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The petroleum industry in
Western Australia Western Australia (commonly abbreviated as WA) is a state of Australia occupying the western percent of the land area of Australia excluding external territories. It is bounded by the Indian Ocean to the north and west, the Southern Ocean to th ...
is the largest contributor to the country's oil exports. Western Australia's North West Shelf (NWS) is the primary location from which production originates. Oil exports are shipped from Port Hedland. Notable offshore acreage includes Cliff's Head. Based largely on development of the reserves of the
North West Shelf The North West Shelf is a continental shelf region of Western Australia. It includes an extensive petroleum, oil and natural gas, gas region off the North West Australia coast in the Pilbara region. Geology Considerable parts of the region are t ...
and other onshore hydrocarbon basins, the industry extracts
crude oil Petroleum, also known as crude oil, or simply oil, is a naturally occurring yellowish-black liquid mixture of mainly hydrocarbons, and is found in geological formations. The name ''petroleum'' covers both naturally occurring unprocessed crude ...
,
condensate Condensate may refer to: * The liquid phase produced by the condensation of steam or any other gas * The product of a chemical condensation reaction, other than water * Natural-gas condensate, in the natural gas industry * ''Condensate'' (album) ...
and
natural gas Natural gas (also called fossil gas or simply gas) is a naturally occurring mixture of gaseous hydrocarbons consisting primarily of methane in addition to various smaller amounts of other higher alkanes. Low levels of trace gases like carbo ...
from petroleum reservoirs deep beneath the Earth's surface. A large plant located at Withnell Bay near Dampier, produces
liquefied natural gas Liquefied natural gas (LNG) is natural gas (predominantly methane, CH4, with some mixture of ethane, C2H6) that has been cooled down to liquid form for ease and safety of non-pressurized storage or transport. It takes up about 1/600th the volu ...
(LNG) for export to Asian customers. Crude oil and most petroleum liquids are exported. Australia's largest petroleum refinery at Kwinana in WA's south-West, closed in 2021. Natural gas is processed at plants located on islands off the WA coast (e.g. The "Gorgon Gas Project" on Barrow Island) and onshore, then transported by pipelines to gas users throughout the state. In 2007, the industry produced of crude oil/condensate, and 30 billion cubic metres of gas. Approximately 65% of the gas was transformed into 12 million tonnes of LNG (all of which was exported), with the remainder of the gas being sold to users in Western Australia. Primary production by the industry was valued at $16.7 billion, accounting for 31% of all natural resources produced in the state.


Early history

The earliest petroleum-related activity in the state was in 1902, with the first oil exploration well drilled near the Warren River area in the southwest. Traces of oil were found in a bore near Fitzroy Crossing in 1919. Formal exploration in Western Australia started in 1946, when the Australian Motorists Petrol Company (AMPOL) commenced an exploration programme, using the services of the Bureau of Mineral Resources (BMR) which had been set up by the Australian government in the same year to conduct survey work. In the following year, AMPOL were awarded the first two exploration permits in Western Australia near Exmouth. Large-scale surveys were conducted in the
Canning Basin The Canning Basin is a geological basin located in Western Australia. Deposition of sediments began after early-Ordovician thermal subsidnce, and continued into the Early Cretaceous. The Basin covers approximately 506,000 km2 of which appro ...
in 1947, and in the same year,
Ampol Ampol Limited is an Australian petroleum company headquartered in Sydney, New South Wales. Ampol is the largest transport energy distributor and retailer in Australia, with more than 1,900 Ampol-branded stations across the country . It also ope ...
secured exploration permits for the Exmouth region. Ampol formed a joint venture with Standard Oil of California. The new company was called West Australian Petroleum (WAPET), and drilled its first well at
Rough Range Rough Range is a location in Western Australia where oil was discovered during an exploration drilling programme in 1953. West Australian Petroleum (WAPET) drilled its first well at Rough Range near North West Cape North West Cape is a penins ...
in 1953. This well produced at a rate of , and was probably the commencement of Australia's commercial petroleum industry. In the following year, WAPET geologists conducted a basic survey of
Barrow Island Barrow Island may refer to: * Barrow Island (Western Australia), Australia * Barrow Island (Queensland), Australia * Barrow Island, Barrow-in-Furness Barrow Island is an area and electoral ward of Barrow-in-Furness, Cumbria, England. Origina ...
. They were the first civilians to visit the area since British atomic testing on the nearby
Monte Bello Islands The Montebello Islands, also rendered as the Monte Bello Islands, are an archipelago of around 174 small islands (about 92 of which are named) lying north of Barrow Island and off the Pilbara coast of north-western Australia. The islands f ...
. The company achieved major commercial success with a large discovery on the island in 1964, which was followed by a large scale operation which continues to this day. In 1966, WAPET discovered WA's first commercial quantities of natural gas near Dongara. Construction of the state's first gas pipeline was completed in 1971. The pipeline transported gas from Dongara to Perth, Kwinana and Pinjarra. Originally known as the WANG Pipeline (after WA Natural Gas Pty Ltd which was a WAPET subsidiary), it is still in operation and now known as the Parmelia Pipeline. Woodside received its first permits to explore the Carnarvon basin in 1963. The 1971 gas/condensate discoveries by the BOCAL consortium at Scott Reef, North Rankin and Goodwyn were followed by a further gas/condensate discovery at Angel in 1972.


