23rd Parliament · 3rd Session
The PRESIDENT (Senator the Hon. Sir Alister McMullin) took the chair at 3 p.m., and read prayers.
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– I have received from His Excellency the Governor-General a commission to administer to honorable senators the oath or affirmation of allegiance.
Commission read by the Clerk.
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The- PRESIDENT.- I have to inform the Senate that, pursuant to the provisions of the Constitution, Wis Excellency the Governor-General notified the Governor of the State of South Australia of the vacancy in the representation of that State caused by the death of Senator Rex- Whiting Pearson, and that I have received, through His Excellency the Governor-General, a certificate of the choice of Gordon Sinclair Davidson as a senator to fill the vacancy.
Certificate laid on the table and read by the Clerk.
Senator Davidson made and subscribed the oath of allegiance.
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– I ask the Minister representing the Minister for Health the following questions: Is it a fact that the National Health and Medical: Research Council has appointed a committee to draw up a national advertising code? Is this code to be used to circumvent quacks and charlatans? Will genuine health practitioners who do not conform to the ordinary medical code in the prescribing of pills, potions and drugs be safeguarded and, if so, how? When will the report’ of the committee be made available?
– In- reply to- the first’ question; I inform the honorable senator that I have read that the- National’ Health and Medical Research- Council- is preparing a; f.8841/61. - s. - 1351 national advertising code. But that is the only question among the number that the honorable senator has asked that I can answer now. I suggest that he put the other questions on the notice-paper so that the Minister for Health can supply prepared answers.
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– My question is addressed to the Minister representing the Minister for Primary Industry, and has reference to the recent transaction by the Australian Wheat Board involving the sale to China of 250,000 tons of Australian wheat on extended credit terms. Is my information correct that the Export Payments Insurance Corporation has declared that it is unable to stand behind this transaction and that as a consequence the final payment to wheat-growers in respect of the 1960-61 wheat crop will be deferred until 1963?
– I understand that the sale of this wheat has not been underwritten by the Exports Payments Insurance Corporation. I think there is no doubt that the Australian Wheat Board made this transaction only after a very careful study of all the implications. As I have said previously in this chamber, the board has been selling our wheat now for about twenty years,, and during that time it has not sold one bushel of wheat that was not paid for on the due date. With a record such as that, 1 think it is fair to say that the board is Well aware of any risks it may be taking and has finally concluded that the transaction is a sound one. 1 do not think there is any basis for the suggestion made by Senator Wright that the last payment from this pool will be deferred until 1963. If possibly will be delayed, but I should riot’ think it would be delayed ‘until then.
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– My question; which- is addressed to the Leader of the Government in the Senate, refers fo a statement which appeared in the public press last week attributed- to Mr. Calwell, the Leader of the Opposition in another place. According to that statement, the party of which’ Mr. Calwell is leader contends that the procedure- under which the Senate is dealing with the Estimates is unconstitutional. For that reason, it contemplated withdrawing its supporters in the Senate from the discussion in this chamber because they were being compelled to take part in a procedure which, the party contended, was unconstitutional and quite, improper. In view of the gravity of those statements, which Mr. Calwell supported by quotations from authorities, and which he has persisted in even after the recent Senate decision, I ask whether a considered statement in reply could be prepared to rebut the allegation that this chamber is continuing to act in defiance of the Constitution.
– I read with interest Mr. Calwell’s statements on this matter. I do not agree with him in any degree at all. I think his statements are incorrect. What the Senate is doing is being done within the terms of its own Standing Orders. We have commenced a new procedure in dealing with the Estimates. I think that it is operating well, and I hope that both sides of the Senate chamber will agree that that is so. I believe, it will be of benefit to the Senate, not only this year, but in other years to come. Because of that, I am reluctant to embark on a public argument on the matter with the Leader of the Opposition. I am more concerned with thoroughly trying out the procedure this year, hoping that it operates as well as seems likely at the present stage. I hope, too, that as a result of this experience, we shall receive co-operation with the procedure in the future from both sides of the Senate. That seems to me to be a more desirable immediate objective than to get into a disputation with the Leader of the Opposition about it. After all, this is a repetition of events in 1909, when both sides of the chamber agreed on the adoption of a new procedure.
This is something that we can do within our own Standing Orders. We made the most careful inquiries about that aspect before we introduced the procedure in the Senate. Its introduction has been confirmed by a decision of the Senate. I should prefer to let it rest on that basis for the time being; but, of course, I must reserve the right to change my view if the procedure becomes the subject of disputation originating from some other direction.
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– Has the attention of the Minister representing the Minister for Primary Industry been directed to a statement which appeared in a New South Wales newspaper last week to the effect that jockeys’ caps and jackets made of light-weight wool have the advantage of being some seven ounces lighter than corresponding articles of other material?
– Yes, I did read the statement to which the honorable senator referred. I am not quite sure of the import of his question. I am all in favour of any suggestion that jockeys change to woollen garments but I remind the honorable senator that no weight advantage will be gained thereby, because the handicapper will see that the jockeys go out with the required weight for the horse and distance involved. There is a good deal of merit in the work that is being done to-day by the Australian Wool Bureau in sponsoring the production of light woollen garments. I am sure that these will play a most important part in all types of dress.
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– I ask the Minister for Civil Aviation: Did Trans-Australia Airlines advise the Department of Civil Aviation that it intended to exercise its right to appeal against the co-ordinator’s decision to allow Ansett-A.N.A. equal access to Darwin? Was T.A.A. subsequently advised that the decision was made by the Director-General of Civil Aviation and, as such, it could not be appealed against? Did T.A.A. write to the Minister asking whether, in fact, the decision was one made by the co-ordinator, which could be appealed against, or one made by the department, which could not be appealed against? If such a letter was received has the Minister given T.A.A. any advice? If so, what was this advice?
– I think that we have been over this particular course before. The facts are - I shall repeat them - that Trans-Australia Airlines did notify the Co-ordinator of Civil Aviation of its intention to appeal against the decision made by the co-ordinator. At that time, the precise nature and grounds of the appeal were, as I understand it, not stated to the coordinator, for, in fact, if the appeal were made it would go to the chairman appointed under the Civil Aviation Agreement Act and not to the co-ordinator. The DirectorGeneral certainly did not advise T.A.A. that there was no right of appeal. The contrary is the case. It is provided for in the legislation and is well known by the co-ordinator and by both parties to any dispute.
The Australian National Airlines Commission did write to me, as I advised Senator Kennelly in reply to a question that he asked last week. I have not formally replied to that letter but I had a discussion with the chairman of the commission as recently as Sunday last in Perth. We discussed the particular queries which the chairman had put to me in his letter. I am not prepared to state the precise terms of the inquiries. That is a matter which is necessarily confidential as between the chairman of a commission and his Minister.
In general terms, however, the queries had to deal with what might be regarded as the legal implications of the situation, and I was in a position last Sunday, having conferred by then with the Attorney-General, to go in more detail into the legalities concerned. Not as a result of my discussions with Sir Giles Chippindall but concurrently with them and prior to them, talks were proceeding between T.A.A. and AnsettA.N.A. as to time-tabling and related matters which would apply should Ansett-A.N.A. fly to Darwin. This morning, just before lunch, the two airline companies advised the Director-General of Civil Aviation that they had agreed on the frequencies, types of aircraft, and time-tables to be operated on1 the Darwin service. From that it is assumed that T.A.A. does not intend to proceed with the appeal of which it gave notice some weeks ago.
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– I welcome you back to the Senate, Mr. President, and ask the Minister representing the Minister for Labour and National Service whether he is aware that at a political school conducted at North Hobart over the last week-end by the Liberal Party a distinguished Liberal senator from Tasmania is reported to have said that the Commonwealth Conciliation and Arbitration Commission should be reconstituted in order that men with backgrounds in trade, industry and markets, and wise trade unionists might be added to mere judicial experience. Is the Minister aware that trade unionists cannot understand why the word “ wise “ should be applied to them and not to members of the other groups that were mentioned? Will the Minister consider reconstituting the commission, because no section of the community appears to be satisfied with its present form and functioning?
– No, I am not aware that a distinguished Liberal senator has been reported in the terms stated by Senator Dittmer. However, if the honorable senator is referring to Senator Wright, on other occasions I have heard, just as I am sure Senator Dittmer has heard, Senator Wright express in this chamber in debate his personal opinions as to how he would like the Commonwealth Conciliation and Arbitration Commission to be reconstituted. We have heard Senator Wright give reasons why, in his opinion, reconstitution of the commission would be a good thing. As to whether the commission will be reconstituted, that is clearly a matter of high policy and is therefore not appropriate to a parliamentary question.
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asked the Minister representing the Postmaster-General, upon notice -
– My colleague, the Postmaster-General, has supplied the following information: - 1 and 1. The review of the Post and Telegraph Act is a complex task but it is now well advanced. Many policy aspects are involved and, upon completion of the review, these will require careful consideration by the Government before steps are taken to prepare a new statute. The PostmasterGeneral has however given specific attention to section 16 and on Thursday last, 28th September, sought leave to introduce a bill for an act to repeal section 16 of the Post and Telegraph Act 1901-1960.
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asked the Minister for ‘National Development, upon notice -
– The answers to the honorable senator’s questions are as follows: -
With regard ‘to -Iehi No. 1, the -provisions of the Agreement concluded under section 10 of the Petroleum Search Subsidy .-Act 1959 permit the publication by the Commonwealth of scientific and technical information obtained .from the above drilling operation mot earlier than twelve months [after its completion. The drilling operations at ,lem No. 1 were completed in November, 1960. However, the following information is .-available. Of nineteen separate formation tests -pf eleven perforated intervals covering four .zones which were selected for testing on the core and electric logs evidence, only one produced a large volume of dry gas. The remaining zones were impermeable and produced either .water or no fluids at all. It can be stated, therefore, that in this particular well, drilled to a total depth of 10,042 feet, the formation tests -produced no evidence of oil or condensate.
Barikewa No. 1 well took two years to drill to a total depth of 13-.890 feet - from August, 1956, to July, 195.8 - because of difficult drilling, conditions and prolonged fishing operations.
No oil shows were encountered during drilling, but on test the well produced large quantities of dry gas from the sand reservoirs of the upper section of lower cretaceous sequence. Testing of sands in the lower section pf the lower cretaceous sequence produced saline water and mud with small quantities of wet gas, for example, containing about 8 per cent, of hydrocarbons heavier than methane. No formation tests could be carried out below 9,881 feet because of drilling tools left cemented in the hole. Two gas shows occurred in this lower part of the hole, one in the jurassic section and the other in the pre-jurassic sediments. The latter show had a very high reservoir pressure.
As in the case of Iehi No. 1, it can be concluded that no evidence of oil has been established in Barikewa No. 1; but the well did establish a large open flow potential of dry gas in the mesozoic formations, and a similar flow of gas is possible from the pre-mesozoic section.
In view of the above evidence, there is no sound basis for the report that oil has been sealed off in those two Papuan wells. However, the possibility of finding oil on Barikewa or Iehi structures by further drilling cannot be entirely dismissed.
