ConocoPhillips launches natural gas drilling offshore eastern Australia

ConocoPhillips, a U.S.-based independent company, has begun drilling its first exploration hole as part of a larger campaign to search for natural gas off the eastern Australian coast, 3D Energi its junior partner said on Monday.

3D Energi announced in a filing with the ASX that work began on the Essington-1 oil well over the weekend. It will take 32 days for the drilling to reach 2,650 metres (8.694 feet).

The company stated that this is the first well in the Otway Exploration Drilling Program for the development of new gas for Australia’s eastern domestic market.

Eastern and southern Australia will face a shortage of gas before the end decade. This is causing tensions between domestic and foreign manufacturers.

This is the first major exploration campaign in East Coast waters for almost seven years, as the old fields offshore of Victoria in Bass Strait are running dry.

Conoco has agreed to drill two of the six planned wells under its Otway Program this year. There is also an option to drill four more wells, if necessary.

Since many years, the tight gas market in eastern China has caused political tension.

In late 2017, an "Australian Domestic Gas Mechanism", a trigger, was introduced to limit the export of spot goods when gas is tight. The three LNG consortiums in Queensland are fed by coal seam gas onshore fields in the state. Victorian gas supplies provide backup. ConocoPhillips operates one of them, Australia Pacific LNG.

Since its first term, in 2022, the current Labor government considered expanding export controls. Japan, Australia's biggest LNG buyer, has been against export controls.

(source: Reuters)