'Oil' in this report refers to the combination of hydrocarbon liquids, including conventional crude oil, condensate and liquefied petroleum gas (LPG), and unconventional shale oil and oil shales.
The petroleum resource data in this version of the Australian Energy Resource Assessment (AERA) are reported using the SPE-PRMS classification system. The petroleum resources reported here are at 50 per cent confidence levels for each category of proven reserves (2P), contingent resources (2C) and best estimates of prospective resources. This is different from the previous version of AERA, in which the McKelvey classification system was used. Although the total resources should not change between these two systems, some statistical information may be affected - for example, the remaining resource production life, calculation of which has changed from economic demonstrated resources/production to reserve/production.
Oil is an important source of energy, supplying most of Australia's transport needs. However, Australia has limited domestic supplies of oil. The production of oil in Australia has declined continually for some time. Both crude oil and condensate production declined by about 30 per cent in 2014 compared with 2010. Most oil production has come from only a few major offshore fields. Australia imports the majority of its crude oil and refined petroleum liquids.
Recent crude oil exploration in Australia has not repeated the early success of the 1960s. Additions to crude oil resources do not match production withdrawals, even though production has decreased with time (78 million barrels [mmbbl] in 2014 compared with 102 mmbbl in 2011). Condensate and LPG from a few super-giant and giant gas fields in the offshore Browse and Carnarvon basins form the majority of Australia's remaining petroleum liquid resources.
The drop in the oil price globally since 2014 has not only significantly reduced companies' exploration expenditure, but has also made companies widely impair their assets. It is expected that the trend of decreasing oil resources booking will not change within the known oil basins.
Australia has a large potential for unconventional oil resources, including oil shale and shale oil. Oil shale is shale that contains immature kerogen, and requires mining and retorting. Shale oil is liquid oil that can be extracted from shales using drilling and hydraulic fracturing. Exploration and development of oil shales have a long history, but with no significant production. Large contingent resources have been reported for oil shale deposits in Queensland. Australia also has the potential to find large shale oil resources.
Australia's crude oil resources occur in nine sedimentary basins. The significant volumes of oil resources are restricted to the offshore Mesozoic basins on the north-west margin and in Bass Strait. The onshore basins currently contribute only about 9.6 per cent of the total crude oil resources.
Australia has limited domestic supplies of crude oil (7066 petajoules [PJ]; 1202 mmbbl). However, Australia has significant amounts of condensate and LPG resources associated with the gas resources. At the end of 2014, remaining condensate resources were 16 463 PJ (2800 mmbbl), and LPG resources were 5957 PJ (1415 mmbbl). Australia's largest remaining discovered liquid petroleum resource is now the condensate and LPG Ichthys gas field in the offshore Browse Basin, which is currently under development. It is estimated to contain more than 12 trillion cubic feet of gas and 500 mmbbl of condensate (INPEX 2016).
The most important oil production basins in Australia in 2014 were the offshore Carnarvon, Bonaparte and Gippsland basins, and the onshore Cooper-Eromanga basins. Although Australia has more than 300 crude oil fields, most production has come from only a few major fields.
Australian primary oil production (crude oil, condensate and LPG) peaked in 2000 at 1772 PJ (301 mmbbl). Since then, primary oil production has been declining at an average rate of 4 per cent per year, to 1022 PJ (174 mmbbl) in 2014. Production decreases in both crude oil and condensate are responsible for this significant reduction in production. Crude oil production decreased from a peak of 221 mmbbl in 2000 to 78 mmbbl in 2014. Condensate production also decreased from a peak production of about 75 mmbbl in 2009 to about 50 mmbbl in 2014.
Reserves estimated for crude oil have also decreased with time. This has steadied the crude oil remaining reserve production life, which has been nearly constant at about 8 years. In contrast, condensate reserves have increased with time, associated with the new gas development projects. The remaining condensate production life has increased from about 9 years in 2010 to more than 25 years in 2014. The remaining oil (combined crude oil, condensate and LPG) reserve production life in Australia is slightly more than 14 years.
A large amount of contingent resources is contained in unconventional oil shale deposits, estimated at 84 435 PJ (14 360 mmbbl). However, under the current low oil price regime, the resources may not be developed for some time.