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– On 22nd August last, I asked the Minister representing the Minister for Immigration -a question upon notice. I now ask the Minister whether the question is .embarrassing to .the Department of Immigration or to the Minister in .charge. If not, when .can an answer be .expected?
The -PRESIDENT- Order! I have already called on the next item of business. In any event, the question to which Senator (Cant refers is on the notice-paper and will be .replied to in due course.
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– 1 present the report -of the Public Works Committee on the following subject:-
Proposed construction of a Science Block at the Royal Australian Air Force Academy, Point -Cook, Victoria.
I should like to point om that the committee, in examining this reference, found .that at the present time the Royal Australian Air Force Academy is operating in converted war-time huts which provide only the barest services and fitments for instructional purposes, and which generate conditions unsuitable for delicate, and valuable instruments. The committee believes that there is an urgent need to erect this science block; and as Point Cook is the logical permanent location for the academy, the evidence revealed that the science block would be correctly located in the area at Point Cook set aside for the academy, and that adequate provision has been made to meet future needs.
The estimated cost of the proposed building is £190,000, and the building will need to be ready for use in February, 1963.
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– 1 present the report of the Public Works Committee on the following subject: -
Proposed provision of Engineering Services to the Rapid Creek S’ub-division, Stage 2b, Darwin, Northern Territory.
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Debate resumed from 7th September (vide page 455), on motion by Senator Spooner -
That the bill be now read a second -time.
; - The bill now before the Senate is one to amend the (Petroleum Search Subsidy Act 1959. The history of governmental activity in relation to oil search is of rather recent origin. From 1950 - and provision was in the law for a considerable, period before that year - there was a provision for a taxation allowance in respect of one-third of calls paid for mining, oil prospecting or afforestation activities on the part of companies. Apart from the normal activities of the Department of National Development, and in particular the Bureau of Mineral Resources, that was the position until 1957. It repre sented a long period of stability, if not stagnation, in ^respect of government activity in a matter of prime importance to this country. In 1 957 the oil subsidy provision for ‘stratigraphic drilling was a mere £5^0,000 per annum. Certainly, that was a beginning of activity to stimulate interest and to obtain basic information. It was not ‘on any grand scale, but at least it was on a correct scale. In 1958 an amending bill ‘gave a degree of retrospectivity to the 1’957 measure in order to pick up projects that bad been launched prior to the flotation of the 1957 bill.
In 1959 the Petroleum Search Subsidy Bill, which is also the name of the bill to which we .are now addressing .our minds, carried the subsidy beyond stratigraphic drilling and provided for off-structure drilling, where the drilling could be subsidized to the extent of 50 per cent, of the cost. On off-structure drilling that was approved the subsidy could run to twothirds, the increase in the quantum of subsidy being based upon the general information that would be available to all interested in oil search in off-structure drilling. Special provision was made for a bore hole survey of a water bore where the subsidy could run to 100 per cent, of the cost; on a bore other than a water bore the subsidy could run to ‘half of the cost; and on a geophysical survey to an amount equal to one-half in all.
The bill now before the Senate proposes to extend the scope of the oil search .activities to which the subsidy is ito apply. It is not quite clear to me - I shall ask the Minister for National Development (Senator Spooner) to particularize this at the committee stage - exactly what are the new .activities and new aspects that are to be granted subsidies. The bill extends .the time during which subsidy is to be paid to 1964. Provision is made for work approved prior to June, 1964, to be carried on and to receive subsidy until 1965. The bill introduces a new element in that it is contemplated that the subsidy, instead of being based on a percentage of cost, at the option of the -explorer or prospector and with the concurrence of the Government, may be granted on the basis of footage drilled. Power is taken under the bill to make regulations determining .what that footage basis shall be, recognizing .that costs will ba different in different localities and under different drilling conditions.
The Minister for National Development, in his second-reading speech, indicated that departmental expenditure on oil search this year would be increased from £900,000 to £1,400,000, an increase of about £500,000. Tha annual subsidy is to foe increased by £1,300,000, from £1,400,000 last year to £2,700,000 this year. That makes an additional financial commitment at the governmental level of £1,800,000 for the current financial year.
The 1957 and 1958 bills were supported by the Opposition as making a desirable contribution to general knowledge in furthering the search for oil in Australia. We opposed the 19-59 bill for two main reasons. We considered that the Government itself should use its funds for more basic activity leading to the finding of targets for drilling, and we commented adversely upon the inadequacy of the approach. In this chamber I summed up the attitude of the Opposition on that occasion at the conclusion of my speech by saying -
I would sum up the position by saying that there has been a betrayal of the vital interests of Australia in a matter that could involve our very existence as a nation. It demands a substantially greater degree of Government activity. We of the Opposition shall take the step of voting against this bill as a protest against the Government’s inaction and as an instruction, so far as an Opposition can give an instruction, to make a more competent and vigorous approach to oil discovery in Australia.
In the course of that speech I indicated very clearly the Opposition’s recognition of the national importance of the discovery of oil, of the urgency of the need for it, and how vital it was to the security of this nation. Being dependent upon vulnerable sea lanes for every gallon of oil, it is quite certain that if those supplies were cut, either in peace or war, the nation would be defenceless, the whole of our defence activities in all their forms would be immobilized and the nation would fall easy prey. Associated with that, we recognize the vast importance of the discovery of oil to a rectification of our very adverse balance-of-payments position. Australia spends about £135,000,000 per annum on the importation of petroleum and petroleum products. Of course, if oil was discovered in commercial quantities and developed fully, it would not only save us that amount of money but also enable us to add to our exports very substantially.
Associated with those objectives is the question of the development of the country, the decentralization of population and the building of new towns and new ports. What the discovery of oil in Australia could do for State budgets and what it could do in reducing transport costs which I understand represent about one-third of all costs in this country-
– No, that figure is quite wrong.
– That figure has been quoted by authoritative transport authorities. It may be wrong, but at least it is quoted by responsible transport authorities.
– And it should not be re-quoted without responsible checking.
– Whether or not it is correct, this much is certain: Transport costs play a major part in total costs. Whether the correct figure is one-third, or a figure a little more or a little less than that, makes no difference to the argument that I put; namely, that costs in Australia could be revolutionized if oil was found here under conditions which would enable it to be refined at the minimum cost under commercial conditions.
The Opposition also believes that, being completely dependent upon overseas supplies of oil, Australia has a real and vital need for research into the production of oil from coal and shale. We have put that view repeatedly. The United States of America produces about one-third of the world’s crude oil and has vast reserves as well as the control of areas beyond its own boundaries, but it is very gravely and heavily concerned with research into the production of oil from coal and shale.
In order to express these views, on behalf of the Opposition I move -
That the following words be added to the motion - “ but that this Senate is of opinion that the Government should take the lead in the search for oil and accelerate the search by developing the activities of the Bureau of Mineral Resources in mapping, geological and geophysical surveys and in drilling for oil and should develop research in the production of oil from coal and shale “.
That proposed addition to the motion summarizes the Opposition’s view.
Dealing with the legislation before us, I find - the Minister confirmed this in his second-reading speech - that from November, 1959, to June, 1961, about £3,500,000 was either paid or committed by way of subsidy for 68 geophysical operations and 24 drilling operations in Australia. The Minister claimed that the provision of a subsidy had been a stimulus to the search for oil here. In support of that proposition, he said -
In 1959, there were only four seismic crews operating; there are now sixteen.
Two of those crews are operating for the Bureau of Mineral Resources. Let me refer now to a document describing a fouryear plan for the search for oil in Australia, issued by the Australian Petroleum Exploration Association. It states -
To develop this potential greatly accelerated drilling of sites scientifically located is an urgent requirement. At present most Australian drilling rigs are working at half capacity, and seismic crews are available for engagement.
The information conveyed to me is that, despite the fact that various survey crews have ‘been attracted to this country, they are not being fully employed. They, too, are working only at half capacity. Those who have compiled this four-year plan say also -
The necessary operational knowledge is here in Australia. Not one drilling rig or seismic crew should be allowed to remain idle.
We of the Opposition subscribe fully to that statement. I put the view to the Senate that the great stimulus to oil search in this country - the main reason for American interest particularly and for the proposals to expend big sums on the search for oil here - is that discoveries have ‘been made which lead to the belief that there is oil here. The Minister referred in his second-reading speech to the discovery of gas at Iehi - of which he spoke this afternoon - of oil and gas at Port Campbell and of oil and gas at Cabawin. The strike at Cabawin early this year probably was the most spectacular strike that has been made in Australia since the events at Rough Range some years ago. It is unquestionably the fact that oil is here, if not yet proved to exist in commercial quantities, that has attracted the foreign oil prospectors.
One has to look at the Australian scene against the background of what is taking place generally in the world in the matter of oil search. There is no need for me to stress the importance of oil as a strategic material. I refer first to a document that was circulated by the Minister for National Development in August, 1959, when he was promoting the Petroleum Search Subsidy Bill of that year. At page 13 of the document, the following passage appeared -
In point of fact, we have only the broadest geological and geophysical information for most of the sedimentary basins. The regional geology in Papua, in the Sydney Basin, and in the Carnarvon, Canning, Fitzroy and Bonaparte Gulf Basins in Western Australia is reasonably well known, but detailed information, especially as regards subsurface geology, is lacking in all but a few small areas.
That was an indication, supported by commentaries from other sources, that at that stage - it is true even of to-day - we had barely scratched the surface in exploring the oil potentialities of Australia.
In his second-reading speech on this bill, the Minister confirmed what he had said in 1959. He stated-
However, a tremendous amount of basic exploration remains to be done.
Twenty-four sedimentary basins, totalling 1,362,000 square miles, are known on the mainland, and two major basins, of 100,000 square miles, in New Guinea. Most of the basic topographical, geological and geophysical surveying has yet to be done and only about one million feet of exploration hole has been drilled. The available information ranges from the results of the broadest reconnaissance to fairly precise information about small areas.
Accepting both of the Minister’s statements, it is quite clear that the great task of obtaining basic information about our sedimentary basins still lies ahead. I refer again to the document outlining a four-year plan which, I understand, has been circulated to all honorable senators. Referring to 1960, the document slates -
Last year, only 22 wells were drilled throughout Australia in the search for oil. By way of comparison, Canada and the United States, countries with surplus oil production, drilled 920 and 11,704 exploratory wells respectively in 1960.
Those two countries probably drilled four times those numbers of wells, but not all of them were what are called exploratory wells, drilled when new fields are being sought The document goes on to say -
Communist China, with, about 20 per cent, of the sedimentary area of Australia, currently has 900 exploration teams and 480 rigs in use. 1 understand tha; there are only nine in the whole of Australia. The document continues -
Since 1954, only £25,000,000 has been spent on oil search on the Australian mainland and £32,000,000 in Papua-New Guinea, whilst before 1954 the two combined comprised £13,000,000 only. … lt is obvious that Australia has not realistically scratched the surface in pursuing this nationally vital exploration task.
