoindigenousconventionalcrudeoilproduction.Another


61

CHAPTER 3: OIL

0

35 000

30 000

25 000

20 000

ML

15 000

10 000

5000

1983-84 1987-88 1991-92 1995-96 1999-00 2003-04 2007-08

a) Crude oil

Year

b) Condensate

01983-84 1987-88 1991-92 1995-96 1999-00 2003-04 2007-08

Year

9000

8000

7000

6000

5000

ML

4000

3000

2000

1000

45 000

40 000

35 000

30 000

25 000

20 000

15 000

10 000

ML

5000

0

c) LPG

01983-84 1987-88 1991-92 1995-96 1999-00 2003-04 2007-08

Year

d) Total primary oil5000

4500

4000

3500

3000

ML 2500

2000

1500

1000

500

1987-88 1991-92 1995-96 1999-00 2003-04 2007-08

Year1983-84

AERA 3.23

Northern South WesternQueensland Victoria

Territory Australia Australia

Figure 3.23 Australianoilproductionsource: ABARE2008

Table 3.10 Crudeoilandcondensateprojectsrecentlycompleted,asatOctober2009

Project Company Basin start up Capacity Capital expenditure

($m)

CliffHeadoilfield ROCOil Perth 2006 20kbpd 285

Enfieldoilfield WoodsideEnergy/Mitsui Carnarvon 2006 100kbpd 1480

Puffinoilfield AEDOil/Sinopec Bonaparte 2007 30kbpd 150

WoollybuttoilfieldSouthLobe TapOil Carnarvon 2008 6–8kbpd 143

Perseus-over-Goodwynproject WoodsideEnergy Carnarvon 2008 na 800

Stybarrowoilfield BHPBilliton/WoodsideEnergy

Carnarvon 2008 80kbpd 874

Vincentoilfield(stage1) WoodsideEnergy/Mitsui Carnarvon 2008 100kbpd 1000

Angelgasandcondensatefield

Woodside/BHPBilliton/BP/ChevronTexaco/Shell/JapanAustraliaLNG

Carnarvon 2008 310PJpagas,50kbpdcondensate

1400

source: ABARE;GeoscienceAustralia

unconventionaloilresource,tarsandsintheonshore

GippslandBasin,wasexploitedduringWorldWarII

andinthepost-warperiod(Bradshawetal.1999).

ThehighqualityoilshaledepositsintheNarrows

Basin,nearGladstone,havebeenthesubjectofpre-

developmentstudiesforseveraldecades(McFarland2001).TheStuartOilShaleProjectachievedproductionfromademonstration-scaleprocessingplantintheperiod1999to2004,producingmorethan1.5millionbarrelsofoilusingahorizontalrotarykilnretort(box3.2).


62

50 000

40 000

30 000

20 000

10 000

0

ML

1969-70 1975-76 1981-82 1987-88 1993-94 1999-00 2005-06Year

Griffin

VincentStybarrow

Pyrenees

Enfield

WESTERNAUSTRALIA

EXMOUTH

0001

005

002

50

0 25 km

AERA 3.24

Field outline information is provided by GP Info, an Encom Petroleum Information Pty Ltd product.

NTQLD

WASA

NSW

VIC

TAS

114°30'

21°15'

114°00'

21°45'

Gas fieldBathymetry contour (metres)

Oil field

Gas pipeline100

Figure 3.24 Oilandgasfieldsandbathymetry,ExmouthSub-basin,CarnarvonBasinsource: GeoscienceAustralia

Petroleum refiningThepetroleumrefiningindustryinAustraliaproducesawiderangeofoilproducts,suchasgasoline,diesel,aviationfuelandLPG,fromcrudeoilandcondensatefeedstock.In2007–08,Australianrefineriesconsumed1333PJ(226.7mmbbl,36043ML)ofcrudeoilandcondensate,ofwhichimportsaccountedforaround68percent(figure3.25).MostoftheimportsareusedinthedomesticpetroleumrefiningindustryinEasternAustralia,tooffsetthedecliningproductionfromtheGippslandBasin.

