This section sets out the criteria followed in assessing applications lodged under section 20 of the PSLA for the award of exploration permits.
In their applications for the award of exploration permits, companies will be expected to take into account all relevant information and any special conditions (such as environment protection, defence and fisheries matters) applying in permit areas. Relevant information, access restrictions and details of special conditions known to government at the time of release are included in section 5 of this publication. It is recommended that companies register to receive the Australian Petroleum News (by e-mailing contact details to petroleum.exploration@ret.gov.au) as this publication is used to update this information.
An applicant must first satisfy the Joint Authority of its capacity to undertake its proposed work program, in particular:
The basic objective in awarding any exploration permit is to select the work program bid most likely to achieve the fullest assessment of the petroleum potential within the permit area in the minimum guaranteed period, recognising the essential role of wells in the discovery of petroleum. Work programs proposed in bids must significantly advance the exploration status of the area. Work considered equivalent or inferior to work already carried out will not be regarded as advancing exploration effort. Work program bids will be assessed taking account of the criteria listed below:
In the event that a winning applicant cannot be chosen on the basis of the minimum guaranteed work program, the amount and timing of work proposed under the secondary work program will be assessed against the above criteria.
Applications are expected to be submitted in accordance with Section 1 above, which reflects the Administrative Guideline Applications for Exploration Areas. An application will be assessed against the selection criteria by the Joint Authority. Technical experts will prepare a report for the relevant Joint Authority containing recommendations as to the winning bid.
Applications will be assessed on the basis of the information contained in the written applications together with any additional information requested by the Designated Authority, which should also be submitted in writing. Applicants may be invited to attend an interview with the assessment panel and information provided during that interview will also be taken into account.
It should be noted that the composition and timing of the work program proposed in the original application, as part of the competitive bidding process, cannot be supplemented, expanded or amended through clarification or through the interview process.
In the event that a winning applicant cannot be chosen on the basis of the information contained in the written application and provided during interview, the two or more parties that the Joint Authority considers as equally deserving of the grant of the permit may be invited to submit supplementary written bids as a basis for the selection of a successful applicant.
As indicated above, the Joint Authority may take into consideration, amongst other things, the applicant's past performance in other petroleum exploration areas in Australia or, if relevant, elsewhere. This may occur even where the applicant's proposed work program is the highest submitted.
This would particularly apply in the situation where one or more of the applicants were participants in previous permits that had been cancelled because of default in meeting work program commitments and where there was no agreement to maintain good standing. (Further information on good standing arrangements can be found in section 3 below.)
Although any cancellation would be taken into account and the circumstances of the default would be relevant, consideration would generally be given to cancellations occurring in the previous five years.
In the event of consideration being given to prior cancellation and where this would be a significant factor in the decision to offer a permit, the applicant would be given the opportunity to establish that the earlier failure was irrelevant to the current situation and that default would not occur in the current application.
A record will be maintained of companies that have defaulted on work program commitments and have not taken advantage of the good standing arrangements. Information about whether a particular company has defaulted on work program commitments and has not taken advantage of the good standing arrangements will be provided to a Designated Authority.
Applicants should note that the PSLA provides that the Joint Authority may refuse to grant a permit to an applicant. While the Act does not specify the grounds for refusing to grant a permit, they may include:
An exploration permit will not be offered to an applicant unless the applicant can satisfy the Joint Authority of its capacity to undertake its proposed minimum guaranteed work program and that program is considered likely to significantly progress the assessment of the petroleum potential of the permit area.
A secondary work program must be specified. The secondary work program should include substantial operational activities that will significantly advance exploration of the area.
The minimum acceptable bid for an area will vary depending on the size of the area and its perceived prospectivity. Generally, it would be expected that the minimum guaranteed work program would include at least a significant amount of new seismic surveying and/or wells and that at least one well would normally be expected to be proposed within the six years of the permit term. However:
The minimum acceptable bid must be credible, coherent and supportable. It should be able to be pursued on a dry hole basis. The early elements of the program should be sufficient to enable the later elements to proceed.
If there is no current lead or prospect identified, there must be sufficient phased seismic to enable a lead or prospect to be identified somewhere in the permit area, and be brought to a drillable status.
The above guidance on minimum acceptable bids will also be applied by the Joint Authority when considering applications for five year renewal terms for permits.
The re-release of an area will be at the discretion of the Joint Authority. However, it is generally intended that any area that does not attract a successful bid will be re-released about two months after the original closure date for applications for that area. The re-released areas will be open for bidding for about four months. Whenever possible, the closure date for applications for re-released areas will coincide with the next closure date under the annual acreage release process. Areas will only be re-released once.
The re-released areas will be open to all interested bidders under the work program bidding system. The promotion of the re-released areas will be notified in the relevant government gazette and an article in the Australian Petroleum News.