On this theme, 1 refer next to the “ Australian Financial Review “, which, on 14th September of this year, published an article written by a special correspondent, J. GFuller. The article is headed -
Brisk U.S. interest in Australian oil exploration.
The author refers to the great stimulus to American interest in oil search in Australia that was provided by the discovery at Cabawin, and he proceeds to ou:line the drilling programme in America, where, in 1960, about 45,500 holes were drilled, of which 7,300 were of an exploratory nature in the sense to which I referred just now. The author explains that, in the exploratory field of drilling alone, about 140 new wells were completed in America each week, or about twenty each day. He goes on to comment -
This indicates that in I960’ Australia’s total exploratory effort was the equivalent of approximately one day’s exploration in the United States of America.
In one day, the United States of America,, in the way of field exploratory drilling, does what we in Australia do in one year. The Americans have, within their boundaries, about one third of the world’s supply of crude oil. Nevertheless, they regard as acute the need to keep on developing their resources and their potential. When we look at the American scene we see how insignificant, on the basis of the figures I have given, is the total effort that we in Australia make, although our need and our dependence on oil is infinitely greater and more serious than, that of. the United. States of America.
– Has the honorable senator any thoughts on the development of synthetic fuels- in the United States?
– Yes. The Americans have been gravely concerned about that matter. The costs have been brought to within measurable distance of petroleum costs. The Americans are spending considerable sums on experiments in the extraction of oil from shale and coal.
– Have you any views on Australia’s approach to that subject?
– I have referred to it in. the amendment. I have proposed, and if the honorable senator will bear with me I intend at a later stage to- advert to it. in particular.
In building up. the theme’ that, we should put our effort into proper perspective, let me refer to a comment by a man who visited Australia a short time ago. I refer to an article that appeared’ in the Sydney “Daily Telegraph” of 21st August last. According to the newspaper an oil millionaire by the name of Mr. M. B. Rudman, from. Dallas, Texas, indicated that he was prepared to invest £500,000 a year in surveying for oil in Australia. Mr. Rudman said, he was thinking of operations over a period of ten years.
– lt does not cost much to think. I often think myself.
– Yes-. Yet that is a statement of intention so far as one can carry it. I am not interested in what Mr. Rudman proposed, or in what he will spend; but I am very interested in his final comment. He said -
I think that, the- prospects of finding oil in Australia are very great - especially along your east coast.
The- only way to strike oil is’ to drill, drill and. drill:
So far. in. Australia, you have only scratched the surface. My company drills more holes in one week in America than Australia does in a year.
Drilling for oil in Australia should be increased by about 100 times.
I do not know that we could” afford to do” that. I think that statement might be a little- extravagant.
– I do not know that we could get. his £500,000, either. I have tried hard enough.
– I am very interested to hear that the honorable senator has: tried. I. have- cited a number of comments, commencing with those of the
Minister and followed by those of spokesmen for Australian oil .prospecting companies and other people, for the purpose of showing that we in Australia are doing a very insignificant job in the field of oil search. In my opinion, our economic needs justify a crash programme - that is the term used in the four-year plan for oil.
When one looks at the very interesting document entitled “ A Summary of the Activities, 1960, of the Department of National Development “, one encounters a mass of information which, by and large, is relevant to the subject that we are now discussing. I refer first to page 6, where we see a staffing table of the various sections of the department. I notice that the Bureau of Mineral Resources, Geology and Geophysics, on which we rely largely for our effort in oil search at the governmental level, has a departmental establishment of 469 members, but that the staff employed is only 377. In other words, on the establishment that has been approved, the bureau is 92 down. When we turn to the Division of National Mapping, which does a wonderful job, we find that its establishment is 1 1 5 personnel and that it has only 105, so that it is 10 down. It is something in the nature of a shock to find that a department of the significance of this one .is not functioning with its full establishment.
I turn to page 23, where the functions of the Bureau of Mineral Resources are set out. They are stated, first, in general terms, and then the particular functions of the .bureau are outlined. I shall read the following brief extract: -
To discharge these functions the Bureau is required to -
Make geological surveys and investigations (both regional and detailed) and carry out research relating thereto.
Make geophysical surveys and investigations (including airborne, regional, gravity and magnetic surveys) and carry out research related thereto.
Supplement geological and geophysical investigations by drilling or other means.
I emphasize the words “ by drilling or other means “. I turn next to page 24, where there is a plan of the set-up of the department. We find that there is a geological branch and an assistant chief geologist for sedimentary basins; there ‘is a petroleum technology section, and there is a geo physical section, all concerned with the search for oil.
I confess that it comes as a shock to me to find, at the bottom of page 25 of the document, the following statement: -
The main activities of the Petroleum Technology Section during 1960 were concerned with the administration of the Petroleum Search Subsidy Acts 1957-58 and 1959. Applications for subsidy for stratigraphic and off-structure drilling operations were examined and recommendations prepared. In addition, applications for geophysical and bore-hole logging surveys were examined and recommendations made on those points applicable to this Section.
The report goes on to indicate the number of visits that were made to the sites of drilling operations, and so on. The petroleum technology section abandoned two bore-holes that had been undertaken at Beagle Ridge, in Western Australia, one because of the breakdown of plant late in 1959. The other was abandoned at about 4,800 feet. It seems to me that that means that the time of the petroleum technology section particularly is more taken up with policing, analysing and dealing with the various applications for subsidy than in getting on with the practical work of oil search.
Turning to page 49 of the document, I find that it seems that the section cannot even keep its laboratory going at all times of the year. The document states -
During the year, die Petroleum Technology Section laboratory was manned when staff was available.
The implication that I draw from what I have, read - 1 am open to correction on it - is that this particular section is too heavily engaged in what, after all, is processing work in relation “to all of these applications. The work demands technical knowledge, of course, in order to assess the merits of the application, but on the face df this report, it seems as if that section is bogged down in handling subsidy applications and that its contribution to active effort in oil search is, if not insignificant, much less than it would otherwise be.
I should like to refer to the amount of subsidy provided. Last -year it was, J think, £1,400)000. This -year it will be £2,700,000, as -shown in the Estimates. We have already had indications that in one State, Queensland, the activity .contemplated in the immediate, future is such .that that State alone could absorb the whole of the subsidy provided for this year. The Queensland Minister for Mines, Mr. Evans, stated on 4th September that two new American companies were to start activities over 13,000 square miles of country centred on Duaringa, about midway between Rockhampton and Emerald. He claimed further, in a press statement that he referred to me with approval when I communicated with him, that oil companies would spend a record £4,000,000 in Queensland on exploration and drilling activities in the next twelve months. We assume that the companies are soundly based from the stand-point of making geological and geophysical surveys and that they will work to targets or will find targets that are worth while for drilling operations. On the assumption that they receive the approval of the department as being technically accurate, the total subsidy of £2,700,000 to be provided this year could well be used in that one State.
Mr. Evans stated that there were now operating in Queensland five companies, each of which was expected to spend £1,000,000 per annum. He gave the names of the companies in a press statement in the Brisbane “ Telegraph “. On the face of it, the subsidy which the Government announced with a good deal of pride - it is certainly a 100 per cent, improvement on the amount provided last year - will not go far in view of the activity in one State, and is inadequate on an Australia-wide basis.
– To what period of twelve months did Mr. Evans refer?
– He referred to the twelve months immediately ahead. The document is dated 5th September, 1961, and reads -
Oil companies will spend a record £4,000,000 in Queensland exploration and drilling activities in the next twelve months.
He was referring to the twelve months ahead, from the time that he spoke. He gave details of the five companies. The Minister is most welcome to peruse the document and the letter that Mr. Evans addressed to me, the press statement that he made and the copy of the oral statement that he sent to me with approval. On my reading of the statement Mr. Evans anticipates that expenditure in the twelve months immediately ahead.
The other aspect of which one may be critical is that while the bill and the 1959 act contemplate the payment of subsidies over a period of years, the actual amount is appropriated by the Parliament from year to year. It may be more; it may be less. The expectation is that it will be made more, but it does not encourage oil prospectors to make long-range developmental plans when they know that the amount of subsidy depends not upon a plan spread over a number of years but upon an annual appropriation, which may be affected by factors not concerning oil at all. Other factors which impose strains upon the economy may result in a far lower appropriation than perhaps the department itself considers desirable. The fact that a lump sum is not made available over a specified number of years is one of the factors that militate against the success of the subsidy idea. ,
The viewpoint of the Opposition - I have expressed it on many occasions from this place - is that the Department of National Development should lead in the matter of oil search. It should not follow, merely by subsidy, upon the activities of oilprospecting companies, each of which is concerned about its own particular area and makes its own efforts in that area. I recognize the vastness of the problem, when we have nearly 1,500,000 square miles of sedimentary basins, of having them all surveyed adequately at the beginning. There must be photography and mapping and then the various forms of geological survey on the ground. In addition, after prospective targets are sighted, there must be various geophysical surveys - gravity, magnetic, and now seismic, which is accepted as the latest and best form of locating a drilling target.
I know that it takes a great deal of doing, but as I see it the duty of the Department of National Development is to keep moving ahead of private enterprise activity and to provide targets. The view of Opposition senators is that we support any expenditure of that type which would provide quicker development. Subsidies would not be necessary if drilling targets were found by the department, instead of the department, using only two seismic crews per annum, doing a limited amount of seismic work and subsidizing other activity. At the moment we in this country are blessed with a surplus of seismic survey crews working, I am told, to half capacity. In view of the great task that lies ahead, why does not the department let contracts to those crews that otherwise would be lying idle? Why can they not be taken under the wing of the Bureau of Mineral Resources, a division which has done magnificent work, within the limits of the funds and facilities extended to it? Why could that not be expanded far more, so that we could get an exact knowledge of more and more of our sedimentary basins and lead in to more and more targets? I am told by those who ought to know and who are engaged in active drilling operations, that the urgent need of this country is to have a supply of targets ahead of drilling activity. The claim is made that if these seismic crews now in Australia were fully employed, some 35 or 40 targets a year could be found with real prospects of success. In the light of our great need for oil it seems a shame that any seismic survey crew should be idle in Australia. We on this side of the chamber would support any expenditure designed to keep these crews fully employed. On that point I would like to refer to what appears to be a rather more elaborate four-year plan for oil. This plan has been prepared by the people who submitted the brochure from which I quoted earlier.
– Who are these people?
– The Australian Petroleum Exploration Association Limited. I understand that the association comprises most, if not all, of the Australian companies engaged in oil exploration. Under the heading “ Seismic “ the association states -
There are in Australia at present fourteen commercial seismic crews which, fully employed, would cost £2,500,000 annually. The number of crews could be readily doubled or trebled as the need arose. These crews would be expected to uncover 35 drilling targets per year. The higher rate of seismic subsidy suggested above for the next two years is designed to overcome a currently desperate position. So far from seismic being two years ahead of the drill with a respectable number of drilling targets established as of now, the fact is that at the end of July -
The association is referring to July this year - there will not be one drilling target delineated by detailed seismic with established closure ready for the drill.