Imports of refinery feedstocks

Refinery feedstock from domestic production

50 000

40 000

30 000

20 000

10 000

ML

01969-70 1975-76 1981-82 1987-88 1993-94 1999-00 2005-06

AERA 3.25

Year

AERA 3.25

Figure 3.25 SourcesofAustralianrefineryinputssource: ABARE2009b

TherearesevenmajorpetroleumrefineriescurrentlyoperatinginAustralia,managedbyfourcompanies—BP,Caltex,MobilandShell(table3.11).Thesesevenrefinerieshaveacombinedcapacityofaround42.7billionlitresayear.ThelargestoftheseareBP’sKwinanarefineryinWesternAustraliaandCaltex’sKurnellrefineryinNewSouthWales.ArefineryatPortStanvacinSouthAustraliaceasedproductionin

Imports of refinery feedstocks

Refinery feedstock from domestic production

Table 3.11 Australianrefinerycapacity

Operator year commissioned

Capacity mLpa

New south Wales

Clyde Shell 1928 4930

Kurnell Caltex 1956 7320

Queensland

BulwerIsland BP 1965 5110

Lytton Caltex 1965 6270

south australia

PortStanvaca Mobil 1963 (4520)

Victoria

Altona Mobil 1949 4530

Geelong Shell 1954 6380

Western australia

Kwinana BP 1955 7960

Totalb 42 500

Notes: aThePortStanvacrefineryceasedproductioninJuly2003; bTotalofcurrentlyoperatingrefineries;MLpamillionlitresperannumsource: AustralianInstituteofPetroleum2007


63

CHAPTER 3: OIL

2003andiscurrentlyunderacareandmaintenanceregime.Itsclosureisoneofthereasonsbehindadeclineintotalrefineryoutput,whichhasledtoincreasedimportsofrefinedpetroleumproducts.

Consumption Oilissecondonlytocoal,intermsofsharesinAustralianprimaryenergyconsumption.However,itssharehasbeendecliningsteadily,fromahighofalmost50percentofprimaryenergyuseinthelate1970stoaround34percentin2007–08.Priorto1979,Australia’sprimaryoilconsumptionhadgrownstronglyatarateofaround5percentperyear.However,sincethen,consumptionhasbeengrowingatamoderaterateofaround1percentperyear toreach1942PJ(347mmbbls,55168ML)in2007–08(ABARE2009b).

ThetransportsectoristhelargestconsumerofoilproductsinAustralia,currentlyaccountingforaround70percentoftotaluse,comparedwith50percentinthe1970s(figure3.26).Theincreasedsharehasoffsetthedeclineintheindustrialsector’sshare,downfromabout40percentinthe1970stoabout20percentin2007–08.

0 0

20

40

60

80

2500 100

2000

1500

PJ %

1000

500

AERA 3.26

1973- 1978- 1983- 1988- 1993- 1998- 2003- 2007-74 79 84 89 94 99 04 08

Year

Total oil Transport sector shareconsumption (PJ) of consumption (%)

Share of primaryenergy consumption (%)

Figure 3.26 Australianoilconsumption,shareoftotalenergyconsumptionandtransportsectorconsumption

source: ABARE2009b

TradeAustraliaisanetimporterofcrudeoilandoilproductsbutanetexporterofLPG.Morethan60percentofdomesticcrudeoilandcondensateproduction(18.6billionlitres,688PJ,117mmbbl)wasexportedin2007–08,predominantlyfromtheCarnarvon BasininWesternAustraliatoAsianrefineries. ThisreflectstheirrelativeproximitytothemajorproducingfieldscomparedwiththerefineriesonAustralia’seastcoast.Australiaalsoimported26billionlitres(962PJ,163.5mmbbl)ofcombinedcrudeoilandcondensatetomeetitsdomesticrefineries’

-2

2

4

6

8

10

12

14

0

7

6

5

4

3

2

1

0

a) Primary oil

-11989-90 2007-081992-93 1995-96 1998-99 2001-02

BL

2007

-08

$billi

on

2004-05Year

16

14

12

10

8

6

4

2

0

-2

BL

-4 -4

-2

0

2

4

6

8

10

12

14

b) Refined oil products16

1992-93 1995-96 1998-99 2001-02

AERA 3.25

1989-90 2004-05 2007-08Year

2007

-08

$billi

on

Volume (BL) Value ($b)

Figure 3.27 Australia’snetoilimports–volumeandvalue

source: ABARE2008and2009c

requirements.In2007–08,Australia’snetimportsofprimaryoil(crudeoil,condensateandLPG)werearound7.7billionlitres(383PJ,48.4mmbbl), valuedat$5.5billion.

