AusBN - Chevron has halted its plans to explore in the deep waters off Australia’s South coast as the low oil price environment makes the project unjustifiable.
The US oil giant had long seen the waters known as the Great Australian Bight as a very promising location, Wood Mackenzie estimated it could hold 1.9 billion barrels of oil equivalent, but had to walk away due weak oil prices.
The Chevron announcement follows a decision by BP to also abandon exploration plans in the Bight.
“While the Great Australian Bight is one of Australia’s most prospective frontier hydrocarbon regions, in the current low oil price environment it was not able to compete for capital in Chevron’s global portfolio,” the company said in a statement.
The Australian Petroleum Production and Exploration Association (APPEA) said Chevron’s decision reflected the difficult circumstances oil and gas companies are facing in the current environment.
“While several other companies continue to develop exploration plans for the bight, the international environment for the oil and gas industry is challenging,” APPEA director Matthew Doman, said in a statement.
The company added that the decision was strictly commercial and not due to any governmental, regulatory, community or environmental concerns.
Chevron Australia managing director Nigel Hearne said the company would remain focused on LNG in Western Australia.
Already the largest resource holder in Australia with around 50 trillion cubic feet of gas resources, Chevron announced first LNG production at its Wheatstone project earlier this week.
“Offshore Western Australia is a global focus area for Chevron where we have access to vast natural gas resources and existing infrastructure,” said Hearne.
“We have invested billions of dollars in Western Australia to commercialise our large gas resource base through the Chevron-operated Gorgon and Wheatstone LNG and domestic gas facilities and expect to be here for decades to come.
“Through greater collaboration with other producers in WA, Chevron is also pursuing opportunities to accelerate the commercialisation of our gas resource base through non-operated LNG facilities.”