Equinor ASA has dropped plans for oil drilling deep in the ocean off Australia’s south coast following a sustained campaign from environmentalists who said that the project posed too big a risk to the vast and unique marine ecosystem.
The Norwegian company would not drill the Stromlo-1 exploration well in the Great Australian Bight, because “the opportunity is not commercially competitive,” it said yesterday.
Lower oil prices and an outlook for plateauing demand amid a shift to electric vehicles, as well as concerns over climate change, have forced a rethink of many big-ticket energy projects.
On Monday, Canada’s Teck Resources Ltd pulled its application for a controversial US$850 million oil sands project, which was proposed at a time of US$100 oil and also faced pushback from environmentalists.
Australia’s government yesterday renewed its commitment to tapping the Bight.
“Many will find Equinor’s decision not to proceed with this oil exploration project in the Great Australian Bight extremely disappointing, and it is particularly hard for South Australia,” Australian Minister for Resources, Water and Northern Australia Keith Pitt said in a statement. “The Bight basin remains one of Australia’s frontier basins.”
Equinor earlier this month boosted its targets for reducing greenhouse gas emissions, even as its production hit record highs.
Climate groups said that its plan to open up a new region to fossil fuel production was at odds with its aim to become the world’s most carbon-efficient oil and gas company.
“The decision is likely to have been driven by stronger carbon reduction targets of the European oil companies,” said Graeme Bethune, CEO of energy consultancy EnergyQuest. “Carbon costs are starting to bite and the European companies appear to be setting higher hurdles for oil projects than gas.”
Industry estimates suggest the Bight could hold the equivalent of 1.9 billion barrels of oil, making it a hugely prospective resource.
Other energy majors have struggled to make it stack up, with Chevron Corp and BP PLC walking away from projects in the area in the past several years.
“With three global oil giants abandoning their plans to drill in the Bight, the time for the government to give the South Australian community certainty and permanent protection for the Great Australian Bight has come,” the Australia Institute, a lobby group that researches environmental issues, said yesterday.
Sarah Hanson-Young, a Greens senator for South Australia, welcomed the decision, saying that it was good for tourism and the environment.
Three other companies also have interests in Bight exploration permits: Murphy Oil Corp, Santos Ltd and Bight Petroleum Corp. Karoon Energy Ltd relinquished its permit last year.
Equinor also holds an exploration permit for offshore Western Australia and said that it would continue with other ongoing activities in the country.
“We will engage with the federal and state authorities regarding our decision to discontinue the exploration program” for the Great Australian Bight, Equinor said.
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