Formostofthe1990sAustraliawasanetexporterofrefinedoilproducts.Stronggrowthinconsumptionresultedinnetimportsfromaround1999–2000(figure3.27).However,importsincreasedsignificantlyfollowingtheclosureofthePortStanvacrefineryin2003andamountedtoaround15billionlitres(555PJ,94mmbbl)in2007–08.Theseimportswerevaluedataround$12billion.

Oil supply–demand balanceFigure3.28providesasupply–demandbalanceforprimaryoil–productionfromoilfieldsandconsumptionindomesticrefineries(refineryfeedstock).Exceptforabriefperiodinthemid-


64

0

1800

1600

1400

1200

1000

PJ

800

600

400

200

1969-70 2007-081975-76 1981-82 1987-88 1993-94 1999-00

AERA 3.28

Year

Naturally occurring Crude oilLPG production production

Condensate Consumptionproduction (refinery input)

(refinery output)

0

2250

2000

1750

1500

1250

PJ

1000

750

500

250

1965-66 2007-08

ProductionConsumption

AERA 3.29

1971-72 1977-78 1983-84 1989-90 1995-96 2001-02Year

Figure 3.28 Australianprimaryoilsupply–demandbalance

source: ABARE2009b

Figure 3.29 Australianrefinedoilproductssupply–demand balance

source: ABARE2009b

1980s,Australiahasreliedonnetimportstomeetdomesticrefineries’needs.In2007–08,refineriesinAustraliaused1462PJoffeedstockwitharound25percentofthisinputmetfromimports.

Figure3.29providesasupply–demandbalanceforrefinedoilproducts,thatis,oilproductsproducedfromdomesticrefineriestomeetdomesticdemandforliquidfuels.Incontrasttoprimaryoil,Australiawasgenerallyselfsufficientintermsofrefinedoilproductsforsubstantialperiodsduringthe1980sand1990s,becauseAustraliahadenoughrefinerycapacitytomeetdomesticdemandforoilproducts.SincetheclosureofthePortStanvacrefineryin2002–03,however,netimportsofoilproductshaverisensteadily,andin2007–08netimportsaccountedforaround30percentoftotalconsumption.

3.4Outlookto2030forAustralia’sresourcesandmarket

3.4.1KeyfactorsinfluencingtheoutlookForthepurposesofthisassessment,akeyassumptionisthatdemandforoilwillcontinuetogrowandwillbemetfromavarietyofsourcesincludingimports,domesticconventionalcrudeoilandcondensateproduction,andunconventionalsources.GiventherapidchangesinthepastdecadewhereAustraliamovedfromnetexportertoimporterofoil,furthersignificantchangeisexpectedintheoutlookperiodto2030.Therewillbecontinuedproductionfromknownfields,andthedominanceofthebasinsoffshorenorth-westernAustraliawillbeentrenchedasproductioncomesonstreamfromcondensate-richgasfieldssuchasIchthysintheBrowseBasin,andasthenewlydevelopedExmouthSub-basinoftheCarnarvonBasinreachespeakproduction.Themajoruncertaintiesinindigenousoilsupplyarewhetherexplorationeffortsinfrontierbasinswillbesuccessfulinfindinganewoilprovince;whetherdiscoveredresourcesarecommercialised;andtheroleofunconventionaloilsources(gas-to-liquids,coal-to-liquids,enhancedoilrecoveryandshaleoil)aswellasalternativetransportfuelssuchas biofuels.

Thisoutlookisaffectedbyvariousfactors,includingthegeologicalcharacteristicsoftheresource(suchaslocation,depth,quality),economiccharacteristicsoftheresource(suchascost),developmentsintechnology,infrastructureissues,fiscalandregulatoryregime,andenvironmentalconsiderations.Themarketpriceofoilisperhapsthemostimportantfactorofallindeterminingtheincentivesforoilexplorationanddevelopment,especiallyforunconventionaloilresources.

Oil pricesAustraliaisaproducer,exporterandimporterofcrudeoilandrefinedproducts.Sincederegulationoftheoilsectorinthelate1980s,Australia’soilmarkethasbeenopen,competitiveandfullyexposedtoglobalmarketconditions.