That is and has been the base of the Opposition’s case in this matter for a very long time. We think that the lead in the basic fields of geological and geophysical surveys should come, not from the private exploration companies, each of which is concerned with its own relatively limited area, but from the national department. I repeat that if these targets were lined up in the way I have indicated, it would not cost so very much because I believe that the oil operators and prospectors would get ahead with the targets. The exploration companies would not need subsidies if the targets were firmly indicated. The companies very quickly would find all the money required. The first essential is to get the basic information. After that the detailed information would be required. On that point there is no trouble about finance for the very costly business of drilling.
I come now to the cost of keeping a seismic survey crew in the field. I am amazed at the information in this regard that has been given to me. I have a choice of a number of estimates. Recently I asked the Minister a question on this point and I received an answer on 13 th September last Part of my question was -
What is the average cost per month per crew in the field?
I was referring to seismic crews. The Minister’s answer was -
The cost per month, allowing for depreciation, administration, overhead, &c, is £12,500 per crew.
That would amount to £150,000 per annum. But the Minister in his second-reading speech gives the estimate at £200,000 per annum, which runs out at about £16,600 a month, compared with £12,500 a month given to me as recently as 13 th September.
– Is the cost of crews uniform?
– I think the cost would vary having regard to many factors and according to circumstances. One of the factors involved would be the amount of explosives used to project the detonation. In some areas very little gelignite would be needed and in other areas a great amount would be needed. Accessibility of the terrain would have a great effect on costs. The information that I sought was the average cost. In his second-reading speech the Minister said -
In 1959, there were only four seismic crews operating; there are now sixteen, mainly consisting of experienced overseas personnel and each costing about £200,000 a year to operate.
So I received two quotes of estimated costs within a matter of about a fortnight. One quote was for £12,500 a month and the other was for about £16,600 a month. But that is not the end of the matter, because the secretary of the Department of National Development, Dr. H. G. Raggatt, in an article written for “ Australia Unlimited “ - a magnificent supplement to the issue of the “ Sydney Morning Herald “ of 10th July last - under the heading “ Speedup in Exploration for Minerals “, had this to say about seismic costs -
Seismic methods are costly. The capital cost of equipping one field party is about £95,000 and the operational cost for a party-month is £25,000.
How difficult it is for me, as a member of the Opposition, without access to all the detailed information on this subect, to make up my mind! Do I accept the Minister’s statement given to me last month, in which he said that the cost was. £12,500 a month? Do I accept the statement in his second. reading speech, in which the cost is given at £16,600 a month? Or. do I accept the estimate of £25,000 a month, given in July last by the secretary of the department? In the course of his reply I would like, the Minister to indicate, which of those three estimates, each of which comes from a truly official source, is the correct one.
– Do you notice that the estimates are falling?
– The Minister asks me whether I notice that the estimates are falling.
– Each estimate is lower than the preceding one. In other words, the teams are doing more work at more economical rates and at finer costs. I do not give that as the complete answer, but I think it may be the answer to the honorable senator’s question.
– In July the secretary of the department gave the cost as £25,000. In the middle of September the Minister gave the cost as £12,500, but by the end of the month that figure had grown to £16,600. So the position for which the Minister contends does not apply. The cost rose in something like a fortnight from £12,500 to £16,600. The trend for which the Minister contends is not borne out by that sequence of events. I am informed that the cost of operating seismic crews in the last two years has been halved because oil search operations in this country are now fiercely competitive. That is in line with the submissions I have been making to the Senate. Here is a perfect opportunity for the Bureau of Mineral Resources to pick up these seismic survey units, many of which apparently are free and which, as the Minister has suggested, operate more cheaply with the passing of the months. These units are now competing very fiercely with each other. They have the blessing of Dr. Raggatt who, in the article from which I quoted earlier, referred to the virtues of seismic survey. He stated -
Gravity surveys also may be used, to indicate the regional structure and in some instances give a lead to a possible structural target for detailed investigation for its oil possibilities. However, in the search for oil it is the- seismic methods that are most widely and successfully used.
He added -
The seismic method usually gives a sufficiently good picture of the geological structure of the sub-surface to allow the selection of a site for a test well.
An enormous amount of geological and geophysical investigation lies ahead. The crews are available, and the Opposition would support any appropriation required to have them put into action under the direction of the Bureau of Mineral Resources. It has been proven over the years that the bureau has thoroughly competent and devoted personnel. I suggest that it would have a much better national outlook in regard to the areas to be approached’. I should think the bureau would select areas that would be within reasonable proximity of the refineries now established, ports, transport and that kind of thing. It may well have data coming in all the time which is being assessed by its technical officers and which would indicate an even far more distant target. I believe the bureau would make a better national approach to the determination of a programme than if the matter were left to the sporadic efforts of private corporations.
It is quite: evident that America is taking a- tremendous interest in oil. The “ Petroleum Engineer “ of April last pointed out that Australia was the best country in which> to search for oil. That is referred to also in the “ Financial Review “. A similar statement appears in an advertisement published by Bi Orchard Lisle, an industrial cartographer in America, in which he offered, for sale oil’ maps of Australia and pointed out to the oil world that Australia presents the best prospect. So I do not think we have to importune the Americans by offering; subsidies and so forth. They know that the prospects exist. Obviously what, excites their interest and is bringing them here, in swarms- is the fact that oil has. been found; but it only remains to be. found in adequate quantities.
Let me refer to one matter which concerns the Opposition. Under the existing legislation the Minister for National Development is empowered to make arrangements with the companies about what would happen if a subsidized drilling produced commercial oil. The act does not prescribe what provisions he shall include in the agreement. I understand that precautions have been taken to ensure that, in the- event of drilling being, successful, the Government will get back its subsidy money. But- the powerful American com:panics which are coming to this country in great numbers are not so- generous. Two American companies - the Union company and the Kern organization - have, taken, an 80 per cent, interest in all the. Australian holdings of- Australian Oil. and Gas Corporation Limited. What is to be. the arrangement if their drilling programme is successful? My information is that 80 per cent, of the oil leases in Australia are now under the domination, or control of foreign corporations. Something ought :> be done to ensure that that state of affairs shall, not develop any further. I. suggest to the. Minister and to the Senate that if subsidized drilling, is successful the Government should not merely get back its subsidy but should have, an interest on behalf of the people of Australia.
– Are they not spurred on because of the possibility of profit?
– That is SO. But, if the department has put its money into the effort, why should it not participate in the reward? Why should not the nation have a share in the reward, too? I say to the honorable senator through you, Mr. Acting Deputy President, that there will come a time when a tremendous national resource will pass into the hands of overseas corporations.
– That is a different matter.
– lt is one of the important elements. I should like to sec more thought given to that. I should If’ to see the. outlook of the department, of the Minister, and particularly of the Governs ment, laid down with greater particularity.
– What proportion of the capital do these overseas corporations provide?
– I understand that the American companies, which took an interest in Australian Oil” and Gas Corporation Limited provide ail the capital for the drilling. I believe they are subsidized by the Government, but 1 am not prepared to say so. I’ note that the Minister nods his head; so that statement seems to be correct. Actually, these foreign companies find only approximately one-half of the cost, of their drilling operations. The Government provides the other half. Yet, if the operations are successful the American companies, will take 80’ per cent, of the returns.
– You gave us figures showing what- had been spent on- the mainland and elsewhere.. How. much- capital has been contributed by the overseas companies and. how much is local capital?
– I cannot give the honorable senator- that information. However, I. should, be inclined to say that the great bulk of the- money has been found by foreign corporations. The. department and the- Government, should be prepared to lean a: good dea-l further towards: the local Australian companies. They should be con:cerned about protecting the: nation itself. 1 should say that the. Bureau of Mineral Resources has been responsible for the targets that have- yielded results up to date. In: all cases it has been: the activity of the bureau- which, has put people on. the target.
Now I should like to refer to one or two details, I had proposed to deal with the division of fuel’. The activities of the department in that field are referred to at pages 53 and 54’ of the document from which I quoted earlier: The. Minister indicated that a committee is at work in this field. I should like him to give us more particulars about what it is doing - whether it is engaging merely in study, whether it is engaging in any kind of laboratory tests and whether those tests are merely on a small scale or upon a scale which could be regarded as being commercial. I understand that he does not expect results until some time next year. I am happy to know that something has been done. I should like to see a great deal more done.
A complaint has reached me about the activities of the seismic crews. I do not vouch personally for what I am about to say; it is based merely on what I have been told. I have been told that the bureau, with only two seismic crews, is far too slow in making available to people the results of its surveys. I am told that the department conducted a seismic survey in 1957-58 at Haddon Downs for Santos Limited. That area is situated in the north-east of South Australia. However, no report of that survey has as yet been received. In 1959 a seismic survey was conducted for the L. H. Smart exploration company on the Enomanga sub-basin in the south-west of Queensland. Some details have become available, but no final report has yet been received.
The ACTING DEPUTY PRESIDENT (Senator Wood). - Order! The honorable senator’s time has expired.
– I rise to support the bill. It is in keeping with the policy that the Government has adopted over the past few years of extending the search for oil not only throughout Australia but also in the Territory of Papua and New Guinea. I do not think any honorable senator would do other than compliment the Government upon its action. The search for oil is very costly, but if success is achieved the rewards will be very great. It is obvious, even to those of us who have only a slight knowledge of the difficulties with which we are confronted in the search for oil, that an immense amount of technical work goes into the preparation and the carrying out of surveys. For instance, geological and geophysical surveys, and drillings for stratigraphic information about the nature and arrangement of the sub-surface rock are matters of very great moment, but the information is not easy to obtain. You must have available scientific information, people with the necessary funds to carry out the explorations, and also, as mentioned by the Leader of the Opposition (Senator McKenna), the trained personnel.
It is all very well to say that we are not doing enough, in the search for oil, but after all there is a limit to what 10,000,000 Australians can find in the way of finance and technical resources. I think that the results attained up to the present have justified the course adopted by the Government. The feeling of the Government has been that there must be a co-ordinated effort between the Government and private enterprise. The mapping that is carried out to-day in these searches is of an extremely high order. Ten or so years ago, it would have been almost impossible, but now cameras of a better type are used in aerial surveys. The Commonwealth and State Governments work together to conduct aerial surveys and produce topographical maps.
As has been mentioned regional geological surveys are fundamental in oil exploration. No company can get very far without them. These surveys are carried out by geologists of the Commonwealth Bureau of Mineral Resources and also by geologists engaged on State geological surveys. The bureau carries out regional surveys by land, sea and air. It has also drilled to obtain sub-surface information in selected areas. These drillings are by no means cheap; they are very costly. I understand that to drill a hole 10,000 feet deep in Papua costs £1,000,000 or more.
Indications of oil at Puri, Port Campbell and Cabawin, together with the legislation of the last few years, have given a fresh incentive to companies already engaged in oil exploration. That, of course, is what the legislation was designed to do. It was intended not only to encourage existing companies to carry on, but also to induce companies to come into the field of oil exploration. We have seen, too, an awakening of interest overseas. Here again, some credit must go to the results of exploration so far conducted. Otherwise companies from overseas would not be as keenly interested as they are to-day. An increasing number of oil companies are aware of the possibility of finding oil in Australia. In the forthcoming year these overseas companies are expected to contribute some £2,000,000, or 40 per cent, of the £5,000,000 expected to be expended by private investment in the search for oil. I think that investment will be a welcome addition to the private resources of Australia. The steady increase in interest that I have mentioned could prove to be decisive in the success of the oil exploration that is being undertaken.
