A $200 million offshore oil development has reached a dead end even though it already had regulatory approval.
Norway-headquartered Equinor blamed a lack of profitability for forcing it to pull out of the Stromlo-1 Oil Project in the Great Australian Bight, 476km west of Port Lincoln.
“Following a holistic review of its exploration portfolio, Equinor has concluded that the project’s potential is not commercially competitive compared with other exploration opportunities in the company,” Equinor Australia manager Jone Stangeland said according to News Limited.
The National Offshore Petroleum Safety and Environmental Management Authority (NOPSEMA) recently approved the project’s environment plan, meaning Equinor had two of four approvals needed before it can begin exploratory petroleum drilling 2.24km underneath the surface. The first approval was granted back in the year 2011 and the second took much longer because the proponent had to resubmit its environmental plan twice.
“The approval of the Stromlo-1 exploration well environment plan confirmed our ability to safely operate in the bight,” the proponent said. “However, Equinor has decided to discontinue its plans to drill the Stromlo-1 exploration well, as the opportunity is not commercially competitive.”
1300 jobs gone
This shock decision means the more than 1300 construction jobs promised will not be created and the South Australian and federal governments will lose $1.7 billion in annual royalties that would have been paid. Work was due to start as early as Christmas.
The proponent said it would continue to hold an offshore exploration permit in Western Australia.
Federal Resources Minister Keith Pitt said the late decision to cancel the project will deliver a major economic blow.
“I know 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,” he said according to the Australian Associated Press (AAP).
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SA Opposition MP Tom Koutsantonis hopes the proponent will be fined for walking away from the project so far into the approval process.
“The regulator NOPSEMA and the Australian government have a lot to answer for,” he said according to AAP. “Regardless of whether you support exploration or not the idea that the company can be issued an exploration licence and put opponents and supporters through this level of anxiety and then walk away, without penalty, really dents people’s confidence in foreign investment.”