Globaloilpricesaresubjecttobothshort-termpricemovementsandlonger-termpricetrends.Short-termoilpricemovementsrelatetoinfluencesondemandandsupplyofoilinthemarketplace.Theseincludecyclical/seasonaloildemand,theimpactofsupplydisruptionssuchashurricanes,accidentsorsabotage,riskpremiumsassociatedwithgeopoliticaltensions,andextraneousshockstotheeconomysuchastheglobalfinancialcrisis.Indomesticmarketterms,significantexchangeratevariationsandmarketspeculationcanalsoaffectshort-termoilpricemovements.

Inthelongerterm,animportantdriverofoilpriceswillbetheunderlyingmarginalcostofoilproduction,


65

CHAPTER 3: OIL

140

120

100

80

60

40

20

0

Prod

uctio

n co

st ($

200

0)

0 1000 2000 3000 4000 5000 6000 7000 8000 9000 10 000Resources (billions of barrels)

Deepwater andultra deepwater

AERA 3.30

Coal to liquidsOil shales

Gas toliquids

Arc

tic

CO

-E

OR

2 EO

R

Heavy oiland bitumen

lO

ther

Produced MENA

conv

entio

nal

oi

whichwillhaveimplicationsforoilsupply,andacombinationoflongtermeconomicgrowthanddemandsideefficiencyimprovements,whichwill haveimplicationsforoildemand.

TheIEA’srepresentationoftheavailabilityofoilresourcesandassociatedproductioncostsisshowninfigure3.30.Itshowsthatjustover1trillionbarrelsofoilhavealreadybeenproducedatacostofbelowUS$30perbarrel.Therearepotentiallyaround2trillionbarrelsofoilremainingthatcanbeproducedatacostbelowUS$40perbarrel,aroundthree-quartersoftheminOPECmembercountriesintheMiddleEastandNorthAfrica(MENA).Reflectingitslarge,lowcostreserves,OPEC’sshareofproductionisprojectedtoincreasefrom44percentin2008to52percentby2030(IEA2009c).OPEC’sdecisionsonoilfielddevelopmentwillbecomeprogressivelymoreimportantfortheworldoilmarket.

TheimportanceofOPEC’sinvestmentdecisionswillbeunderpinnedbytheincreasingcostofnon-OPECproduction.Themajorityofnewnon-OPECinvestmentislikelytobeinoffshoreoilfields,increasinglyindeeperwater,furtherbelowtheseabedandagreaterdistancefromshore(includingfieldswithintheArcticcircle).ThecostofoilproductionfromdeepwatersourcesandthoseneedingadvancedtechniquessuchasEORisestimatedtobebetweenUS$35andUS$80abarrel,similartothecostofproductionfromoilsands.ThecostofproducingoilfromtheArcticcouldreachUS$100abarrelbecausethelargecostassociatedwithdevelopinginfrastructureinanenvironmentallychallengingarea(IEA2008).

Theincreaseinoilpricesoverthepastfiveyearshasencouragedexplorationactivityinfrontierregions

Figure 3.30 LongtermoilsupplycostcurveNote: MENA–MiddleEastandNorthAfrica

source: IEA2008

suchastheCamposBasinoffthecoastofBrazilandindeeperwaterintheGulfofMexico.TheBrazilianTupifield,forexample,oneofthemostsignificantoildiscoveriesinthepast20years,is5kmbelowthesurfaceoftheAtlanticOceanandbelowasaltlayerupto2kmthick.InSeptember2009,BPannouncedthediscoveryoftheTiberoilfieldintheGulfofMexico.Theoilfieldis10700mbelowtheoceanfloorandinwaterthatisaround1200mdeep,makingitoneofthedeepestdrilledintheindustry(BP2009b).Thecontinueddevelopmentandapplicationofdeepwaterdrillingandfielddevelopmentwilleventuallyleadtolowerproductioncostsandtheexpansionoffrontierareaswherenewoilfieldscanbedevelopedindeeperwaterandfurtherbelowtheseabed,buttheprocessatpresentiscostly.

Syntheticoilproduction,suchasshaleoil,CTLandGTL,hasthehighestproductioncosts,estimatedbytheIEAatuptoUS$110perbarrel.Thismakesnoallowanceforanycostsassociatedwiththeabatementofgreenhousegasemissionsthatareby-productsoftheprocess.AtpresentthereareveryfewcommercialCTLandGTLprojects,reflectinglargecapitalandproductioncostsandtechnicallychallengingproductionprocesses.