The regional geology of Papua, the Sydney basin, and the Carnarvon, Canning, Fitzroy and Bonaparte Gulf basins of Western Australia are reasonably well known, but detailed information, especially about sub-surface geology, is lacking in all but a few areas. That point was touched on by the Leader of the Opposition. Unfortunately this information takes time to acquire. Although oil has not yet been found in commercial quantities, it has been struck at Rough Range, Puri, Port Campbell and Cabawin. Natural gas has been found at Kuru, Bwatu, Iehi, Barekewa, Port Campbell, Cabawin, the Roma district and the Sydney basin.
The best prospects at present, in order of importance, appear to be: (1) the Papua Basin, extending north and north-west from the Gulf of Papua; (2) the north-western portion of the Carnarvon basin of Western Australia; (3) the north margin of the Fitzroy basin in Western Australia; (4) the Bowen basin in Queensland; (5) the southern margin of the Fitzroy basin in Western Australia; (6) the central part of the Carnarvon basin; (7) the Otway basin in Victoria and South Australia; (8) the south-east margin of the Aure trough in Papua; (9) the central Gippsland area of Victoria; (10) the central part of the Great Artesian Basin; (11) the Perth basin in Western Australia; (12) the Amadeus basin in the Northern Territory; (13) the Georgina basin in the Northern Territory and Queensland; (14) the northern part of the Papua-New Guinea basin; and last, but we hope not least, the Sydney basin. Those are the most promising basins in the order that I have read them out.
Let me now consider the assistance that has been given to oil search. The Commonwealth itself gives direct assistance through the Bureau of Mineral Resources, the Division of National Mapping and the Petroleum Search Subsidy Act. Those are the three main sources of assistance. Indirectly, liberal tax concessions are now being granted to encourage oil search.
What will be the benefit to Australia if the search for oil is successful? There is no doubt that the search will be successful. Every one seems to agree on that point. Consider for a moment the benefit that the establishment of the Mount Isa mine brought to Queensland. A town was established in what I would regard as an arid area. It now provides a good living for a large number of people and earns for Australia a considerable amount of money overseas. The finding of oil would have similar results, and would inevitably lead to an increase in our population. Such a discovery would also certainly mean an increase in our wealth and the opening up of large tracts of land which one cannot envisage being opened up for any other purpose. It must be borne in mind that many of the drillings are taking place in areas which do not lend themselves readily to cultivation. We must also bear in mind that our railway systems to-day are relying more and more on the use of oil as a fuel in lieu of coal. In some respects, that is to the detriment of the coal industry. Our railways must be provided with the most efficient fuel so that they, in turn, can give the most efficient service to the community. Trains that are drawn by diesel engines are able to carry larger loads more quickly and at a lower cost than steam trains.
Mention has been made of what we should do to get substitutes for oil, if it can not be found in Australia. Honorable senators from New South Wales will remember that there was a cracking plant at Glen Davis. That plant has now been dismantled and scattered to the four winds. After the decision to close down that plant had been taken many people were of the opinion that it should not have been disposed of at that time because future experiments might well prove that there is still a place for it, particularly when it had been established.
It is all very well to say that our oil search experiments and drillings have not been sufficiently numerous. Some disappointment may be expressed at the results of them. But what has been the experience overseas? Drilling after drilling has been undertaken before success has been achieved, and apparently Australia will not be any different from overseas countries in that respect. A tremendous number of drillings probably will have to be undertaken in Australia before we are successful. We must face up to that. 1 believe that the progress that has been made and the information that has been gained have been very substantial. It is all very well to talk about the information that is available from overseas countries; but, of course, we have to obtain information on our own types of terrain. That is not easy and it cannot be done quickly. In my opinion the present Government deserves very much credit for the vision that it has displayed in the interests of the welfare of Australia, first in inaugurating this system and then in pursuing it as vigorously as it has done in the past and will do in the future.
The criticism in which the Leader of the Opposition indulged was not constructive. It was more what one can only term, without wishing to be rude, the carping type of criticism. I rebut very strongly the accusation made by the Leader of the Opposition that the action taken by this Government has been against the best interests of the nation. A little while ago I mentioned that we are all of the opinion that oil will be found in Australia eventually. I refer honorable senators to the second-reading speech made by the Minister for National Development (Senator Spooner) in which he said -
There can no longer be any doubt that oil and gas exist in Australia and many experienced professional oil-exploration men are sure that commercial deposits will be found.
That seems to be the opinion of all the men who come here from overseas with experience in searching and drilling for oil be.hind them. That is very comforting and encouraging, I have referred briefly to the criticism that we have not sufficient of the knowledge and data that we need. I also mentioned that a long time and many facilities are required to acquire that information.
The Leader of the Opposition mentioned the number of drillings that are being made in the United States of America and Canada. When wc consider that the first drillings in the United States were made in t858, just over 100 years ago, and the com panies there have been drilling ever since, it is not to be wondered at that the standards and rate of drilling in Australia at this stage do not compare with those in that country. I think a six-year-old or sevenyearold school-child would see the point in that. We all agree with the contention of the Leader of the Opposition that more drilling should be undertaken; but that costs money and we must also have the resources to enable it to be done. Considering that we have only about 10,000,000 people in Australia and also the limited finance and resources that are at our disposal, we are not doing such a bad job. What should we do? Spill money out - that is, if we could get it - and be like the gentleman who mounted his horse and galloped madly in all directions? Is that what the Opposition wants?
– No.
– lt seems as if you do, judging by the speech of your leader. lt was mentioned that the Bureau of Mineral Resources has not the number of men that it requires for outside work. That does not apply just to the bureau. Some of us know that in the departments there is a shortage of surveyors, for instance. I imagine that surveyors would be included in the categories of staff of which there is a shortage in the Bureau of Mineral Resources.
Had the Opposition gained some experience in conducting oil search and giving encouragement to people indulging in it in past years, it would have been in a better position to engage in some constructive criticism on this subject. But, of course, the records show that it has not had that experience. This Government is getting some experience in it. Members of the Opposition are not in a position to indulge in the constructive criticism that is desirable. The Leader of the Opposition also said that he did not think overseas interests needed any subsidy to encourage them. I understood him to convey that the prize in itself was sufficient to encourage them to continue their explorations and drillings for oil. That may be so, but I believe experience shows that the subsidies that have been provided by this Government have given a very welcome stimulus indeed. I have no doubt that that will continue to be so- in the future. 1 do not like the amendment that has been moved by the Leader of the Opposition. I ‘believe that the Government .is going along as -quickly as circumstances will permit and is doing a good job for Australia, i sincerely hope that it will not be long before the Government’s efforts meet with the success that we all ‘hope they will achieve, f .trust that .as .a result Australia will benefit in .a very great measure. I support the ‘bil
– 1 rise to support the amendment. Before I speak constructively, I should like to deal with Senator Mc’Kellar’s remarks. For about three-quarters of his speech he kept on a particularly high ‘level and made a really useful contribution; but when he came to deal with the speech of the Leader of the Opposition (Senator McKenna) the level became considerably lower. If I heard him correctly - he may correct me if I did not - he said that Senator McKenna’s criticism “was not constructive, but rather was carping. Is that correct?
– That is correct.
– How ridiculous was that assertion! Senator McKenna adopted a purely scientific approach to the whole problem, not only in relation to the scientific information available but also in relation to the financial needs of this nation. Further, in drawing comparisons Senator McKellar said that the first drilling in the United States of America was in 1858. ls that correct?
– That is correct; that is what I said.
– He said that that is why the United States is so extraordinarily far -ahead of us.
– That is “One of the reasons.
– That was the reason you gave.
– That is one of the reasons.
– I do not know what ‘your other reasons were, ‘but that was the only reason that you gave to the Senate. Do you know that the first drilling in Australia occurred in ‘1892?
– No, I did not know that.
– That was not so many years after the first drilling in the United States. Yet we are a long way behind ‘that -country. ‘So, apparently, this matter cannot be measured in terms of time. That drilling was in South Australia. I am trying to make this ‘speech courteously and considerately. If Senator Hannaford, who is trying to interject, will permit me to do so, I will proceed in -that fashion. Senator McKellar said further, in effect, that the Opposition had no experience in the field of oil search. Let me say that we of the Labour Party would have that experience now if the Chifley Government had not been defeated ‘because of a misrepresentation of the facts through the resources available to the present Government parties. The purpose of the Chifley Government was to inaugurate an intense search for oil in Australia, and it bad imported two drilling rigs. This Government, when it came into office, saw fit to sell those rigs, and to sell them quickly. Those are the only criticisms of Senator McKellar’s statement that I have to offer.
On this occasion, I am the next Opposition speaker to rise after the Leader of the Opposition (Senator McKenna). 1 have attempted to follow him in debates on previous occasions, but I have been Ben Hall-ed out of my rights by the actions of the Government. On a previous occasion, when the Leader of the Opposition had made a brilliantly analytical approach to a problem affecting the finances, the development and the settlement of this nation, the Leader of the Government in the Senate (Senator Spooner) said that there was no theme to the speech and that he could not follow the thread of the argument. Perhaps that was due to deficiencies of understanding on the part of the Minister, although I do ‘not think he suffers from such deficiencies. Let ‘us be clear on this Occasion. There was -a theme to ‘the speech made by the Leader of the Opposition. The theme was the need Tor an intensification of the search for oil in Australia and an intense criticism of the Government’s proposals. There was a ‘thread cif the argument. That thread was, so to speak, a cord which the Leader of the Opposition effectively put round the necks df ‘Government members and round the neck of the Leader of the Government in particular.
In relation to the bill now before us, there is an anomaly. I am not speaking now geologically, mineralogically or geophysically. As we know, the location of oil deposits often arises from the discovery of physical anomalies. This Government, allegedly wedded to free enterprise, and liberal by name if not by nature, does not appear to be particularly liberal in the assistance that it proposes to accord to free enterprise in the search for oil. The Government boasts that it will make available this year £1,400,000 by way of direct aid and £2,700,000 by way of subsidy. All of those associated with free enterprise in the search for oil say that that is not nearly enough. It is certainly very little when compared with a total annual tax collection of over £1,960,000,000. When we realize how necessary it is to find oil in this country, that amount of assistance appears to be a threepenny bit approach to the problem, and all the people and groups associated with oil search in Australia regard it as such. They are grateful for even the small measures of assistance that the Government has extended to them, but they believe there is no realization by the Minister for National Development (Senator Spooner) and his associates of the requirements of Australia in this field.