Geology

Five of the seven major sedimentary basins in Western Australia have known hydrocarbon accumulations,with 2007–08 production coming from the Carnarvon, Perth, Bonaparte and Canning basins. Sixty-one fields were on production during 2007–08 fiscal year. Petroleum in Western Australia is mostly sourced from the
Carnarvon Basin The Carnarvon Basin is a geological basin located in the north west of Western Australia which extends from the Dampier Archipelago to the Murchison bioregion, and is the main geological feature that makes up the North West Shelf. The onshore ...
, which stretches for 1,000 km of the west and northwest coast, from Geraldton to north of Port Hedland. In area, the onshore part of the Carnarvon Basin covers about 115,000 km² and the offshore part covers approximately 535,000 km² with water depths up to 3,500 m. Less than 5% of the state's gas comes from fields near Dongara, part of the Perth basin, which extends about 1300 km along the southwestern margin of the continent. This is a large (172,300 km²) basin that formed during the separation of Australia and Greater India in the Permian to Early Cretaceous period. It includes a significant onshore component and extends offshore to the edge of continental crust in water depths of up to 4500 m. The Officer basin, straddling the WA-SA border in the south-east section of the state, is a poorly explored basin, with limited seismic coverage, although more than 20 exploration wells have been drilled. A small amount of oil is produced in the Canning basin, in which 250 wells have been drilled and 78,000 line-km of 2D seismic surveys has been shot. A local company, Arc Energy, currently the largest Perth basin producer, is actively exploring and drilling in the Canning basin.


Products


LNG

The
North West Shelf Venture The North West Shelf Venture, situated in the north-west of Western Australia, is Australia's largest resource development project. It involves the extraction of petroleum (mostly natural gas and condensate) at offshore production platforms, o ...
(NWSV), a consortium of six energy companies led by Woodside, operates five
LNG train Liquefied natural gas (LNG) is natural gas (predominantly methane, CH4, with some mixture of ethane, C2H6) that has been cooled down to liquid form for ease and safety of non-pressurized storage or transport. It takes up about 1/600th the volu ...
s near Karratha. It relies on natural gas supplied from North Rankin, Goodwyn and Perseus fields in the Northwest Shelf (NWS). The majority of LNG produced by the NWSV is exported to Japan, with occasional spot sales to the United States, Spain and Korea. A fifth
LNG train Liquefied natural gas (LNG) is natural gas (predominantly methane, CH4, with some mixture of ethane, C2H6) that has been cooled down to liquid form for ease and safety of non-pressurized storage or transport. It takes up about 1/600th the volu ...
is currently under construction and is expected to increase export capacity by an additional 4.2 million tons, bringing total capacity to around 16 million tonnes per year. The cost of the project is estimated at $1.6 billion, with startup in late 2008. Although the NWSV dominates Australia's LNG market, additional projects are in various stages of planning, the largest of which is the
Gorgon gas project The Gorgon gas project is a multi-decade natural gas project in Western Australia, involving the development of the Greater Gorgon gas fields, subsea gas-gathering infrastructure, and a liquefied natural gas (LNG) plant on Barrow Island. The pr ...
. Chevron (along with joint venture partners Shell and ExxonMobil) is considering development of the Greater Gorgon gas fields, which contain recoverable reserves of . The project entails constructing subsea pipelines from the Gorgon and Jansz fields to Australia's
Barrow Island Barrow Island may refer to: * Barrow Island (Western Australia), Australia * Barrow Island (Queensland), Australia * Barrow Island, Barrow-in-Furness Barrow Island is an area and electoral ward of Barrow-in-Furness, Cumbria, England. Origina ...
, where 3 liquefaction trains will produce 15 million tons of LNG per year.