ThefutureexpansionofGTLcapacitywilldependoncompetingusesforgassuchasforelectricitygeneration,transportorexportbypipelineorasLNG.OneofthechallengesforCTLismanagingthehighCO

2output.Eachbarrelofoilproducedfromthis

technologyreleasesbetween0.5and0.7tonnesofCO

2,comparedwitharound0.2tonnesofCO

2 from

abarrelofoilfromtheGTLprocess(IEA2008).


66

GTLplantsareoperatinginQatar,SouthAfricaandMalaysiaandtherehasbeenoutputfromanexperimental(500bblsperday)plantinJapan.ThereisoneCTLplantinSouthAfrica.

IncomparisontoGTLandCTL,productionfromoilshaleisthemoreuncertain,givenitsenergyandcarbonintensity.ThereissomeoilproductionfromoilshaleinBrazil,ChinaandEstonia.Theintroductionofapriceforcarbonwouldfurtherincreasethecostofshaleoilextraction.

Recenthighoilpriceshaveencouragedinvestmentintechnologytoimproveextractionofoilfromoilsandsandresearchtocommercialiseoilproductionfromcoalandgas.IftheR&Dissuccessful,itshouldenableproductionofincreasedquantitiesofoilfromunconventionalsources.However,despitetherecentR&Deffort,productioncostsfortheseunconventionalsourceshaveallincreased,associatedwithhighercapitalandoperatingcosts.

FurtherinformationonthelongtermoutlookforoilpricesiscontainedinChapter2.

Oil demandThetwofactorsexpectedtoinfluenceoildemandoverthenexttwodecadesarethecontinueddecreaseinoilintensityinOECDeconomiesandtheincreasedoilconsumptioninnon-OECDeconomiesassociatedwithstrongeconomicgrowth.

IntheOECD,oilintensity(theamountofoilconsumedperunitofGDP)hasbeendecreasingsincetheoilshocksofthe1970s(figure3.31).Oneofthedriversofthistrendhasbeenthemoveawayfromoil-firedelectricitygenerationcapacity,tocoal,gasornuclearpower.Theincreaseinpricesduring2007andthefirsthalfof2008islikelytoreinforcethistrendandwillencourageanalogousresponsesinotherareasofdemandsuchasthetransportsector.Improvedfuelefficiency,increaseduptakeofalternativetransportfuelsanddevelopmentofalternativetransportmodesareallpossibleimpacts.Thecontinueddecreaseinoilintensityalsocomplementsbroaderenvironmentalandenergysecuritypolicygoals.

3.5

3.0

2.5

2.0

1.5

1.0

0.5

01972 1977 1982 1987 1992 1997 2002 2007

Oil

cons

umpt

ion

(bar

rels

per

day

)pe

r rea

l GD

P (2

000

US$

)

OECD

Non-OECD

AERA 3.31

Year

Figure 3.31 OilintensityofGDPsource: ABAREestimatesfromIEA2009bdata

Non-OECDeconomies,includingChinaandIndia,areprojectedtogrowstronglyovertheoutlookperiod.Historically,therehasbeenastrongcorrelationbetweeneconomicgrowthandoilconsumption,drivenbyhigherpersonalincomesandincreaseddemandforpersonaltransportandvehicleownership.TheIEAprojectsthat,by2030,non-OECDeconomieswillaccountforaround53percentofworldoilconsumption,comparedwith41percentin2008(IEA2009c).

Resource characteristicsInAustralia,theinitialdepositionalenvironmentsandsubsequentmaturationhistoryafterburialthatarerequiredtoproduceandpreservecrudeoilaccumulations(Box3.1)haveoccurredlessfrequentlythanthegeologicalconditionsthathaveresultedinnaturalgasaccumulations.Australia’sidentifiedconventionalpetroleumresourcesaredominatedbywidelydistributednaturalgas.Incontrast,themajorknownaccumulationsofcrudeoilarerestrictedtotheGippslandBasinandfive‘oily’sub-basins(Longleyetal.2002)alongthenorth-westmargin.Thisdistributioniscontrolledbytheoccurrenceofdeep,narrowtroughscontainingmatureoilsourcerockswhichwereformedaroundthecontinent’smarginsasitbrokeapartfromGondwana.TheGippslandBasinisaworldclassoilprovincewithanumberofgiantfields:itisexceptionalintheAustraliancontext,havingthegreatestthicknessofyoung(Cenozoic)sediments.MostofAustralia’scrudeoilhascomefromthisonesmallbasinbeingsourcedfromanoilkitchen(theCentralDeep)onlyabout50kmwide(figure3.32).

