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Criteria for Assessment of Applications

• Assessment Criteria
• Process for Assessing Applications
• Consideration of Past Performance
• Refusal to Grant a Permit
• Minimum acceptable Work Program bids
• Re-release of Acreage

This section sets out the criteria to be 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 Special Notices. It is recommended that companies register to receive the Australian Petroleum News (by e-mailing their contact details to petroleum.exploration@industry.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, particularly:

• the adequacy of financial resources and technical expertise available to the applicant;
• the likelihood that the applicant will continue to have access to sufficient resources to meet the requirements of the proposed work program as well as other commitments previously entered into in other permit areas;
• the future viability of any consortium lodging an application, including evidence that a satisfactory Joint Operating Agreement has been or can be reached; and
• the applicant's past performance in other petroleum exploration areas in Australia or, if relevant, elsewhere.

Assessment Criteria

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:

• the number and timing of exploration wells to be drilled, provided there is an adequate supporting program of geological and geophysical work;
• the amount, type and timing of seismic surveying to be carried out;
• other new surveying, data acquisition and reprocessing to be carried out;
• the amount, type and timing of any purchasing or licensing of existing data:
  - pre-purchase of existing non-exclusive data cannot form part of the work program but any interpretation of that data will be taken into account in assessing the relative merits of the work program proposed;
  - existing non-exclusive data proposed to be purchased after the award of a permit may form part of the work program provided that this does not disadvantage a competitor who purchased the data prior to bidding;
• significant appraisal work over any previous petroleum discoveries within the area; and
• the extent to which the applicant’s technical assessment supports the amount of seismic surveying and the number and conceptual targets of wells proposed in the application.

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.

Process for Assessing Applications

Applications are expected to be submitted in accordance with Applications for an Exploration Permit, which reflects the Administrative Guideline Applications for Exploration Areas. An application will be assessed against the selection criteria by a panel of officials representing the relevant Joint Authority. The panel 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 amended by the provision of additional information 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 will be invited to submit supplementary written bids as a basis for the selection of a successful applicant.

Consideration of Past Performance

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 Permit Conditions and Administration.)

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 may be provided to a Designated Authority.

Refusal to Grant a Permit

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:

• the work program proposed is inferior to that of a competing bid;
• the work program bid is inadequate to significantly advance the exploration status of the area;
• the work program bid is not supported by a sound technical assessment;
• the Joint Authority is not satisfied that the applicant possesses the financial or technical capacity to complete the work program bid; or
• the Joint Authority is not satisfied that, on the basis of past performance, the applicant will comply with permit conditions.

Minimum acceptable Work Program bids

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:

• Where extensive, non exclusive seismic data or significant reprocessed seismic data (normally from field tapes) are available over an area, it would generally be expected that the minimum guaranteed work program would include at least the licensing of a significant amount of those data, followed by a well or wells.
• Where the area is fully covered by 3D seismic data, substantial reprocessing of the data may form a substantial part of proposed primary work commitments. The reprocessing would normally be expected to be from field tapes.
• The challenges of exploring in frontier areas are recognised and will be reflected in the assessment of bids. Such assessment would include consideration of the types of survey to be carried out over the permit area
  – and in particular appropriate seismic line spacing to progress exploration
  – and the timing of any wells that are proposed.

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.

Re-Release of Acreage

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 would be notified in the relevant government gazette and an article in Australian Petroleum News.

Guidance Notes for Applicants | Applications for an Exploration Permit | Criteria for Assessment of Applications | Permit Conditions and Administration | Closing Dates, Lodgement of Applications and Availability of Data | Special Notices Concerning Titleholder Obligations and the Rights and Interests of Others | Application For Petroleum Exploration Permit | Printable PDF version

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