There is no planned approach to the problem by the Government. Since I have been in this Parliament, the assistance provided has been provided on a year-to-year basis. I shall not deal now with what the approach of a Labour government would be; I shall deal with that subject later. We on this side believe that in the field of oil search the Australian Government should take the. lead. We believe that if free enterprise is engaged in this work, it should be assisted, but I repeat that our view is that the Australian Government should take the lead. As I have said, the Government has no planned approach to the problem. Because of the lethargy, ineptitude, inefficiency and incompetence of this Government over the years, the oil search companies now have a franchise for practically all the possible oil-bearing areas of Australia, covering about 1,362,000 square miles. That is five times as great as the area of the possible oil-bearing land in China. The oil search, companies ask how they can plan ahead when the Govern ment says only that it will provide £4,000,000 or £6,000,000 for subsidies this year, and they do not know what the amounts will be in the next year or in the years after that. The Government says that the assistance given under this legislation will apply until 1964, but there is no indication of how much money will be made available in the years after that. All that the Government says is that until 1964 there could be subsidies of certain amounts for oil exploration. Incidentally, this Government claims repeatedly that it is a master of planning.
Surely the Government must realize the urgent need to find oil in this country. In view of the favorable, environmental circumstances and the likelihood of the existence of oil in commercial quantities, the Government must be condemned for its lack of action. We. all know how essential oil is to our defence. If war were to occur and supplies of oil to Australia were cut off, all of the £1,900,000,000 that has been spent on defence over the years by successive Menzies Governments would have been wasted. Without power, industry could not carry on. There is in this country only enough crude oil to last us for seven to eight weeks. Without oil, almost every form of transport in Australia would be rendered immobile, yet the Government talks in terms of spending this year only £2,700,000 and £1,400,000 on oil search. Without oil, this country would be easy prey to an invader.
To show the pusillanimity of the Government in this matter, let me refer to what other countries are doing. Canada has an over-supply of oil, but last year it drilled 920 wells. The United States of America, also with an over-supply of oil, drilled more than 13,000 wells. China, with only onefifth of the sedimentary basin area of Australia, drilled 920 wells.
– How many were drilled in Australia?
– Last year only 22 wells were drilled. Because of the parsimonious attitude of this Government, we shall be lucky if more than 22 are drilled this year. Let us hope that this Government will be thrown out of office on 9th December, so that a Labour government can intensify the search for oil as well as look after our unemployed people and foster the development of the nation generally.
Almost 50 per cent, of this country is favorable to the occurrence of oil. The required stratigraphic structure, is there The traps for oil are there. There were occurrences of oil, although not in commercial quantities, at Rough Range some years ago and, more recently, at Puri. There are natural gas occurrences in Victoria, at Pickanjinnie and Hospital Hill in Queensland and at Iehi in New Guinea. There have been occurrences at various other places, in smaller quantities. Occurrences of natural gas are not to be sneered at. In countries in which natural gas in commercial quantities has been found, particularly America and Canada, the gas is piped as far as 1,300 and 1,600 miles. What are we doing to assist in the development of the natural gas that has been revealed at Roma? Liberal-Country Party governments in neither the Federal nor the State sphere are assisting in any way at the present time. Irrespective of whether the occurrence of gas at Pickanjinnie and Hospital Hill, at Roma, are of real commercial significance, research and further investigation could point the way to immediate utilization of that form of fuel if it were found in large commercial quantities. lt is much easier to transport than oil and does not require refining processes. Yet, the Government will do nothing to assist.
We have to realize just how much has been done in this field, not by the Government, but by various companies, somewhat haphazardly in past years, it is admitted. It must be agreed that Australians have the necessary know-how. The Bureau of Mineral Resources has done a magnificent job, within the limits of the finances allowed to it and having regard to the paucity of personnel available to it. The Division of National Mapping has assisted in an extraordinary fashion. But the Government has not gone out to seek scientific personnel. The deficiency in this respect was mentioned by the Leader of the Opposition. The Government is content to have people in the office recording the work done in relation to the subsidy granted by the Government, instead of taking the lead. Do not forget that to-day oil is the national basis of power and defence, transport and industry. Yet, the Government is making no attempt to take the lead in any direction. It intends to hand over control to private enterprise, regardless of the vital necessity of this form of fuel. The whole trend over many years has been to place power and the sources of power in the hands of the people. Even in the United States of America, where the waterways which were utilized for the provision of hydro-electric power were alienated, attempts are being made to reacquire those sources of power.
In this country, where we have not yet found oil in commercial quantities, the Government intends, if oil is found, to hand it over to private enterprise, although Australia’s welfare, financial and otherwise, largely depends on this source of power. There is not a likely area in Australia that is under control, by way of franchise, of the Commonwealth. If the Government brought in drilling rigs, where would it locate them? It is so lethargic, so slow in appreciating its responsibilities, governmental and otherwise, that it has done nothing while the race for land has gone on. It is no wonder, therefore, that the Government stands condemned and that the Leader of the Opposition was able to indict it so efficiently and so thoroughly this afternoon. It will be interesting to hear the answer of the Leader of the Government in the Senate to the case that he presented.
When we think of the factors that are involved in this matter, it may be said that the Government has made available information as a result of seismic investigation. But there are many other phases of the exploration for oil and the development of discoveries. As honorable senators know, it is necessary to have further stratigraphic drilling to determine the topography of the location and to indicate the suitability of the discovery. Then, there must be test drilling to see whether oil occurs. There must be further drilling to ascertain the limits of it, and still further drilling to see whether it is in commercial quantities. Then there is the production programme. The Government, however, comes in only for what might be called the preliminaries. Certainly, I will say that it receives some value for the money it spends, in that the companies are bound to make available to it information derived from investigations. But nowhere has it been stipulated that if oil is found in payable quantities the
Government shall be entitled to share in the enterprise by way of profit:
I do not want anyone to get. up and say that: I regard the expenditure of millions of pounds; however small in number, as paltry, but from the point of view of the major nature.- of this enterprise and the importance of finding oil, I say that the Government has adopted a paltry approach. lt has no say in the matter. Any contributions that it makes will assist further in the making of profits by private enterprise. The benefit will not be derived by the people. Of course, that is consistent with the Government’s attitude to all matters. It is characteristic of the Government’s political history that the people should own only those enterprises or instrumentalities that cannot be associated with profit, such as roads, railways and harbours-. When there is possibility of’ a profit being made, the Government believes that such enterprises should be left to individuals, either as persons or as corporations. Here we have another example of that approach.
Let us concede that there is a place, for private, enterprise, in the search for oil, but let the Government, be. sufficiently responsible to take the lead. It should have not only its seismic, crews, its geological and geophysical investigations, its national mapping crews, and so on; it should have its own. oil-drilling crews, as well. Let it go into the matter: thoroughly and not just sit on the fringe, trying- to1 convey to the people, the impression’ that- it is- sincerely interested in finding oil in commercial quantities. The Government must’ be- condemned when- w& think that’ within two years the French Government was prepared to spend more than £30,000,000 in the search for oil in- an arid’ area that did not offer the prospects- that Australia offers’. Again, there is- the callous approach to Queensland’. If we are -to place the States of Australia in order- of preference from the point- of view- of geological and geo*physical possibilities-, F should’ say- that we in Queensland are sufficiently tolerant to adopt a- national’ attitude and’ say that Western Australia is probably the most favorably placed1, with Queensland next. Yet; how much has the- Government advanced1 to- Queensland in relation- to the search for- oil,’ although there have been occurrences of natural gas in- that State?
The1 gas has been utilized commercially, although certainly not in large quantities. Oil also has occurred in Queensland, such as. at Cabawin No. 1, where the. rate of flow was 57 barrels a day, or not far short of commercial requirements. The Government spends a. few hundred thousand pounds and thinks: “Well, there’s a sop. That will probably keep the Queenslanders quiet.” That is typical of its approach to all the problems of that State.
Let us consider the conditions that would exist if oil were discovered in commercial quantities. First, we would save, on present figures, £136,000,000 in overseas spending: We- could provide our own refineries- with the raw material. The petro-chemical industry, would expand, and so, too, would other industries because of the provision of cheap power. Our security would be safeguarded. We could make- certain that our industry was provided with power and could carry on in the event of an emergency. The nation could be assured that its. transport would not be immobilized. It should not be- forgotten that the amount we spend overseas- on crude oil is an> ever-increasing one. Within five to ten years, the £136,000,000 that we are now spending in that way could, well be £300,000,000. Yet Government supporters preen and pride themselves on providing £4,100,000, together with some remissions in taxation which, I believe the. Minister claimed, amounted, last, year to £.1,000,000. The disadvantages, are. that the Government is putting, the country in hock, further, to overseas interests,, and that it has. to beg, borrow and steal to make, up deficiencies caused, by overseas spending. If oil is not discovered, the. whole, of our industry will be immobilized,, and- our defences - however meagre they are after twelve years of successive. Menzies Governments controlled by the Liberal and. Country Parties - will amount to nothing. That is why I say that the. Leader of the Opposition made, a really constructive, speech and did offer something of scientific value. He did say something that was- worth while.. If the Government listened to him, the nation would, be all the better. Senator Spooner, Leader of. the Government in the Senate and. Minister for National Development
– A good man!
– I am- not arguing about his virtue at all. 1- am arguing about his competence. I am- told that he is a good man, but I am not discussing his virtue; he. is entitled to that.. We are all good men, as Senator Paltridge knows.
The point is that the. Government has the responsibility. This year it. will collect over £1,960,000,000 from the people of this country. It realizes, the importance of oil but it is playing, with the problem. There are pages and pages in the second-reading speech delivered! by the Minister for National Development, but what is it worth? An amount of £4,100,000, in toto, will be provided for oil search, apart from indirect assistance in the: form of tax remissions. The Government is making no real effort. Even spokesmen, for private enterprise, men with the scientific know-how who realize the justification for an intensive search, say that, a, paltry amount is being provided: by the. Government.
The- Government does not plan what it will allocate next year, if it- is returned, nor the year after. How can there be continuity of search when the Government talks in terms of subsidy and. those’ people of the. Government’s own political philosophy - so-called private enterprise^ - who are interested in oil search, do not know where they are going? That is why the Government should’ stand’ condemned-, not only in the eyes of the Opposition but also in the eyes of the- nation. The Government is recreant to its trust, as it has been on so many occasions. Let- us hope and pray that the Government is- not returned to office, but if it is returned, let us hope that when it introduces- a supplementary budget in February, to- pillory the poor and punish the worker; at least it will put a more intensive effort, in the interests of the nation, into the search for oil.
