Energy exploration 'hit by rising costs'

Monday Jun 19 16:20 AEST

Energy explorers have seen exploration costs rise by more than a third over the last year posing a serious threat to the future of the industry, a peak industry body says.

At an industry conference in Darwin, chief executive of the Australian Petroleum Production and Exploration Association (APPEA) Belinda Robinson said exploration was also being threatened by limited equipment availability.

"In general we have seen costs increase by around 35 per cent over the past year," Ms Robinson said.

"This combined with the limited physical availability of rigs poses a serious issue for the industry."

She said the cost of using a drill rig was now about $250,000 a day, compared to $65,000 a day 18 months ago.

Despite the increase in the cost of exploring, there was more exploration taking place in some regions with an increase in the take-up of acreage in offshore areas.

The take-up rate in 2004 reached 81 per cent, up from the 44 per cent of 2002, Ms Robinson said.

"However ... the exploration data released last week showed a dip in expenditure for the March quarter," she said.

Energy exploration dropped by $52.9 million to $273.6 million in the March quarter.

Exploration was encouraged by the provision of geological data for under-explored areas, she said.

The Federal and Northern Territory government had recently released information on the Arafura Basin to support exploration in the region.

"I can never emphasise enough the importance of pre-competitive, geo-scientific information in promoting the prospectivity of frontier regions such as the Arafura Basin," she said.