Legislative Council Fifty-First Parliament, Third Session (51-3) 51 3 Parliament of South Australia Legislative Council published Answers to Questions Answers to Questions Fossil Fuel Reserves FOSSIL FUEL RESERVES The Hon. D.G.E. HOOD Legislative Council FOSSIL FUEL RESERVES In reply to the Hon. D.G.E. HOOD (29 October 2008). The Hon. P. HOLLOWAY Legislative Council Minister for Mineral Resources Development, Minister for Urban Development and Planning, Minister for Small Business FOSSIL FUEL RESERVES The Hon. P. HOLLOWAY (Minister for Mineral Resources Development, Minister for Urban Development and Planning, Minister for Small Business): I thank the honourable member for his questions. It is appropriate to say firstly that forecasts of future petroleum production are underestimates unless the realistic potential for exploration to add to petroleum supplies is taken into account. I am advised by my Department that there are approximately 9 to 12 remaining years of supply at current production rates of crude oil, condensate and LPG, based on known field reserves. This is based on estimates of established field reserves and sales statistics for the twelve months to June 2008 for the SA portion of the Cooper Basin, and excludes the inevitable addition to petroleum reserves through exploration. Adelaide based EnergyQuest publishes its Energy Quarterly which provides a comprehensive statistical analysis of Australian oil and gas production, reserves, gas prices and other key data. Their figures for the entire SA/QLD Cooper Basin reserves and production for crude oil, condensate and LPG has a supporting figure of 8 to 9 years life at current production rates. I understand that Cooper Basin, like many mature producing basins is on production decline but that does not mean that hydrocarbon liquids will cease to be produced from the basin within the decade. The basin will continue to produce hydrocarbon liquids into the future but not necessarily at 2008 production rates. Production rates of LPG and condensate from the basin are directly related to gas production to meet gas contracts. Gas pricing and the cost of coal seam methane production in Queensland and the new pipeline from Queensland may alter the mix of SA gas production from the Basin to meet those contracts. Oil production rates are driven by external economic factors including but not limited to the international price of oil, exchange rates and local factors such as production bottlenecks—which in locations such as the South Australian Cooper Basin can be the flooding of Cooper Creek affecting exploration and rig availability for exploration and field development. High oil prices in the last 12 months and supportive investment frameworks have combined to stimulate upstream petroleum companies to acquire considerable two-dimensional (2D) and three dimensional (3D) seismic surveys in the Cooper and Otway Basins and also in frontiers for petroleum exploration, in the South Australian Officer and Arckaringa Basins in the past few years. It is particularly heartening to see for the first time in many decades that exploration is being undertaken for oil and gas in these prospective basins. These exploration seismic surveys will inevitably define prospects that can be drilled and lay foundations for future discoveries in the State. Indeed, in relation to your question, regarding contingencies the government has put in place, I am pleased to say this State remains very highly regarded for its investment frameworks for petroleum exploration. Our investment frameworks include easily accessible pre-competitive data from decades of exploration and production, a one-stop-shop for the upstream petroleum sector and a competitive fiscal regime. It is worth noting that our State is also highly regarded for the bi-partisan support given by successive South Australian Government for efficient and effective implementation of our investment frameworks for petroleum exploration, development, production and transport. Sustaining a trustworthy, efficient and effective investment framework for petroleum exploration investment, is a very practical means to prolong the life of petroleum production in our State. As I previously alluded, the provision of modern, fit-for-purpose and easy to access data and information to facilitate corporate decision-making is a key part of South Australia's investment framework for petroleum explorers. As an example, many South Australian petroleum licence holders, and many companies which have been interested in becoming South Australian petroleum licence holders have subscribed to my Department's 'Petroleum Exploration and Production Systems' database. PEPS contains detailed production data that allows for production decline curve analysis in addition to general exploration data. Many petroleum companies purchase PEPS on DVD for their own due diligence analysis to independently assess the undiscovered potential of South Australian basins. I am pleased to state that since winning the Federal Government's Technology Productivity Gold Award for the PEPS database in 1994, SA has continued to lead the nation in delivery of detailed production data, an achievement that no other state has been able to match for production data. In presenting the award, the Technology in Government Committee cited how PEPS had achieved significant productivity gains and delivered a premium service to industry in Australia. Additionally, the easy accessibility to data and information has opened opportunities for service companies to 'add value' and create marketable products, such as EnergyQuest's publications. With private enterprise prepared to make forecasts of petroleum production available to subscribers, there is no need for Government to establish a public register on petroleum reserves. This is a reasonable example of South Australia's investment framework facilitating expert outputs from private enterprise with benefits for all South Australians, through the exploration investment engendered. As private enterprise currently satisfies market requirements, there is no need for the State Government to create a public register of known reserves and production data beyond what is already readily publicly available.