– This bill seeks to amend’ the Petroleum Search Subsidy Act of’ 1959 to provide, inter alia and most importantly, for the eligibility of test drilling and detailed structure drilling for subsidy: Test drillings as far as I can. gather, is undertaken where seismic surveys have revealed; the presence of rock sequences and structures favourable to the occurrence of oil. The test drill is put down in such country to establish whether the structures really hold reservoirs of petroleum, so that the main drilling operations may proceed with expedition if the: results of the test warrant such a course. Detailed structure drilling, which the Minister for National Development (Senator Spooner) explained in his secondreading speech, is carried out by drilling a hole’, or a number of holes, for the purpose o£ obtaining detailed information about the nature of the structures. These are oil drilling techniques which did not attract subsidy under the Petroleum. Search Subsidy Act of 1959 but which, in the Minister’s judgment, are of such importance in the practical search for oil as to warrant the granting of subsidies:
Senator Spooner, as Minister for National Development, has built a most efficient organization for- the promotion of oil drilling and has given vigorous- leadership in this highly important field, through the Bureau of Mineral- Resources, Geology and Geophysics and” the- Division of National Mapping. The- search for oil to-day is not the haphazard hit-or-miss- business of a few years ago. It i& a highly planned operation and: skilled, competent men are engaged in formulating the1 plans. We are all wise after every big event. All the. quidnuncs assembled can say: “ I told you so: Why did you not do this? Why did you not. do the other? “ But it is now crystal clear that the majority of the early bores drilled in Australia were, off-structure, with the odds of striking oil heavily against the driller and the. investor. In other words,, they were what we call blind stabs. Companies were formed, and moneys were subscribed to enable a hole to: be drilled in an area where surface indications, did not convey much hope of. oil at. the lower; levels where the drill would: go.
Moreover, in the very early days, the operation was a pure gamble. Work was undertaken on a blind-stab- basis- in- the hope that the operators might be- fortunate enough to hit a pool of oil at 3,000, 4,000, 5,000 or 6,000 feet. That- was the- happy-go-lucky style of the early 1 930’s, and many investors sent their money down the drain, not realizing that there was any other approach to- the problem- of finding oil’. However, since this Government came- to power, things, have really- moved ahead- briskly under the direction of Senator Spooner.
He has built up a splendid organization in the search for oil.
– We are still without oil.
– Of course, Rome was not built in a day. This is a country of vast area. It might be many a year yet before we recover oil in payable commercial quantities. It is all very well for Senator Dittmer to cavil and criticize and say that we should do more. We are building better than we know. Everything that is done to-day is the result of a planned operation. We have men mapping the areas in which it is thought oil may be found. We have the men employed on stratigraphic work. We have the drillers. The work is being carried out faithfully in the areas that are known to be likely to hold pockets or reservoirs of oil. The stratigraphic and test drillings ensure that the main drilling takes place in an area the structure of which is known to be capable of holding oil. There is always the risk, of course, that due to some geological condition or to some fault the oil will not be trapped where the drilling takes place. These days nobody will bear the cost of putting down holes without the assurance that they are being made in a structure that is likely to contain oil. A few years ago this would not have been possible.
Up to date the search for oil in Australia and the Territory of Papua and New Guinea has cost about £65,000,000. Having regard to the vast area covered by the sedimentary basins of Australia and the Territory of Papua and New Guinea, it may be said that that is not a large amount of money, but nevertheless it is a sizable amount for the public and Commonwealth governments to spend on oil search. Viewed by any standards the amount is large. It is not as much as has been spent by the United States of America, which was referred to by Senator Dittmer, and some other countries, where conditions are more promising than they are here, but having regard to the large area and long distances involved, both on the mainland and in the Territory, the expenditure of £65,000,000 by Australia on oil search is a mighty achievement.
– Over what period has that expenditure been incurred?
– I think the search for oil has been seriously undertaken in the past seven or eight years. Without being absolutely certain, I would say that the money has been expended during that time.
– You would not goback farther than seven years?
– Money was spent on. the search for oil earlier than seven years, ago and perhaps the figure of £65,000,000 includes what was spent in earlier years. On reflection, I think that the money spent on oil search in the 1930’s - in Gippsland in Victoria in the 1920’s and 1930’s - would be included in that figure of £65,000,000. That was the figure that was given to me, but I did not ascertain the exact period that it covered. I think Senator Toohey will agree with me that the bulk of the expenditure on oil search would have been incurred in the last three or four years - since the subsidies have become an important feature of the drilling for oil in this country. So far the only reward that we have obtained for that expenditure of £65,000,000 has been something like 288,000 gallons of oil recovered in Gippsland in the 1920’s and 1930’s. More recently we had the flow of oil from the No. 1 well at Rough Range on the northwest coast of Australia. Unfortunately that did not prove to be a commercial field. More recently still we had the very valuable indication of the presence of oil in Australia at Cabawin in the Tara district, about 200 miles south-west of Brisbane, where a number of barrels of very high quality oil were recovered. That gave great encouragement to investors, drillers and the Government. Everybody concerned in the search for oil was tremendously stimulated by the flow at Cabawin. The search for oil in that area is being concentrated around the Roma-Surat-Tara zone. I am satisfied that by drilling holes within a limited radius of Cabawin we are going about the search for oil in the right way. I have great hopes for that area. I have never lost faith in the Maranoa basin as a source of oil in this country. In the early 1930’s on Hospital Hill, Roma, referred to by Senator Dittmer, there was a big flow of petroliferous gas from a bore hole that had been put down by the Roma Oil Corporation of that time. I had the pleasure then of driving around the town of Roma - I think I have mentioned this in
Senate on another occasion when this subject has been discussed - in a motor car that was propelled by motor spirit extracted from that flow of petroliferous gas. One hole put down recently in the vicinity of Roma gave off a high yield of petroliferous gas. The town of Roma is at present lighted at night by gas obtained from that hole. In some circumstances, gas is equally as valuable to a community as petroleum.
I believe that one day oil in commercial quantities will be found in that area. Many geologists who went to Roma in the 1930’s to study the flow of petroliferous gas told me that they had no doubt that the gas had percolated through crevices in the sandstone and other rock formations from a pool of petroleum. In their opinion the gas came from a pool or reservoir of petroleum. Of course, that pool or reservoir could be located 100 or 200 miles from the bore hole at Roma. The question was: Where is the pool and how can we find it? The only method known at the time was to sink a hole in the ground with a drill. Some of the drills used then were old style percussion drills. They were slow and far from efficient. To-day modern techniques and the subsidies and taxation concessions provided by the Commonwealth, as well as the lead that it gives, ensure that investors get full value for every £1 that they invest in the search for oil.
We owe a very great debt of gratitude to the Minister for National Development for his leadership in this field. He has given great encouragement to all. He has never failed to provide some means of assistance to those who are active in the search for this commodity. As I said a while ago, despite the gloomy speech delivered by Senator Dittmer, we in this country are building on a sure foundation : and are moving, though perhaps only steadily, towards a definite objective. Let us give credit where credit is due. We are discussing a national matter the importance of which transcends all petty political differences. The discovery of oil could mean the salvation of our country. Australia would become one of the great powers on earth if we discovered oil in commercial quantities. We could give employment to agreat number of people, we could build new cities and towns, and we could save a tremendousamount of the money that is now spent on foreign exchange every year in importing crude oil.
A lot has been done by this Government to encourage the investment of large sums of money in oil refineries. Much more than £100,000,000- perhaps even £200,000,000 or £300,000,000 - has been invested in such undertakings. These refineries give employment to very many people. I have in mind the refinery at Kwinana in Western Australia, which I had the privilege of visiting a couple of years ago, and also the refineries at Kurnell in New South Wales and Altona in Victoria. If we could find in our own country oil to supply to those refineries, we would really be in the big time. When considering these matters, we should not get down to a party political level. Let us be big enough to say that the Government is doing something that is really worth while. None of us can work miracles, but if we make steady progress along sound lines and narrow down the possible deposits of oil, we will be doing something really worth while. I submit that that is actually what is being done. The Minister for National Development is deserving of the goodwill and gratitude of every Australian for what he is doing in leading this great campaign.
A substantial sum of money has been expended in Papua on the search for oil. More than £30,000,000 has been spent at Puri and Iehi. Despite that expenditure, only traces of oil and high gas pressures have been noted at Puri. At Iehi 31,000,000 cubic feet of gas flowed daily in 1960. But they are good signs. The efforts being made there are worth persevering with.
I forgot to mention a little while ago the amount of work that has been done by Senator Spooner in encouraging investors from the United States of America, and perhaps other parts of the world, to invest their money in Australia. There has been a large inflow of money for investment in the search for oil. It may be argued that if oil is found in Australia the Americans will get the benefit. I say: Good luck to them. Any one who is prepared to put up his money in a search for oil over such a vast area of land as is contained in Australia and New Guinea is entitled to all the rewards that his enterprise can bring. I repeat: Good luck to the investor, whereever he comes from, who is prepared to search for oil in Australia. We are benefiting from the efforts of the large number of skilled men whom the Americans are sending here to search for this commodity. Those men understand the art of putting down a drill, erecting the rigs, sinking the bores and all the other intricate processes that are employed in this modern age in the United States of America and the Middle East. We Australians owe a lot to Senator Spooner because he keeps in touch with the class of investor to whom I have referred and because of his persuasiveness in encouraging them to come here. At receptions in Brisbane I have had the pleasure of meeting a number of these men who have come from the United States. They have gone to the more remote parts of Queensland to do their best, and they are full of confidence and determination. Perhaps within another year or two we shall have some very good news for the whole of Australia.
Senator Dittmer referred to our sedimentary basins, which cover about twothirds of the area of Australia.
– I did not say they covered two-thirds of the area of Australia. They cover 1,362,000 square miles, which is not half the area of this continent.
– I shall accept your figures. I really think they were the figures quoted by the Minister in his second reading speech. These basins once formed part of an ancient sea bed. They are of the kind of structure in which almost all the great oil-fields of the world exist. Seeing we have such a tremendous area of sedimentary basins, it can be said that there is vast scopefor the driller and the investor in the search ‘for oil. 1 repeat that in Australia the driller is going down into the type ofbasin in which all the great oil pools in the world are to be found. So we have that in our favour.
Sitting suspended from 5.45 to 8 , p.m.
– When the sitting was suspended I was about to say that the Research Professor of Geology at the University ofQueensland, Dr.Dorothy Hill, has delivered a highly interesting inaugural lecture entitled “ Fossil Corals and “Petroleum Engineering “.When referring to the search for oil, Dr. Hill, as reported in “ The Australasian Oil and Gas Journal “, said -
Queenslandhas perhaps the most striking of the world’s living coral reefs.
Fossil reef regions are among the many different types of regions that are regarded as favourable for petroleum. Favourable regions are those that have evidence of five things -
An organic source of oil;
A sediment - the source rock, in which the organic source can be buried and altered to petroleum;
A handy porous rock into which the petroleum can be flushed during the compaction of the source rock under increasing load of deposit;
A hydraulic gradient in porous rock up which petroleum can migrate into;
Traps in which the oil can be enclosed in a porous reservoir rock by an impermeable cap rock.
Dr. Mill then stressed the fact that among the various regions in which all these requirements could be found, were the reef regions, and that the reefs were formed in well-lit, warm, shallow waters rich in mineral nutrients and abounding in marine plankton.
It was these myriads of microscopic animals and plants that live suspended in the water, that are thought to be the chief source of petroleum. The growth of the plankton is encouraged by upwelling currents such as rise up over elevations, like reefs on the sea floor. When the plankton dies it is buried mostly in the deeper hollows of the reef regions, where a reducing element may assist in its subsequent alteration to petroleum.
