110817-01: Elinor Alexander Shaping the Cooper Basin's 21st century renaissance 1 Shaping the Cooper Basin's 21st century renaissance The Department of Manufacturing, Innovation, Trade, Resources and Energy (DMITRE) SA has been successfully using competitive acreage releases to manage highly prospective Cooper Basin acreage since 1998. The expiry of long-term exploration licenses enabled the most significant structured release of onshore Australian acreage in the industryʼs history—it has generated: • 32 petroleum exploration licences (PELs) from ~70,000 km 2 acreage; • $432 million in guaranteed work program bids; • 70 new field discoveries; • $107.6 million royalties and $1.4 billion sales; and, • increased gas supply-side competition. Cooper acreage turnover has also changed the makeup of Australiaʼs onshore exploration industry from numerous company-making discoveries. Since 1998, 10 acreage releases have been staged, enabled by the Petroleum Act 2000 (now the Petroleum and Geothermal Energy Act 2000), conjunctive agreements with Native Title claimants, access to multiple-use Innamincka and Strzelecki Regional Reserves, and transparent application and bid assessment processes. Despite delays, most recently due to flooding, all but three of the original PELs are in their second term and relinquished acreage has been incorporated into subsequent releases. All work-program variations have been kept above the second bid score (except one, where the second ranked bidder was consulted and approved the change) preserving bidding system integrity. DMITRE is planning new Cooper Basin acreage releases while contemplating acreage management options for emerging unconventional plays. Industry input to map the best possible future for the SA Cooper Basin continues to be welcomed. Regulatory framework State and Commonwealth agencies are responsible for managing the communityʼs in-the- ground minerals and energy resource assets. South Australiaʼs asset-management approach aims to maximise the net public benefit derived from discovered and undiscovered mineral and energy resources. DMITRE is the lead agency facilitating ecologically sustainable petroleum exploration and development in SA. Its operations cover promotion of petroleum
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110817-01: Elinor Alexander Shaping the Cooper Basin's 21st century renaissance
1
Shaping the Cooper Basin's 21st century
renaissance
The Department of Manufacturing, Innovation, Trade, Resources and Energy (DMITRE) SA
has been successfully using competitive acreage releases to manage highly prospective
Cooper Basin acreage since 1998. The expiry of long-term exploration licenses enabled the
most significant structured release of onshore Australian acreage in the industryʼs history—it
has generated:
• 32 petroleum exploration licences (PELs) from ~70,000 km2 acreage;
• $432 million in guaranteed work program bids;
• 70 new field discoveries;
• $107.6 million royalties and $1.4 billion sales; and,
• increased gas supply-side competition.
Cooper acreage turnover has also changed the makeup of Australiaʼs onshore exploration
industry from numerous company-making discoveries. Since 1998, 10 acreage releases have
been staged, enabled by the Petroleum Act 2000 (now the Petroleum and Geothermal Energy
Act 2000), conjunctive agreements with Native Title claimants, access to multiple-use
Innamincka and Strzelecki Regional Reserves, and transparent application and bid
assessment processes.
Despite delays, most recently due to flooding, all but three of the original PELs are in their
second term and relinquished acreage has been incorporated into subsequent releases. All
work-program variations have been kept above the second bid score (except one, where the
second ranked bidder was consulted and approved the change) preserving bidding system
integrity.
DMITRE is planning new Cooper Basin acreage releases while contemplating acreage
management options for emerging unconventional plays. Industry input to map the best
possible future for the SA Cooper Basin continues to be welcomed.
Regulatory framework
State and Commonwealth agencies are responsible for managing the communityʼs in-the-
ground minerals and energy resource assets. South Australiaʼs asset-management approach
aims to maximise the net public benefit derived from discovered and undiscovered mineral
and energy resources. DMITRE is the lead agency facilitating ecologically sustainable
petroleum exploration and development in SA. Its operations cover promotion of petroleum
110817-01: Elinor Alexander Shaping the Cooper Basin's 21st century renaissance
2
acreage opportunities through marketing and providing geoscientific data and information,
regulating the upstream petroleum industry, and optimising royalty-income streams.
DMITRE regulate onshore petroleum acreage through the Petroleum and Geothermal Energy
Act 2000, which established a formal legislative framework for competitive tenders (both work
program and cash bidding) and over-the-counter applications. Work-program bidding was
established to allocate all petroleum exploration tenements in producing basins (i.e. the
Cooper and Otway basins), which are gazetted competitive tender regions. Competitive
tenders were first applied to manage the expiry of PELs 5 and 6 across the Cooper Basin in
February 1999—one of the most significant staged releases of highly prospective Australian
onshore acreage.
The selection of winning bids is achieved by a scoring system that establishes a 'risked net
present value in well equivalents' as the basis to rank work program bids (Morton and
Alexander, 2002). The scoring system has been adapted for each Cooper and Otway basin
acreage release based on the density of existing exploration data, size of the block(s), and
the best technology to evaluate petroleum potential. For example, scores for new seismic
acquisition in a block that already has excellent seismic coverage and ready-to-drill prospects
would be lower relative to drilling in that bid round.
Alternatives to work program bidding include cash bidding and first-in-best-dressedʼ or over-
the-counter applications—the latter are accepted for frontier SA basins with limited
infrastructure, seismic, and drilling coverage; thus, with higher exploration uncertainties. Cash
bidding has not been used for offshore Australian permits since 1993 and was tried with a
work program component unsuccessfully in 2001 for small Cooper Basin blocks (former
Petroleum Production Licenses [PPLs]). The Federal Governmentʼs Energy Policy White
Paper (November 2011) reconsiders cash bidding for highly prospective offshore areas. The
Queensland Government introduced cash bidding in January 2012. APPEA have opposed
cash bidding because it perceives that money would be diverted from exploration to cash-
bidding auctions.
Cooper Basin bidding rounds
Work program bidding was used from the mid-1980s for releases in the Otway, Officer, and
Stansbury basins and for acreage relinquished by the Delhi-Santos JV (Arrowie, Arckaringa,
Pedirka and Simpson, Basins). These acreage releases provided an opportunity to test
acreage management and competitive-tender approaches for the expiry of PELs 5 and 6. Ten
rounds of work-program bidding have been conducted in the SA Cooper Basin since 1998