According to EnergyQuest’s latest EnergyQuarterly report, for the first time, annual Australian exploration spend onshore exceeded offshore expenditure in 2020, reversing a historic trend.
Onshore spend increased by 1 per cent to $602 million, while offshore spend collapsed by 55 per cent from $789 million to $355.2 million. This is the lowest annual spend in real terms in the Australian Bureau of Statistics series since 1976 (nominal $34.9 million, $224.2 million after adjusting for inflation).
EnergyQuest states that the consequences of a poor national effort in offshore exploration over the past five years are beginning to flow through to national gas reserve figures.
“Unless there is a major reversal of activity, offshore gas reserves may have already entered a period of terminal decline.”
Notwithstanding COVID-19, EnergyQuest says the Australian gas sector performed steadily in 2020.
“In the circumstances of the one in a century pandemic, this is a remarkable outcome.”
While there is no evidence of a gas-fired recovery yet, standing still is still a major achievement according to EnergyQuest. Australian domestic gas consumption was 1,014 petajoules (PJ) in 2020, down by only 6 PJ (0.6 per cent) year-on-year (yoy), with 4,284 PJ of liquified natural gas (LNG) exports, up by 44.7 PJ (1 per cent) yoy.
Total petroleum production edged higher to a new record in 2020, thanks to a strong performance from the INPEX-operated Ichthys project. National production increased by as much as 0.6 per cent (6.5 MMboe) to 1,072 MMboe, compared to 2019.
According to the report, Australia exported a record 78.2 million tonnes (Mt) of LNG in 2020, up from 77.5 Mt in 2019. This was a good result given the disruptions to Chevron’s Gorgon, the fact Shell’s Prelude hadn’t produced since early February, the issues seen at Wheatstone with reduced production and the COVID-19 destruction of LNG demand, particularly early in the year.
Looking ahead, EnergyQuest estimates that Australian LNG production will increase slightly in 2021 to about 80 Mt (slightly higher than the Federal Government’s forecast in the Resource and Energy Quarterly of 79 Mt), with higher contributions from Prelude and east coast LNG producers).
The report notes that Queensland’s LNG projects recovered quickly from the slump in demand and global gas prices in mid-2020 to finish the year with record exports in volume terms. Total exports from Queensland increased to a record 6.2 Mt in Q4 2020, beating the previous record of 5.9 Mt in Q4 2019.
Quarterly revenue numbers highlight the roller-coaster ride – $4.1 billion in Q1, $4.2 billion in Q2 and a nadir of $1.6 billion in Q3 before bouncing back to $2.6 billion in Q4 2020.
EnergyQuest estimates 2021 export revenue for the Queensland LNG industry of around $10 billion, although it notes much will depend on the winter in the northern hemisphere.
Lastly, national oil production improved slightly in 2020 by 1 per cent (0.5 MMbbl) to 48 MMbbl. The increase was entirely due to the start of production in Q3 2019 at Vincent/Greater Enfield, which EnergyQuest says ‘is easily Australia’s largest oil project’.
Further information on EnergyQuest’s EnergyQuarterly can be found here.
