Southern promise in the Great Australian Bight

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New frontiers: exploring Australia's Ceduna Basin

Last edited: 16 April 2013

Thanks to a booming resource industry and strong trading links to the wider Asia-Pacific region, Australia's financial success bucked the global trend. BP Magazine visits the country to find out more and looks at what the future may hold for its oil and gas industry

For most visitors to Australia, the distinctive red rock formation of Uluru – formerly known as Ayers Rock – in the Northern Territory is on the list of must-see sights. But for those venturing out to the country’s west, there’s another spectacle – this time man-made – that draws curious sightseers slightly off the beaten track. 

As deep as Uluru is high, and with about the same circumference, the Super Pit is an enormous hole in the ground in the Western Australia (WA) city of Kalgoorlie- Boulder. This vast open-cut gold mine took shape in its early days as a series of separate underground pits. When the precious metal was discovered here in the 1890s, fortune seekers flocked to the area, some 600 kilometres (370 miles) east of the state capital, Perth. Almost a century later, one businessman started buying up leases of the so-called Golden Mile and pieced together the jigsaw in the 1980s to create a single pit. 

Now under the ownership of one company, the landmark mine will eventually stretch 3.8 kilometres (2.3 miles) long by 1.35 kilometres (4,430 feet) wide and reach a depth of more than 500 metres (1,640 feet). Viewed from a distance on a panoramic platform, the colossal grooves in the Earth appear to be patrolled at a crawling pace by miniature trucks – but information panels reveal that some of these vehicles are in fact 685-tonne, two engine beasts with 11,000-litre fuel tanks.

The immense scale of the Super Pit and its equipment might well serve as a symbol of Australia’s booming resource industry as a whole. Through its mining and energy exports, the mineral-rich island continent has provided the fuel for Asia’s urbanisation – and China’s, in particular. Australia has reaped the benefits of its trading links with the neighbouring region; unlike other industrialised countries, it rode out the global financial crisis with a strong economy that has expanded more than 10% since 2007. 
Driving north from Kalgoorlie on a single-lane highway, bright white salt plains and a couple of emus wandering in the bush are among the few distractions to catch the eye among the expanse of red dirt outback. Those who work at two mines close to the town of Leonora, three hours from ‘Kal’, as the locals know it, give this road journey a miss, opting instead to fly in and out of the local airport for their shifts.

The Gwalia and King of the Hills mines are operated by St Barbara Ltd, one of Australia’s largest gold producers and explorers. BP delivers fuel to these sites every other day from its oil terminal in Kalgoorlie. Three-trailer road trains loaded with 120,000 litres of product arrive at the mines’ fuel farms to fill up the tanks. Just like a petrol station, drivers of different working vehicles – ranging from passenger utes to dump trucks – pull up to refuel, before continuing their activities underground or on the surface.

As well as feeding the engines of more than 200 site vehicles that keep the mines’ operations moving, diesel is also used to generate power. A dependable and timely supply is, therefore, crucial to business, according to Gwalia mine general manager Kous Kirsten. “Without fuel, nothing happens,” he says. “It is critical to our operations and if we didn’t have that reliable supply, we would feel it on the bottom line, instantly.

“Our demand is fairly constant and we pay close attention to how we manage our volumes to ensure that we have sufficient storage capacity. It involves staying in constant contact with BP to meet our needs.” On average, the two mines consume some 14 million litres of fuel every year.

BP has off-road mining customers, such as St Barbara, spread across Australia – and that’s just one part of the fuel market. So, what’s the key to getting the right products to the nation’s biggest miners, busiest airports and most isolated roadhouses?

With two refineries strategically positioned on the eastern and western seaboards (close to Brisbane and Perth), as well as dozens of terminals to receive, store and dispatch its fuels, BP has created a structure that allows it to move products to the locations where customers need it.
"It’s about being on the ground in the right places, such as where key mining and agriculture enterprises are located, where demand is greatest."
- Paul Waterman
“We have an advantaged market position and that’s something we are always looking to build on.”

Most goods and freight are transported around the country by road, so this is another business segment that has seen sustained growth in recent years. “The trucks that drive up and down the coasts and inland to the resource areas are part of what we call the on road business and we believe that will grow around 40% by 2020,” continues Waterman.

“So, we’re investing quite significantly to ensure that we have the right infrastructure, as well as developing customer relationships to take advantage of that growth.” As part of building that infrastructure, in 2010, BP acquired a company called Reliance Petroleum and with it an extensive network of bulk fuel and lubricant depots.

For the average Australian driver, though, BP is most visible through some 1,400 branded service stations and stores, both company and dealer-owned sites. Some dealerships have a very long history with BP, starting out as single-pump enterprises and growing over the decades to multi-milliondollar businesses. Take the Andrianopoulos family in Melbourne, Victoria: Andreas Andrianopoulos bought his first service station bearing the BP logo in 1970; 43 years later, along with his four sons, he runs a network of 49 sites, with fuel sales of almost 500 million litres in the past year.

“Our partners bring great expertise and passion for the business and their customers,” says head of sales and marketing for BP Australia Mike McGuinness. “Such long-standing relationships are testament to dealers’ innovation and commitment as retailers.

