APPEA Chief Executive Belinda Robinson said the report outlines the opportunities and challenges that Australia faces in managing its oil and gas resources, and that the economic and environmental potential of our gas resources is not yet fully appreciated.

Ms Robinson said “What we are achieving today flows from the policies of yesterday. We face an increasingly competitive marketplace and need to acknowledge our investments and successes of tomorrow will be determined by the policy, regulatory, and fiscal settings we develop today.

“This report suggests there is a degree of complacency around the capacity of this industry to continue to underpin Australia’s economic wellbeing and that the factors driving declining levels of exploration and oil production cannot be ignored.”

State of the Industry 2010 states that a number of policies are limiting the penetration of gas in electricity generation. These include the expanded Renewable Energy Target, the extension of the Petroleum Rent Resources Tax, and restrictions on where gas from large gas fields located offshore Western Australia can be marketed.

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APPEA’s report held a positive outlook for Australia’s LNG industry, saying that “Australia’s LNG production capacity is set to increase from 19.5 MMt/a in 2010 to 38.8 MMt/a from 2014.”

However, it warned that access to markets and finance “will be key determinants [of industry success], both of which have become more difficult as a result of the GFC, slowdown in global economic growth and changes in some of the world’s largest gas markets. Projects are also likely to face increasing cost pressures as skilled labour shortages again re-emerge and as construction activity in this and other industries increases.”

The report states that in Western Australia development costs have doubled over the past five years, meaning that gas prices need to remain undistorted in order to promote industry investment. Provided there is sufficient customer demand, states the report, Western Australia’s gas supply capacity could increase by more than 50 per cent by 2015 and double within ten years.

APPEA has also announced that it has re-elected Buru Energy Limited Executive Director Eric Streitberg as Chairman of APPEA for the second year, as well as ExxonMobil Australia Chairman John Dashwood as Vice-Chairman of APPEA.

In addition, Western Australia Department of Mines and Petroleum Deputy Director General Strategic Policy Stedman Ellis has been appointed to the position of APPEA Director – Western Australia.