Similarly,thecrudeoilintheExmouth,BarrowandDampiersub-basinsoftheCarnarvonBasin,andintheVulcanSub-basinandtheLaminariaHigh–FlamingoSynclineoftheBonaparteBasinisderivedfromnarrowLateJurassictroughsfilledwithoil-pronesourcerocks.Somecrudeoilaccumulationshavebeenpreservedintheolder(Paleozoic)largelyonshorebasinsbutthemajordiscoveredresourcesandthegreatestpotentialforfuturefindsareoffshore.

ThecondensateandLPGresourcesarealsopredominantlylocatedinoffshorebasins,especiallyingiantgasfieldsontheNorthWestShelf.Gasliquidsarenotpresentinthelargecoalseamgas(CSG)resourcesidentifiedinonshoreeasternAustralia.

Australianshaleoilresourcesarevariableinorganicrichnessandmoisturecontent.ThoseinCenozoicbasinsofeasternQueenslandarethickandrelativelyshallowdepositswithviableoilyields,andhavealowcarbonatecontentwhichdoeshaveadvantagesinprocessing,includinglessCO

2 release.

Technology developmentsThedevelopmentofconventionaloilresourcesinthepasthasbenefitedfromsignificanttechnological


67

CHAPTER 3: OIL

VICTORIAORBOST

BAIRNSDALE

gton Fault SystemWellin Northere nk Pa laL tformNorthern Terrace

SALE Fault SystRose edale m

SnapperMarlinBarracouta

Fortescue/HalibutCentral DeepBream BassDarr iman CaF na yos e u

oF r lt nt KingfishFau Systel mt

System

GippslandSouthern Platform Rise

0 50 km

500

10002000

3000

AERA 3.32

NTQLD

WASA

NSW

VIC

TAS

Basin outline

Gas field

Oil field

FaultBathymetry contour (metres)100

149°148°147°

38°

39°

Field outline information is provided by GP Info, an Encom Petroleum Information Pty Ltd product. Figure 3.32 GippslandBasinshowingoilandgasfieldsandstructuralelementssource: GeoscienceAustralia,fromdataprovidedbyGeoScienceVictoria

changeoverasustainedperiodoftime,leadingtoincreasedaccesstoreservoirs,increasedrecoveryofreserves,reducedcostsofexplorationandproduction,andreducedtechnicalandeconomicriskstothedevelopmentofoilprojects.Therearesimilartechnologicaladvances–andneeds–indevelopingunconventionalresources.Botharediscussedinmoredetailbelow.

Development of exploration technologyExplorationinvolvesanumberofgeophysicalanddrillingactivitiestodeterminethelocation,size,type(oilorgas)andqualityofapetroleumresource.Priortoareaselection,initialregionalstudies(figure3.33)mayusenon-seismicsurveytechniques(gravity,magneticandgeochemicalsurveys,satelliteimageryandsea-bedsampling)todefinesedimentarybasinsandtodetermineifthereareanyindicationsofnaturalhydrocarbonsseepage.Recenttechnologicaldevelopments,suchasaccurateglobalpositioningsystems,improvedcomputingpower,andalgorithmsforreprocessingexistingseismicdataandadvancedvisualisationtechniquesusedtocombinedifferentdatasets(Wilkinson2006),haveenhancedthevalueofthisphaseoftheexplorationprocess,especiallyinoffshorefrontierbasins.InAustralia,withitslargelyunder-exploredvaston-andoffshorejurisdiction,governmenthastakenanactiveroleinprovidingthisregionalscalepre-competitiveinformationtostimulateexploration.

