Shifting sands: mapping the areas turning on or off oil

Yoana Cholteeva 19 November 2019 (Last Updated November 15th, 2019 12:36)

In recent years, a few countries have banned oil and gas for environmental reasons and to pursue renewables; at the same time however, other countries are still actively embarking on new oil and gas exploration as they seek to grow their economies and build energy security. In this article, we map a few key locations that have stopped drilling and the ones opening to it.

Shifting sands: mapping the areas turning on or off oil
In March, Oregon lawmakers made permanent a ban on drilling off the Pacific Coast of the US.

Countries which have banned drilling

United States

Oregon lawmakers approved a permanent offshore oil drilling ban at the Pacific coast for petroleum exploration and extraction in March 2019. In April and then September during the same year, lawmakers responsible for the Atlantic coastline, the Pacific coast and the Gulf Coast of Florida followed the same example and banned any further drilling for both oil and gas.

The decision was partially taken in opposition to the Trump administration’s plan to reverse the Obama-era drilling ban on 120 million acres of Arctic Ocean and 3.8 million acres in the Atlantic. A federal judge ruled that Trump’s order to revoke the ban was unlawful because it exceeded the president’s authority.

The ban covers oil and gas exploration, development, and production in state coastal and tidal underwater land. It addition, it also prohibits construction of new infrastructures that transport oil and gas developed in the regions.

 

New Zealand

In April 2018, the New Zealand government announced it would stop issuing new offshore oil exploration permits. It was decided that the ban will apply to new permits only and will not affect the existing 22 sites, which cover an area of 100,000 sq km.

The ban was seen as a historic victory in the fight against climate change as, a month before the decision, New Zealand’s Prime Minister Jacinda Ardern accepted a 50,000 signatures Greenpeace petition calling for an end to offshore oil and gas exploration.

Arden explained that the ban will work as a preventative measure and will move the country forward to a carbon-neutral future.

 

Italy

In February 2019, the Italian parliament approved an 18-month moratorium on offshore oil and gas exploration permits.

A considerable increase of payable fees on upstream concessions has also been introduced as part of the government’s “simplification decree”, looking to prioritise renewable energy developments and reduce Italy’s carbon emissions.

The moratorium includes 73 existing exploration permits (47 onshore and 26 offshore), 79 pending applications for exploration permits, and five pending applications for non-exclusive offshore exploration permits.

The existing moratorium could be extended to 24 months and it is designed to allow time for the government to agree a new “plan for the sustainable energy transition of suitable areas” and to define the areas where exploration and production could be allowed in future.

 

Ireland

Ireland’s Taoiseach Leo Varadkar announced a decision to end fossil fuel exploration in September 2019 at the UN climate summit, which he justified by explaining that the Irish government agreed with advice from the Climate Change Advisory Council that oil exploration is incompatible with a low carbon future.

The Taoiseach announced that although oil licensing will stop, Ireland will rely on gas exploration and use as a transitional fuel for some time during its journey to a carbon-free economy.

Existing oil and gas licences will remain valid but Minister for Climate Action Richard Bruton is working on a government memo expected to set out how the change will be implemented.

 

The countries encouraging drilling

Lebanon

After years of inactivity, Lebanon decided to renew its licensing of oil and gas reserves in 2017 by passing a draft oil tax law laying out payment terms for future licensees. The petroleum law demands 20% income tax on oil operations and a stamp-duty fee of LBP5m ($3,311), with the government’s share of production not accounted for.

In January 2018, the Lebanese Petroleum Administration then launched the first licensing round since 2013 and awarded its first gas and oil exploration and production agreements to a consortium of France’s Total, Italy’s Eni and Russia’s Novatek for two blocks.

At the end of 2019, offshore drilling is expected to start at block 4 and 9 located on the south and south-western coast. There is also a high licensing interest in a second licensing round, especially from Russian operators.

 

Bangladesh

Bangladesh has progressively encouraged drilling over the past decade after its first big oil discovery, estimated at 153 million barrels, was made in the north-eastern Sylhet region in 2012.

Later in 2014, the country won the rights to 20,000 sq km of gas-rich waters from India in a UN territorial arbitration, which made Bangladesh the largest supply in the Asia-Pacific with estimated natural gas resources at 200 trillion cubic feet.

That was followed by a bigger than expected finding in the Shahbazpur gas field in Bhola Island in 2018, which indicated a high chance that there are other gas pools structures in the southern coastal area.

Despite its recent discoveries, the region has proved challenging for the process of actual drilling and Shell, Chevron and Gazprom have recently suspended exploration due to insufficient yield. Bangladesh remains a rich in reserves, but less welcoming for exploration.

 

Indonesia

Indonesia’s government is embarking on further oil and gas exploration as part of President Joko Widodo’s responded to a proposal initiated by the parliament to boost the country’s energy independence.

Although Indonesia was once a major oil exporter and member of the Organization of the Petroleum Exporting Countries (OPEC), its crude output has decreased, making the country heavily dependent on imports.

A GlobalData report, showed that the region is expected to start 28 key crude oil and natural gas projects by 2025.

The projects are expected to add about 145.9 thousand barrels of oil per day to global crude production and about 4.1 billion cubic feet per day to global gas production. Indonesia and Malaysia are the main leaders in terms of highest number of planned projects.

 

Australia

Australia broke records for liquefied natural gas extraction in September 2019. In the Australian Energy Quarterly September 2019 report, EnergyQuest accounted for a 16% year-on-year increase of Australian oil production which exceeds the one billion barrels of oil equivalent for the 2019 financial year.

One of the reasons for the production rise is Shell’s Prelude LNG facility offshore Western Australia shipping about one LNG cargo each week since June, and the Inpex-operated Ichthys project in northern Australia which has been working at full capacity.

Australian gas producer Woodside is also looking to invest $20.5bn in its Browse project in the North West Shelf of Australia in the first half of 2021.

After elections in 2020, the new Federal Government commenced a review of Australia’s environmental law to ‘tackle green tape,’ a move that is expected to make oil and gas exploration easier.