“It’s competitive out there and our customers are mobile, so they can choose to go anywhere. At our company-owned sites, we’re concentrating on how to improve what we offer – in the look and feel of our stores, the customer experience on the forecourt, making the right products and the right payment technology available. We’re working on what delights the customer.”
By November 2011, a three-dimensional marine seismic survey was under way, conducted by experts onboard the PGS vessel, the M/V Ramform Sterling. Together with its trailing cables, each eight kilometres (five miles) long, and listening hydrophones out on the water, the vessel became the largest moving man-made object in the world. Six months on, its task was complete: to record sound pulses reflected from the layers of rock below the seabed. This data from half the permit area will allow BP’s geoscientists to pinpoint where potential hydrocarbon resources lie.

Exploration on this scale requires a number of teams, working on opposite sides of the globe. While staff from BP’s Exploration division analyse the results of the seismic study in the UK, engineers in the global wells organisation are looking at how to drill wells safely and efficiently in the GAB’s challenging ocean conditions.

“From the acreage position, the next piece of land to the south is Antarctica, which is some 4,000 kilometres [2,485 miles] away,” explains Mark Stanley, BP’s vice president for wells, new ventures. “Waves have a tremendously long distance to build in height and extend in length. A wave height of 10 metres [30 feet] would not be unheard of – that’s comparable to the North Sea – but we will be seeing them more regularly.”

Such a hostile environment will require highly-specialised rig facilities to drill the four exploration wells agreed under the permit. “We’ve had great support from colleagues in Houston who have shared lessons from the Deepwater Horizon accident,” says Home, who is based in Perth with the BP Australia Upstream team. “They have flown out here and spent time with representatives from the federal and state governments, so we can demonstrate that we know what is required to operate in the GAB.”

With no deepwater offshore industry currently in South Australia, BP will need to create infrastructure and also make use of existing facilities at Port Adelaide for its supply base. Meanwhile, a small representative office has opened in Adelaide so that the company has staff on the ground in the state where oil and gas may make a significant future contribution to the economy.
"We’re keeping local communities informed of our activities offshore and of the timeframe involved in studying the seismic data. We want to build relationships here, so we’re talking to stakeholders and working with other organisations, such as the Eyre Peninsula Community Foundation, to support some small-scale education projects and offer fuel vouchers."
- Maria Soares
Negotiations also are going on to undertake a proposed environmental and social research programme relating to the GAB, through collaboration with academic and scientific institutions.

All this new activity in the south of the country makes BP an exciting place to work, not just for those directly involved in the exploration project, but for others in the company’s Melbourne headquarters, and beyond. But, if there have been downsides to Australia’s rock solid economic growth over the past decade, a shortage of skilled labour has been one of them, as the resource industry and others vie for the nation’s brainpower. It’s not uncommon to hear stories of university leavers accepting driving jobs on mining sites, where they are generously recompensed for their isolation in outback locations.

“Renewing our talent is really important and will continue to be so,” says Chris Lokum, director of human resources. “Competition with other employers does put pressure on us when it comes to looking for skills, especially at a graduate level.” Recruiting diverse candidates – whether that’s in gender, age or ethnicity – is a priority for the business, as is offering flexible working options through part-time and job-share roles.

“We’ve focused on understanding how competitive our employee offer is in comparison to others and we’ve made adjustments to salaries and benefits accordingly,” says Waterman. “I would say our culture is important, too – if you create a stimulating and engaging place to work, where people feel they can further their careers, you’ll do well at retaining staff.

“I certainly believe that this is an exciting time for us here. The exploration blocks represent a vote of confidence for BP in Australia and signify the quality of the relationships we’ve built. Depending on what we find in the Great Australian Bight, it could be an incredible game changer, not just for BP, but for South Australia and the country as a whole.”

Premium fuels - such as the BP Ultimate range – are big hitters on the Australian forecourt, representing more than a third of total consumer sales. While continuing to invest in the development of these products, BP has teamed up with the nation’s cricket captain and motoring enthusiast, Michael Clarke, to educate drivers about the Ultimate range. As the brand ambassador, Clarke has also been behind the wheel of the BP Ultimate rally car, driving two stages of the International Rally of Queensland.

With a sporting icon on its billboards and the familiar Helios logo on retail station canopies in every state, BP’s downstream presence is clearly evident in Australia. But the company has also been involved in hydrocarbon production for several decades, generating significant cash for the wider group, most notably as a joint venture partner in the country’s largest resource development project on the North West Shelf.

Recent upstream activities have been operated by other companies. But, after almost a century doing business here, a new chapter began in 2011, when BP was awarded four exploration permits in the Great Australian Bight (GAB), off the central southern coastline. “This is an untested delta system, which we believe has the potential to be highly prospective,” says Phil Home, a geologist and vice president for BP Developments in Australia.

“An industry speculative seismic survey a few years ago revealed enough information to point to a working petroleum system, so this really is a frontier basin – and that is increasingly rare on the planet.”

Covering some 24,000 square kilometres (9,266 square miles), the exploration blocks lie 300 kilometres (190 miles) offshore in water depths of up to 5,000 metres (16,400 feet). With a marine park overlapping the permit area and other environmental sensitivities to consider, including a whale calving zone to the north near South Australia’s coastline, BP consulted with state and federal governments, research agencies, environmental researchers and the fishing industry before submitting its applications for regulatory approvals to conduct further research.

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