BP HAS abandoned controversial plans to explore for oil in the Great Australian Bight off South Australia.
The company said that it had not changed its mind on the prospectivity of the region, but that it was no longer competitive. BP recently carried out a review of its upstream projects and said that it had decided to focus on projects which would deliver value in the near- to medium-term. The Great Australian Bight, it concluded, could not, on those grounds, compete for capital investment against other projects..
BP has had ongoing problems with Australia’s National Offshore Petroleum Safety and Environment Management Authority (NOPSEMA), which twice rejected BP’s proposals for failing to meet environmental protection standards, most recently in May. NOPSEMA invited BP to again submit revised proposals but on 29 September it delayed making a decision, instead requesting more information from BP. However, Claire Fitzpatrick, BP’s managing director for exploration and production, Australia, said that NOPSEMA’s regulatory process had no bearing on the decision.
“We have looked long and hard at our exploration plans for the Great Australian Bight but, in the current external environment, we will only pursue frontier exploration opportunities if they are competitive and aligned to our strategic goals. After extensive and careful consideration, this has proven not to be the case for our project to explore in the Bight,” she added.
BP consulted with its joint venture partner Statoil and said that the Norwegian company understood BP's change in strategy and accepted its decision.
“Statoil did not participate in the decision but was informed prior to the public announcement. Statoil has no plans to take over BP’s obligations in the licence,” Statoil spokesperson Erik Haaland told The Chemical Engineer.
BP said that it informed both the Australian federal government and the South Australia state government. The federal government has not yet responded but South Australian treasurer Tom Koutsantonis told the Australian national broadcaster ABC: “Every Australian has the right to feel disappointed by BP. They made a promise to the South Australian government that they would spend nearly A$1.4bn on exploration of the Great Australian Bight when they tended for these tenements and now they've withdrawn. I think they have done a bit of damage to their brand.”
Allan Suter, mayor of the Ceduna community where the onshore operations were to have been based told ABC that he was shocked, and that they “didn’t see it coming”. He added Ceduna had stood to gain from the development in terms of jobs and investment.
Fitzpatrick, however, said that BP did “acknowledge” its commitments and obligations and that its priority is now to “work with government and community stakeholders to identify alternative ways of honouring these.”
The news has been welcomed by conservation charities, which have campaigned hard against exploration in the Great Australian Bight, a pristine marine environment and a protected marine park. Australian-based group The Wilderness Society called on all oil companies to follow BP’s lead.
“'This decision shows that it’s too expensive to establish the significant and costly risk management and cleanup capacity infrastructure needed to protect our communities from the enormous spill risks associated with drilling in this part of the world. Clearly, this is a far-too-high-cost oil basin for any oil company to consider exploiting,” said national director Lyndon Schneiders.
Wilderness Society South Australia director Peter Owen added that the Great Australian Bight is deeper, more remote and has more treacherous conditions than the Gulf of Mexico, where BP’s Deepwater Horizon rig suffered a catastrophic blowout.
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