Great Australian Bight

Chevron has become the second big oil company to abandon plans to drill for oil in the Great Australian Bight off the South Australian coast, a year after BP cancelled its plans to drill.

Oil companies say the Bight has similar potential to the Gulf of Mexico, site of the Deepwater Horizon oil spill of 2010, which was the largest marine oil spill in history and killed 11 people.

Norwegian oil and gas company Statoil has taken over two exploration permits from BP and plans to begin drilling for oil in the Great Australian Bight by late next year.

Statoil and BP have signed a swap agreement covering four offshore petroleum titles. Under the deal Statoil transferred its 30% equity in two of its permits to BP and exited the licences. In return, BP has given its 70% equity in two other permits to Statoil and relinquished those licences.

BP’s recent decision to pull out of a plan to drill for oil in the Great Australian Bight has been dubbed “strategic” by the company’s exploration managing director, Claire Fitzpatrick.

Taxpayers will subsidise the clean-up costs of oil spills in the Great Australian Bight under the terms of the controversial Petroleum Resource Rent Tax.

Treasury officials have confirmed that clean-up costs for oil spills from exploration wells would be classified as “exploration expenditure” under the PRRT regime, meaning they would be tax deductible for oil companies and could be held over and “uplifted” into future years at an annual rate of 17.5%.

BP finally announced in late December it had withdrawn its two environmental plans for exploration drilling two months after announcing it would ditch the controversial project.

Australia’s offshore oil and gas regulator, NOPSEMA, had already sent back BP’s application to drill in the Bight three times and was due to make a decision on its latest two submitted plans by the end of the year.

Chevron, Santos, Murphy and Karoon Gas still have exploration licences but will face the same massive costs and increasing community opposition that BP experienced.

BP announced on October 11 that it has abandoned plans for a $1.4 billion program to explore for oil in the Great Australian Bight, off South Australia.

The British petroleum giant said the decision, which delighted environmental groups, was made because the project was not economically viable. It said it would instead focus on projects it could exploit in the short-to-medium term.

The South Australian government has finally admitted that oil drilling in the Great Australian Bight is a risk, with two government reports highlighting the risks of spills and shipping and threats to marine life.

The Department for Planning, Transport and Infrastructure’s South Australian Marine Spill Contingency Action Plan admits: “The intended drilling activities increases both the South Australian and West Australian risk profile with respect to possible spills from the rig itself as well as an increase in shipping movements to and from the rig.”

The Senate will shine a much-needed spotlight on BP’s plans to drill for oil in the Great Australian Bight after it voted for an inquiry into the matter. The inquiry will report back by May 12.

The Senate’s Environment and Communications References Committee will look into the potential environmental, social and economic impacts of BP’s planned exploratory oil drilling project and any future oil or gas production in the Great Australian Bight.

Australia's offshore oil and gas authority, National Offshore Petroleum Safety and Environmental Management Authority (NOPSEMA) has rejected BP's application to drill for oil in the Great Australian Bight on the grounds that its “environment plan does not yet meet the criteria for acceptance under the environment regulations”.

NOPSEMA had earlier said BP needs a comprehensive risk assessment and a comprehensive oil pollution emergency plan.

Protesters hold a banner opposing BP oil drilling in the Great Australian Bight, in St Kilda beach on May 16. Photo: Chris Peterson

About 100 people rallied at Glenelg in Adelaide to protest against plans by oil company British Petroleum to explore for oil in the Great Australian Bight.

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