Domestic gas

In 2006-07, around two thirds of Australia's natural gas was produced in the Carnarvon Basin off the coast of Western Australia. Most of the gas produced in WA is transformed into liquefied natural gas (LNG) and exported to Japan. The remainder is used within the state. The domestic market for natural gas in WA, like that of Australia as a whole, is characterised by a small number of producers and a small number of large industrial consumers, with limited depth in consumption. The state's two largest individual users of gas are
Alcoa Alcoa Corporation (an acronym for Aluminum Company of America) is a Pittsburgh-based industrial corporation. It is the world's eighth-largest producer of aluminum. Alcoa conducts operations in 10 countries. Alcoa is a major producer of primary ...
(which operates three alumina refineries in the south-west) and Burrup Fertilisers (which operates the world's largest ammonia plant on the Burrup Peninsula, near Dampier). Together they account for more than half of the natural gas consumed in WA. Most of the remaining gas is used for electricity generation and by other smaller industrial and commercial users. Residential gas users consume only about 2% of the natural gas produced in the state. There are three main 'supply lines' for WA's domestic gas: * 65% From the North-West Shelf domestic gas plant near Dampier, operated by Woodside Energy, transporting gas via the Dampier to Bunbury Natural gas Pipeline (DBNGP); * 30% From the Varanus Island facility operated by Apache Energy on behalf of a number of production joint ventures. Output from the Varanus Island plant is divided between mineral processing operations who receive their gas via the Goldfields Gas Pipeline, and industrial and commercial customers in Perth and the southwest who receive their supplies via the DBNGP which links with the Varanus Island trunk line about 130 km south of Dampier; and * 5% From small gas producers near Dongara, transported via the Parmelia Pipeline.


Petroleum liquids (Crude oil, condensate and LPG)

Oil production in Australia increased gradually after 1980, peaking in 2000 at . In 2003, production fell dramatically to . In 2006, Australia produced approximately of oil. Western Australia is Australia's leading oil (and condensate) producing State, having surpassed Victoria, where production from the Gippsland Basin off the southern coast has been steadily declining. Western Australia currently produces 71% of Australia's crude oil and condensate. Australian crude oil and condensate production is projected to increase in the medium term (mainly due to new supply sources in Western Australia) before declining gradually.


Sector organisation

Similar to petroleum industries in other market-capitalist economies such as those in Western Europe and North America, the structure of the WA petroleum industry is characterised by the involvement of private corporations, with an important regulatory role occupied by the
federal Federal or foederal (archaic) may refer to: Politics General *Federal monarchy, a federation of monarchies *Federation, or ''Federal state'' (federal system), a type of government characterized by both a central (federal) government and states or ...
and
state State may refer to: Arts, entertainment, and media Literature * ''State Magazine'', a monthly magazine published by the U.S. Department of State * ''The State'' (newspaper), a daily newspaper in Columbia, South Carolina, United States * ''Our S ...
governments in most aspects of the industry. Australian companies operating in the industry include
Woodside Energy Woodside Energy Group Ltd (formerly Woodside Petroleum Ltd) is an Australian petroleum exploration and production company. Woodside is the operator of oil and gas production in Australia and also Australia's largest independent dedicated oil an ...
and Santos. Foreign-owned companies involved in the state include
Apache Energy The Apache () are a group of culturally related Native American tribes in the Southwestern United States, which include the Chiricahua, Jicarilla, Lipan, Mescalero, Mimbreño, Ndendahe (Bedonkohe or Mogollon and Nednhi or Carrizaleño an ...
, BP,
Chevron Chevron (often relating to V-shaped patterns) may refer to: Science and technology * Chevron (aerospace), sawtooth patterns on some jet engines * Chevron (anatomy), a bone * '' Eulithis testata'', a moth * Chevron (geology), a fold in rock ...
,
ExxonMobil ExxonMobil Corporation (commonly shortened to Exxon) is an American multinational oil and gas corporation headquartered in Irving, Texas. It is the largest direct descendant of John D. Rockefeller's Standard Oil, and was formed on November 30, ...
,
Shell Shell may refer to: Architecture and design * Shell (structure), a thin structure ** Concrete shell, a thin shell of concrete, usually with no interior columns or exterior buttresses ** Thin-shell structure Science Biology * Seashell, a hard o ...
,
Inpex INPEX (Invention and New Product Exposition) is America's largest invention trade show, held since 1985 and organized by the invention promotion firm InventHelp. The annual show is held each June in Pittsburgh, Pennsylvania. INPEX provides a fo ...
and
ConocoPhillips ConocoPhillips Company is an American multinational corporation engaged in hydrocarbon exploration and production. It is based in the Energy Corridor district of Houston, Texas. The company has operations in 15 countries and has production in ...
.