Hashimotoetal.(2008)demonstratehowavarietyofgeophysicalandotherdatasetscanbeintegratedtoassessthestructureandpetroleumpotentialoftheremotefrontierCapelandFaustbasinsoffshorefromeasternAustralia.Figure3.33isa3DviewacrosstheundrilledCapelandFaustbasinsshowingseismiclinesintegratedwithgravityimagery.Thesedatasetshaveassistedintheidentificationofpotentiallyprospectivethicksedimentarydepocentres,boundingfaultsandstructuralhighsunderlainbyshallowbasementwithinthisvastfrontierarea.

Oncetheprospectiveareaislocated,moredetailedseismicsurveytechniquesareusedtodeterminesubsurfacegeologicalstructures.Advancesin3Dseismicimagingcannowdisplaythesubsurfacestructureingreaterdetail(Wilkinson2006)andamplitudeanalysiscanrevealpotentialpetroleum-bearingreservoirs,contributingtorecenthighdrillingsuccessratesintheCarnarvonBasin(WilliamsonandKroh2007).Developmentsinexplorationdrillingnowallowprospectivestructuresidentifiedonseismictobetestedinwaterdepthsbeyondtwo and half kilometres.

Development of production technologyForonshorefields,developmentproceedsinstepwiththeappraisaldrilling.Inoffshorefields,however,theoptimalnumberandlocationofdevelopmentwellsmustbeidentifiedpriortoproceedingwith thedevelopment.


68

AERA 3.33

NTQLD

WASA

NSW

VIC

TAS

Fault

Figure 3.33 Integratedseismicandgravitydatashowingthelocationofmajorfaults,sedimentarydepocentres(gravitylowsdenotedinbluetones)andareasofshallowbasement(gravityhighsdenotedinredtones)fromtheremoteCapelandFaustbasins


Oilproductionrequirestheestablishmentofproductionwellsandfacilities.Attheinitialstageofproduction,thenaturalpressureofthesub-surfaceoilreservoirforcesoiltoflowtothewellhead.Thisprimaryrecoverycommonlyaccountsfor25to30percentoftotaloilinthereservoir(CEM2004),thoughsomeoffshoreAustralianreservoirshaverecoveryratesof70or80percentsupportedbyanaturalstrongwaterdrive,asinthecaseoftheGippslandBasin.Morecommonly,advancedrecoverytechniquesareemployedtoextractadditionaloilfromthereservoir,includinginjectingwaterorgasintothereservoirtomaintainthereservoir’spressure.Pumpscanalsobeusedtoextractoil.Theseconventionaltechniques can increase the additional amount of recoverableoilbyaround15percent.

Enhancedoilrecovery(EOR)isamoreadvancedtechniquethathasbeendevelopedtoextractadditionaloilfromthereservoir.Thistechniquealterstheoilproperties,makingitflowmoreeasily,byinjectingvariousfluidsandgases,suchascomplexpolymers,CO

2andnitrogen,toenablemore

oiltobeproduced.Thistechniquecouldincreaseoilrecoverybyanadditional40percent,butiscostlytoimplement(IEA2007).Currently,thereare11countries,includingAustralia,participatingintheIEA’sEORImplementingAgreement,whichencouragesinternationalcollaborationonthedevelopmentofnewoilrecoverytechnologies,includinglesscostlyEORtechnology.Whilethesetechniqueshavebeenemployedinthepast,currentlythereisnoEORinAustralia.

Bottom-supported Floating

Submersible Jack-up Semi-submersible Drillship

Thrusters

~50 m

~100 mAnchor chain

Riser

Approximate maximum water depth shown in metres (m)

~600 m ~1500 m AERA 3.34

Figure 3.34 Typesofoffshoredrillingvesselssource: Wilkinson2006


69

CHAPTER 3: OIL

Reflectingthelargenumberofoilresourceslocatedoffshore,mostR&Dhasbeendirectedtowardoffshoretechnologies.Thereareseveralpossibledevelopmentoptionsforoffshoreoilprojects,basedonbottom-supportedandfloatingproductionfacilities.Thedevelopmentoftheseoptionsisdependentonseveralfactorsincludingresourcetype,reservoirsize,waterdepthanddistancefromshore.Bottom-supportedplatformdevelopmentsaresuitableforrelativelyshallowwaterdepth(figure3.34).

Accesstodeepwaterfieldshasbecometechnologicallyfeasiblewiththerecentd

Chapter 3 Oil - Geoscience Australia · Chapter 3 Oil 3.1 Summary Key messages • Oil is the most widely used primary source of energy globally. It plays a critical role as a transport

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