How is Oil and Gas Produced?

Where do companies find oil and natural gas?

Oil and natural gas are usually found deep underground, so companies use a range of techniques to determine the best place to drill.  As drilling is a capital intensive process, companies invest in advanced science and engineering during the exploration phase.

Before any work commences, there is a very long and detailed investigation into the sub-surface geology of a region. During this period, specialist geologists use data obtained through sub-surface studies – such as seismic interpretations – to determine where and how deep to drill a well.

Where in Australia is oil and gas found?

Australia produces most of its oil and gas from sedimentary basins in northern South Australia, inland Queensland, Bass Strait, offshore Western Australia and the Timor Sea. But there is also production in every other Australian State and Territory apart from Tasmania.

In addition, some basins are known to hold significant gas deposits, but they have not yet been developed or their development is still at a very early stage. Several parts offshore from Australia, onshore in New South Wales, Western Australia and the Northern Territory fall into this category.

Regulation and safety

The oil and gas industry supports effective, efficient and transparent regulation based on sound science.

From environmental and water management to land access and well integrity, every aspect of the oil and gas industry is tightly regulated in Australia by overlapping state and federal government agencies. The oil and gas industry has a strong understanding of the technologies involved as millions of wells have been drilled around the world in the last 160 years.

In addition to the mandatory regulatory requirements for offshore operations and across all states and territories onshore in Australia, many oil and gas companies commit themselves to voluntary codes of practice to reinforce industry’s commitment to the safe and environmentally responsible extraction of oil and gas resources.

Research also forms an important role in ensuring that the best science is applied to regulation. Depending on the nature, size and potential environmental impact of a project or activity, a range of scientific studies determine the baseline conditions for all environmental values, such as fauna, flora, and air and water quality.

When developing environmental impact statements and management plans, environmental risks are identified and strategies for minimising those risks are evaluated. In cases where the environment is sensitive, or the activity is complex, more detailed research may be commissioned.

The below graphic provides a high-level snapshot of the regulatory environment overlaying operations for the oil and gas industry.

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