Government

Government involvement in the industry covers areas such as policy development, safety and environmental regulation, investment facilitation, provision of infrastructure, releases of new exploration areas, acquisition of regional geological data. The legal framework within which petroleum exploration and development occurs is a result of the division of responsibilities between the Commonwealth and the states/territories under the Constitution and inter-governmental agreements (in particular, the 1978-79 Offshore Constitutional Settlement). Onshore, and out to 3 nm (nautical miles) from the territorial sea baseline (coastal waters), petroleum operations are the responsibility of the state government. WA's offshore areas beyond the 3 nm limit are governed by Commonwealth legislation (Offshore Petroleum Act 2005) administered by the Department of Innovation, Industry, Science and Research. The Law of the Sea Convention gives effect to a system of Exclusive Economic Zones under which nations have sovereign rights over natural resources out to 200 nm from the coast (Australia claimed such rights in 1994 under the Maritime Legislation Amendment Act 1994). The convention also allows Australia to claim sovereign rights over seabed resources where the continental shelf extends beyond 200 nm. State agencies also administer some aspects of federal petroleum-related legislation on behalf of the Commonwealth.


Production facilities

Production refers to the process of extracting the hydrocarbons from existing wells, along with initial separation of the wellstream components (which typically include varying proportions of crude oil, natural gas, and water), prior to transportation to end-use markets or further processing and refining. Most of the state's petroleum production occurs at offshore production platforms, although many wells are situated on the mainland and on several islands off the coast such as Thevenard Island and at
Barrow Island Barrow Island may refer to: * Barrow Island (Western Australia), Australia * Barrow Island (Queensland), Australia * Barrow Island, Barrow-in-Furness Barrow Island is an area and electoral ward of Barrow-in-Furness, Cumbria, England. Origina ...
where commercial oil production in WA commenced in 1964. WA's largest production platforms are North Rankin A and Goodwyn A - both operated by
Woodside Energy Woodside Energy Group Ltd (formerly Woodside Petroleum Ltd) is an Australian petroleum exploration and production company. Woodside is the operator of oil and gas production in Australia and also Australia's largest independent dedicated oil an ...
- located approximately 130 km west of Dampier, where the ocean depth is about 100 m.


Transportation

There are currently four major natural gas transmission pipelines supplying the Western Australian gas market: * Dampier to Bunbury Natural Gas Pipeline (DBNGP), which transports gas from the North West Shelf area to customers in the
Geraldton Geraldton (Wajarri: ''Jambinu'', Wilunyu: ''Jambinbirri'') is a coastal city in the Mid West region of the Australian state of Western Australia, north of the state capital, Perth. At June 2018, Geraldton had an urban population of 37,648. ...
,
Perth Perth is the capital and largest city of the Australian state of Western Australia. It is the fourth most populous city in Australia and Oceania, with a population of 2.1 million (80% of the state) living in Greater Perth in 2020. Perth is ...
,
Mandurah Mandurah () is a coastal city in the Australian state of Western Australia, situated approximately south of the state capital, Perth. It is the state's second most populous city, with a population of 107,641 as of the 2021 Australian census, 2 ...
and Bunbury areas; * Goldfields Gas Pipeline (GGP), taking gas from
Varanus Island Varanus Island is the largest of the Lowendal Islands, an archipelago off the north west coast of Western Australia, near Karratha in the Pilbara region. The island is approximately from the mainland coast. It is located at .Gazetteer of Austral ...
to the Goldfields; * Parmelia Pipeline, taking gas from various fields in the Perth Basin to customers in the State's South West; and * Pilbara Energy Pipeline - from Dampier to
Port Hedland A port is a maritime facility comprising one or more wharves or loading areas, where ships load and discharge cargo and passengers. Although usually situated on a sea coast or estuary, ports can also be found far inland, such as Ham ...
.


