The company says the decision follows a review of its upstream strategy conducted earlier this year that included focussing its exploration programs on opportunities that were likely to create near-term to medium-term value.
BP now says that the GAB project won’t be able to compete for capital investment with other upstream opportunities in its global portfolio for the foreseeable future.
Clair Fitzpatrick, BP’s managing director for exploration and production in Australia, says the company looked long and hard at its exploration plans in the GAB, but that in the current external environment, the company “will only pursue frontier exploration opportunities if they are competitive and aligned to our strategic goals.”
She said, “After extensive and careful consideration, this has proven not to be the case for our project in the Bight.”
Fitzpatrick added that the decision is not a result of a change in BP’s view of prospectivity in the region, not of the ongoing regulatory process that is run by the independent Australian regulator, the National Offshore Petroleum Safety and Environmental Management Authority (NOPSEMA). Rather it is an outcome of the company’s strategy and the relative competitiveness of the GAB in its portfolio.
She said that BP had consulted with Statoil SA, its joint-venture partner in the permit, and Statoil accepts BP’s decision.
BP was awarded its four exploration licence blocks in the Ceduna subbasin in January 2011. Seismic data was acquired in 2011-12 and Statoil farmed in for 30% interest in the licences in 2013. The first well in the program was to have been Stomlo-1.
The company’s plans to drill in the GAB have attracted a barrage of criticism from environmental bodies, including the Wilderness Society, which released scientific modeling in 2015 that show the devastation that a potential oil spill could cause to South Australia’s fishing and coastal tourism.
In addition, the regulator NOPSEMA has twice sent the company’s environmental plan back for amendments and again recently for clarification and more detail on certain points.
The Wilderness Society says BP’s abandonment of its drilling plans demonstrates that it is financial folly for any other exploration company to pursue such plans.