Chevron has announced it will abandon its Great Australian Bight exploration program, citing low oil prices.
The oil giant is the second company to shelve its drilling project and comes a year after BP announced its decision to pull out.
Chevron said leaving the Bight came about because “in the current low oil price environment” it was not able to compete for capital in Chevron’s global portfolio.
Chevron Australia managing director Nigel Hearne said it was a commercial decision and not due to government policy, regulatory, community or environmental concerns.
“We appreciate the strong support from governments, regulators and the local community for our plans to explore for hydrocarbons offshore South Australia,” he said.
“We are confident the Great Australian Bight can be developed safely and responsibly and we will work closely with the interested stakeholders to help realise its potential.”
Ceduna mayor Allan Suter expressed disappointment with the decision.
“In today’s climate I can’t say I am surprised but I am very disappointed,” he said.
“It had huge potential for the local economy and that has now been lost, I hope that Statoil persevere.”
The Australian Petroleum Production and Exploration Association said Chevron’s decision was “disappointing”.
The association’s South Australian director Matthew Doman said success in the Bight would have eased Australia’s reliance on imported oil and delivered the state much-needed new investment and jobs.
“Chevron has made clear its view that the resource potential of the Great Australian Bight remains significant but their decision is a reminder that much-needed investment in developing Australia’s energy resources cannot be taken for granted,” he said.
“While several other companies continue to develop exploration plans for the Bight, the international environment for the oil and gas industry is challenging.”
Wilderness Society South Australia director Peter Owen called for other companies to follow BP and Chevron’s lead.
“BP’s decision showed that it’s too expensive to establish the significant and costly risk-management and clean-up capacity needed to protect our communities from the enormous spill risks associated with drilling in this part of the world,” he said.
He said Statoil, Santos, Murphy and Karoon would face the same “massive costs and increasing community opposition” BP and Chevron experienced.
“Statoil and others should quit the Bight and leave the communities surrounding the Bight in peace.”
Statoil’s country manager in Australia Jacques-Etienne Michel said it was aware of Chevron’s decision, but the company “remains committed to fulfill our obligations in the Great Australian Bight”.
“We are continuing to develop our plans to meet our commitment to the federal government to drill one well,” he said.
“We are aiming to start our project at the end of 2018 or at the start of 2019, although our commitment is not due until October 2019.
“We will take all the time necessary to ensure safe operations.”
He said Chevron’s decision would not impact Statoil’s plans.
“It is important to highlight that Chevron’s Australian and global portfolio is very different from Statoil’s,” Mr Michel said.
“We note Chevron’s statement about the potential in the Bight and agree that the Bight can be developed safely and responsibly.”
The Chevron decision comes only days after it announced the acquisition of three exploration tenements in Western Australia in a partnership with Woodside Petroleum.
“Offshore Western Australia is a global focus area for Chevron where we have access to vast natural gas resources and existing infrastructure,” Mr Hearne said.
“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.”
Chevron acquired the two exploration permits in the Bight in 2013, an area spanning more than 32,000 square kilometres.