Refining

Refining refers to the transformation of crude oil and condensate into end-use petroleum products. The state's only oil refinery, owned and operated by BP, was located at Kwinana, and was commissioned in 1955, but closed in 2021. With a production capacity of , it was the largest of Australia's seven refineries, accounting for almost 20% of national refining capacity. As most of the crude oil and condensate produced in WA is exported to Asia by
ship A ship is a large watercraft that travels the world's oceans and other sufficiently deep waterways, carrying cargo or passengers, or in support of specialized missions, such as defense, research, and fishing. Ships are generally distinguished ...
, the Kwinana refinery relied mainly on shipments of crude oil from elsewhere in Australia and overseas. For many years, a small amount of crude oil has arrived for processing at the refinery via road tanker, having been produced at onshore wells near Dongara since the late 1960s. The quantity of Perth basin oil production rose substantially in 2001 when the Cliff Head field (10 km off the coast near Dongara in 15 m of water) was brought into production., about 320 km north of
Perth Perth is the capital and largest city of the Australian state of Western Australia. It is the fourth most populous city in Australia and Oceania, with a population of 2.1 million (80% of the state) living in Greater Perth in 2020. Perth is ...
. The refinery mostly produced petrol and diesel, along with jet fuel, bitumen and liquid petroleum gas (LPG). Australia's refineries have experienced declining gross margins for several years, mainly due to competition from foreign refineries, an oversupply of refining capacity in Asia, and the high cost of transporting crude oil to Australia.


Issues


Supply disruption

The state's heavy reliance on gas from the north west has become a prominent public issue on several occasions when disruptions to supply has occurred. On 18 February 2004,
Western Power The Western world, also known as the West, primarily refers to the various nations and states in the regions of Europe, North America, and Oceania.
(electricity provider) imposed compulsory restrictions on power usage in Perth. This occurred on a day when the temperature was expected to reach nearly 42 °C and the company was unable to use its 'peakload' gas-fired power stations because of maintenance being carried out on the main pipeline from the north-west. On 2 January 2008, an electrical fault resulted in a production shutdown at the North West Shelf Venture's Karratha Gas Plant. Production resumed on 4 January and normal gas supplies was re-established by 6 January 2008. It was a complete shutdown affecting both LNG exports and domestic gas production. Domestic gas supplies were cut by 2/3. The most serious and significant disruption occurred in June 2008, when a pipeline rupture and explosion at the Varanus Island facility caused a 3-month shutdown of the plant, reducing the state's supply of natural gas by one-third.


Domestic gas reservation policy

In 2006, the state government announced a policy requiring that future developers of export gas projects set aside 15% of the reserves in each gas field for domestic use within the state. This policy replicated the initial State Agreement for the North West Shelf Project, and was based on a perceived decline in the availability of gas from non-export developments. For developers of large export projects, LNG exports generally offer higher returns than sales of gas into the domestic market. A federal parliamentary report referred to the state policy, stating that "while Western Australia presently consumes about 35% of Australia's domestic gas use, and the bulk of LNG exports, there is still a very healthy
reserves-to-production ratio The reserves-to-production ratio (RPR or R/P) is the remaining amount of a non-renewable resource, expressed in time. While applicable to all natural resources, the RPR is most commonly applied to fossil fuels, particularly petroleum and natural gas ...
in excess of 100 years.


Garnaut Climate Change Review

Australia's ratification of the Kyoto Protocol treaty in March 2008 is likely to increase the country's use of natural gas to displace more carbon-dioxide-intensive coal. The first draft report of the Garnaut Climate Change Review (released on 4 July 2008), which identified the impacts of climate change on Australia and proposed numerous public policy measures designed to mitigate these effects, may have a significant impact on aspects of the industry. Among the measures proposed was an emissions trading scheme "which will make higher-emissions forms of energy generation more expensive, shifting demand towards lower-emissions sources, and towards technologies that capture and sequester emissions...and in transport, an emissions trading scheme will make higher-emissions forms of transport more expensive, shifting demand to lower-emissions forms"


Security

The Australian Strategic Policy Institute has identified petroleum facilities in Western Australia, including offshore platforms, ports, processing plants and pipelines, as potential targets of military or terrorist attack. Offshore structures and floating production and storage vessels have few defences against attack. In a 2005 report on maritime security threats, the Institute noted that in Australian petroleum production from onshore to offshore and from Bass Strait to the Northwest Shelf posed increasing risks for the Western Australian petroleum industry. In December 2004 the Australian Government announced a program of augmented security patrols in the Northwest Shelf area.


Further reading

* Regularly updated the
Western Australia Atlas of mineral deposits and petroleum fields ''Western Australia atlas of mineral deposits and petroleum fields'' is a multiple-edition summary of mining and petroleum activity in Western Australia in the twenty-first century. It was published in earlier forms by the earlier Department of ...
publication of the
Geological Survey of Western Australia The Geological Survey of Western Australia is an authority within the Department of Mines and Petroleum of the Government of Western Australia that is responsible for surveying and exploration of Western Australia's geological resources. The ...
provides graphical and indexed material relating to the petroleum fields and their developments.


References

{{DEFAULTSORT:Petroleum Industry In Western Australia