Australia has good potential for increases in oil resources with further exploration activities. The total undiscovered conventional oil resources have been estimated as 126 632 PJ (21 536 mmbbl), mainly in the offshore sedimentary basins. The United States Geological Survey (USGS) assessed the undiscovered conventional crude oil potential in four proven offshore basins (USGS 2011). It estimated the prospective crude oil resources as ranging from 782 PJ (133 mmbbl) in the Gippsland Basin to 16 934 PJ (2880 mmbbl) in the Northern Carnarvon - Canning basins. The same study found that the undiscovered natural gas liquids from these proven offshore basins range from 664 PJ (113 mmbbl) in the Gippsland Basin to 17 546 PJ (2984 mmbbl) in the Northern Carnarvon - Canning basins.
Petroleum potential exists in deepwater frontier basins, but the oil resource remains unidentified. BP, Statoil, Chevron, Santos and Murphy have committed A$1.7 billion to explore the Bight Basin in Australia's southern rift margin, where unrisked prospective recoverable oil resources are estimated as 9 billion barrels (Bight Petroleum 2016). Exploration and drilling activities in the Bight may prove a world-class oil basin potential.
Compared with Australia's offshore sedimentary basins, the onshore basins are thought to have less potential for discovery of large conventional oil resources. A USGS assessment showed that less than 0.5 per cent of the total undiscovered conventional oil potential is estimated from the onshore Cooper-Eromanga basins (USGS 2016), which are considered the most prospective onshore basins for conventional oil resource potential.
Australia has large potential for unconventional petroleum liquid resources hosted in oil shales, and shale and tight gas deposits. A level of 54 455 PJ (9261 mmbbl) of prospective recoverable oil shale has been estimated within the oil shale deposits in Queensland. The potential resources of shale gas liquids and light tight oil have been recently recognised and are assessed. Shale oil resources of 335 287 PJ (57 022 mmbbl) are estimated in various onshore sedimentary basins. Because the capital requirements for unconventional oil resource development projects are very large, and the infrastructure and facilities involved are very complex, it is likely that development of the unconventional oil resources of both oil shale and shale oil will not advance at the current low oil price. These resources could potentially contribute to future oil supply if technology, economic and environmental challenges can be overcome.
World proven oil reserves were estimated at about 1.7 trillion barrels (equivalent to about 10 million PJ) at the end of 2014 (BP 2015). This is around 52 years supply with the production rates at the time.
Since 1995, the world proven oil reserves have persistently increased as new discoveries have been made and new reserves have been developed each year, including those from unconventional sources. Heavy oil and tar sands have already changed the reserves picture for Venezuela and Canada, and light tight oil and shale liquids in the United States and elsewhere have proved to be a major new component of world oil supply.
Nearly half (47.7 per cent) of total world oil reserves are in the Middle East. Three countries in this region - Saudi Arabia, Iran and Iraq - are in the top five of the world's largest reserves. Saudi Arabia alone accounts for nearly 16 per cent (1 570 000 PJ; 267 billion barrels [Bbbl]) of world reserves. However, Venezuela has the largest share of world oil reserves, accounting for about 18 per cent. Canada has the third-largest share of world oil reserves, although oil sands totalling some 982 548 PJ (167 Bbbl) account for around 97 per cent of these reserves. The Asia-Pacific region accounts for 2.5 per cent of world oil reserves. The largest oil reserves in this region are in China (1.1 per cent).
In 2014, Australia ranked 25th in the world in terms of proven oil reserves, accounting for around 0.2 per cent of the world oil reserves. Compared with the proven conventional oil reserves in the world, which may last about 52 years under current production rates, Australia's oil has only about 14 years production life. However, unconventional shale oil and oil shale resources have significant potential for Australia under different economic or technological conditions.
World total oil production in 2014 was around 32.4 Bbbl (equivalent to around 190 309 PJ). The major oil producers are in the Middle East, which has a 30.5 per cent share of world production. Saudi Arabia is the largest single producer, accounting for around 13 per cent of world production. The Russian Federation and the United States are also major producers. The Russian Federation maintains 12.5 per cent of total global oil production. The United States has increased its share of world oil production from 9.6 per cent in 2012 to 12.3 per cent in 2014, as a result of production from unconventional oil resources.
Australia is a minor oil producer, ranking 31st in the world and accounting for 0.5 per cent of total oil production in 2014. The dramatic drop in oil price since 2014 has forced deep cuts in exploration spending across the industry. Discovery rates of new oil reserves have dropped to the lowest level in more than 60 years (IHS 2016).