PETROLEUM EXPLORATION

The Hon. R.P. WORTLEY (14:53): My question is to the Minister for Mineral Resources Development. The Cooper Basin is widely recognised for its excellent exploration potential for petroleum explorers. Will the minister please provide information on the significance of the recent gas discovery by Beach Petroleum in the Cooper Basin and its impact on stimulating additional petroleum exploration investment in South Australia?

The Hon. P. HOLLOWAY (Minister for Mineral Resources Development, Minister for Urban Development and Planning, Minister for Small Business) (14:54): Gas has been produced from the Cooper Basin since 1969 and oil has been produced since 1982, after billions of dollars of investment by the Santos joint venture.

This decade, the Cooper Basin has attracted record numbers of explorers new to the basin who have solely or in joint venture participated in 'company-making' oil discoveries, after committing to very high exploration tenement work programs.

Adelaide-based Beach Petroleum's high level of recent exploration success in the Cooper Basin, particularly along its western flank, has made yet another significant discovery, this time intersecting high quality gas-filled sandstones in the Brownlow exploration well, with Sydney-based joint venture partner Great Artesian Oil and Gas.

The significance of this discovery is that the exploration success achieved by Beach Petroleum confirms that advanced 3D seismic imaging and interpretation technologies are predictive and can enable deliberate exploration strategies for gas in stratigraphic traps, in addition to providing valuable information for the development of gas held in conventional structural traps. To briefly explain, a stratigraphic trap differs from a conventional trap in that it is created through the ceiling of a reservoir bed due to lithology changes rather than by geological structure.

Conventionally, oil and gas companies targeted these structural traps that were associated with faults or bends or other geological features but, with this new three-dimensional information, the explorers can target what are called stratigraphic traps. Stratigraphic traps are, by their nature, elusive and difficult to identify, but they represent an important new breed of targets for oil and gas discoveries in the Cooper Basin.

The Brownlow discovery is now one of a number of gas fields of various sizes found by Beach and Great Artesian in their licence, and the Beach-Great Artesian joint ventures are planning further gas exploration drilling and, in particular, they plan to chase what are now better understood stratigraphic gas play targets.

So, once again, we can see that the Cooper Basin remains a wonderful incubator for what were initially relatively small upstream petroleum companies that can follow Santos' path, that is, to leverage success in exploration into significant and profitable Cooper Basin petroleum production which, in turn, underpins the financial capacity to undertake more exploration and results in significant growth in South Australia, interstate and, ultimately, on the international stage.

Hence, it is heartening to see that Beach Petroleum has, as of 30 June 2008, oil and gas reserves of 145 million barrels of oil equivalent and is expanding its position as an international oil and gas company with its recent announcement of acquiring interests in two highly promising Egyptian oil concessions. I understand that Beach will take a 20 per cent share in one area containing three existing undeveloped oil discoveries in the Gulf of Suez, with oil production planned for late 2009, and a second southern concession is operated by Santos Ltd with Beach Petroleum holding a 20 per cent share.

Moving back to the exciting news that 3D seismic imaging can now be used to improve the chances of finding gas in stratigraphic traps in the Cooper Basin, I am delighted to observe that this technological advance adds incentives for gas exploration investment in the Cooper Basin. Along with this technology breakthrough, petroleum exploration development will continue to be stimulated by the South Australian government through its one-stop shop for investment attraction and regulation and also with proposed amendments to the South Australian Petroleum Act 2000 under the planned Petroleum (Miscellaneous) Amendment Bill.

Amendments will introduce new categories of licences, including special facilities licences and gas storage licences. Both these kinds of licence will allow third-party owned facilities to be licensed and operated under the Petroleum Act. Under existing provisions of the Petroleum Act 2000, in the case of gas facilities, only petroleum production licence holders can be licensed to construct and operate such facilities.

These proposed enhancements to our legislation for the upstream petroleum sector provide greater flexibility to licensees for developing and commercialising gas projects, including the storage of gas for sale and the storage of greenhouse gas to reduce greenhouse gas emissions into the atmosphere.

Summing up, I think members will agree that Beach Petroleum's success in using advanced geophysical technologies to discover otherwise elusive gas in stratigraphic traps is a significant outcome worthy of emulation by all Cooper Basin explorers, and it is great news for the state. I also believe that members will be pleased to note that the industry continues to be vocal in its view that the longstanding bipartisan support of South Australian governments to sustain an efficient and effective one-stop shop for the upstream petroleum industry remains a significant comparative advantage for our state.