She concluded on this note -
We may, I think, accept that regions known to carry fossil reefs deserve more than a casual search for oil. This being so, let us look at Queensland from the point of view of oil related to reef origins.
The continental shelf on which our living systems of reefs is sited is an obvious region for search, especially as marine strata as old as Miocene (30 million years) have been found in boring on Heron Island. The problem of selection of sites in such a watery area is a very special one, and I personally would look first’ at the extreme northern end of the reef where it enters New Guinea waters.
That is what Dr. Hill had to say.
– Is anybody following her advice?
– I am not aware of it. That is why . I have raised this matter to-night . In that inaugural lecture she has made a very strong recommendation to those engaged in the search for petroleum that the ancient reef areas of eastern Queensland should be very carefully and thoroughly examined for oil. I think she. has made a very useful and valuable contribution to our knowledge of the whereabouts of oil in accumulation in or about our coral reef formations along the Queensland coast.
Having introduced, that matter as a subject for thought by all honorable senators interested in the search for oil, and those engaged in the search for oil, I pass on to say that since 1959 no fewer than 68 geophysical operations have been accorded subsidy, and no less than £3,500,000 has been paid or committed in subsidies. The subsidies are to be calculated, from my interpretation of the speech of the Minister for National Development, on a businesslike basis. No happy-go-lucky method of measuring and calculating the amount of subsidy due to the driller will be employed. All applicants will be required to furnish information on the location of the job. An applicant must give evidence of his financial capabilities to see the work through to a successful conclusion, and he must also submit a detailed programme of the operation. In addition - this is very important - a detailed estimate of the cost involved must be given. If the Department of National Development considers the project to be sound and bona fide, its officers will make a recommendation to the Minister that the operation should go ahead and be the subject of a subsidy. Progressive payments will be made on a scale that will afford protection against overpayment. The amount appropriated for subsidy for the current year is stated to be £2,700,000.
The Government is; keenly- aware of the importance- attaching to the- discovery of oil, as the 1959 act and- this bill’ quite clearly prove. The- value of the subsidies and the many concessions provided in the bill run1 into big money. Geologists and professional oil exploration men have’ no doubt about the presence of oil’ in1 Australia. They are certain, from their observations and their study of the occurrences of oil, that oil- in commercially payable quantities will, be found in this country. When thisbill is passed more capital will be attracted to Australia and’ more skilled operators will be engaged on the important task of searching for’ oil.
The amendment submitted by the Leader of the Opposition (Senator McKenna) ventures the opinion that the Government should take the lead in the search for oil. To my mind the answer to that amendment is very simple. The Government has already taken the lead in a well-planned effort. I am sure that all in the Parliament and throughout Australia unite in wishing great success to those good people who are presently engaged in the search for oil in Australia.
.- f am- interested in this legislation because at the present time approximately 30 COmpanies are boring for oil in Queensland. Many of those companies are of American origin. Maybe it is due to the fact that we’ have- such a large number of companies boring for oil in Queensland that this legislation has been introduced. 1 have discussed the subsidy plan with executives of some of the companies and they have expressed their satisfaction with the scheme. I could not understand it if they were opposed to the legislation in any way. Of. course, another inducement to them to bore in Queensland at present is that in the early part of this year oil actually wasdiscovered at Tars.. Certainly, it was noi found in a payable quantity; nevertheless oil was brought to the surface. That, indeed, was an achievement.
When I was listening to some honorable senators speaking this afternoon about the search for oil in various parts of Australia, my mind went back to the time when I was a youngster and gas was allowed to come out: of the ground in Roma. It caught alight. Indeed, it was used to light that’ town for a number of years before the bore was sealed. Quite recently, a similar experience occurred. Of course; if gas iscoming out of the ground, it follows that there: is gas. down in- the ground;, but what we- can do with’ it is another proposition.
The’ Minister for National Development’ (Senator Spooner) has been congratulated by all honorable senators On the Government side who have spoken in this debate. They honestly believe that- the Minister is doing his utmost to win oil. To find sufficient oil for Australia’s requirements is a man-sized-, job. Senator Maher spoke about discovering oil in commercial quantities inAustralia; but so far no one has told us< what quantity of oil will have to be discovered to satisfy all Australia’s requirements.
– To be economic, 100 barrels a day must be produced.
– I will accept the honorable senator’s bid, but he is very wrong. He will not be the only one who is wrong about oil. He has not the good oil.
The legislation that we are discussing at present will enlarge the field of subsidy. Certain classes of oil search operations which have been carried out in the past did not attract the subsidy. That impediment is now to be removed and a subsidy is to be paid for additional classes of work. If we look at the whole proposition, we find that the people of Australia have been underwriting a portion of the cost incurred by companies in boring for oil. The people are meeting a share of the cost incurred by those companies. There is no escape from the truth of that statement. As I said, the oil search proposition is very attractive to the companies. First, there are the income tax concessions. They are not to be scoffed at by any company which is engaged in any sort of operation. These companies have a goal to win. If they are successful, they need not search for oil elsewhere or for anything else because in Australia there is a market for oil which exceeds 2,000,000,000 gallons annually. They could put their drills away and retire.
Australia is in an unfortunate position as a nation because it has to import all of its oil requirements. Australia is unlike many other countries in that respect. The demand for oil is increasing daily. We live in an era of oil and steel. We are getting farther and farther away from the era of coal and the old farm horse. Because of the necessity to have at our command sufficient oil for all purposes, a task falls upon the Government. This is how the Government has seen fit to meet its responsibility: It says, “ This legislation will bring oil to us in sufficient quantities “. I earnestly hope that the Government is correct in that surmise. I earnestly hope that we have oil in Australia.
I can understand immediately, as I think every other honorable senator can, what being able to supply all our own oil requirements would mean to the Australian economy at present. This afternoon it was pointed out that we spend £135,000,000 a year overseas in purchasing the oil that is used in this country and, as I remarked a while ago, the demand for oil is increasing all the time. What position would the economy drift into if suddenly our oil supplies were cut off? I know that some honorable senators would say that that is an impossibility in this nuclear age, but a misplaced nuclear bomb in one or two parts of the world could easily cut off our oil supplies. No alternative to the oil engine has been provided in Australia. Motor vehicles, stationary engines, tractors for winning food supplies, ships and now railway locomotives are all oil-driven. In many ways oil has displaced other fuels which served their purpose in the past. For instance, oil is used for heating homes and it is now very difficult to sell woollen blankets.
I am not prepared to say that the efforts made by the Government are sufficient. The Government could go farther. That is why I support the amendment moved by the Leader of the Opposition (Senator McKenna). I honestly believe that the Government made a great blunder when it decided to sell the deep boring plants that were imported just prior to or about the time it took office.
– *’ Just prior to “ are the right words. It was about four years prior.
– I cannot hear the honorable senator. If he spoke plainly I would understand him. The Government faces another election shortly and it may be a question of finding oil or handing over the reins of office to the Opposition. I am prepared to bet the Minister for National Development all my spare copies of “ Hansard “ to nothing that he will not win oil before 9th December next. I think that is a very fair bet. It is essential that we obtain oil from somewhere at present, but we should obtain it from our own country as soon as we possibly can.
I will now give the Senate an idea of the volume of oil that is required in Australia. At the end of last year 1,967,000 registered cars were on the road. One has only to sit in the front of Parliament House at night and look across to Civic Centre to see the number of motor vehicles being driven around Canberra. In addition, 817,000 commercial vehicles are playing their part in developing the Commonwealth in various ways. There are also 99,000 motor cycles. There is a total of 2,883,000 motor vehicles of various types registered and in use in the Commonwealth of Australia. Also, as I mentioned, there are tractors on the farms and in various other spheres. There are mobile engines of various types, stationary engines and, as I have said, railway locomotives, all using oil.
Let us look at the countries from which oil can be obtained. Trade between Australia and some of those countries is quite free, but with others it would be very difficult indeed. When we glance at the regions in which oil is produced, we find that North America - particularly the United States of America and Canada - produces at present 35 per cent, of the world’s oil. In South America and the Caribbean there are no fewer than eleven oil-producing countries, responsible for 18.71 per cent, of the world’s oil production. In the. Middle East, ten countries produce between them 25.37 per cent, of the world’s oil, and in Africa five countries between them produce .99 per cent. That 99 per cent, is not to be scoffed at, because we can appreciate what the production of oil means to the economies of those five struggling countries. They are Algeria and Sahara, Nigeria, Gabon Congo, Morocco and Angola. In Western Europe there are seven oil-producing countries, responsible for 1.41 per cent, of the crude oil produced in the world, and in the Far East there are also seven countries, responsible for 2.49 per cent. In the group comprising Eastern Europe and China there are eight countries, producing between them 15.79 per cent, of the world’s oil. We obtain the major portion of our oil supplies from Indonesia, and probably we are fortunate to have so close to us a country which can supply us with large quantities of oil.
Let me give some figures to show how the oil that we import is used, because I wish to stress as much as I possibly can the importance of producing oil in Australia. During the twelve months ended in September of last year - giving round figures - we consumed 27,000,000 gallons of aviation kerosene, 1,271,000,000 gallons of motor spirit, 71,000,000 gallons of aviation turbine fuel, 63,000,000 gallons of lighting kerosene, 56,000,000 gallons of power kerosene, 213,000,000 gallons of automotive diesel oil, 237,000,000 gallons of industrial diesel oil, 624,000,000 gallons of furnace oil, 199,000,000 gallons of refinery fuel, 57,000,000 gallons of lubricants, 24,000,000 gallons of industrial and white, spirits, 8,000,000 gallons of liquefied petroleum gas, 11,000,000 gallons of domestic gas and 57,000,000 gallons of other products. A total of about 2,871,000,000 gallons of oil was consumed for various purposes during the twelve months ended in September of last year.
I have mentioned the countries from which we could obtain oil. Unfortunately, the United Kingdom is not an oilproducing country. If she were, trading with her would be easier because we could take her oil and she could take, say, our dairy products. These are days when we are speaking about the possible effects of the European Common Market and various things of that kind. In future, it may be difficult for Australia to obtain the oil which she requires. In view of that possibility, we must either look for alternative sources of supply from overseas or take positive steps to overcome the difficulty. I suggest that a positive step at the present time would be to do what is suggested in the amendment proposed by the Opposition, and I will deal with that subject very soon.
When Senator Maher was speaking before the sitting was suspended, he talked about Australia getting into the big time. I do not know what he meant by that. Possibly he had in mind Australia’s becoming wealthy and controlling valuable economic resources.
– It is a Queensland expression, is it not?
– Only recently the Mayor of Toowoomba said that that city had a very rosy future, and he was hopeful that oil would be discovered in the Tara area within a matter of weeks. He assured the public that if that happened - and it could - Toowoomba would be the most important city in Australia.
– In other words, it would be big time.
– ;Let me dispel any foolish thoughts that the honorable senator may have in this regard. There are companies in the big time in Australia at present in regard to oil. I am sure that Senator Mattner could not tell me how much capital is invested in the oil industry in Australia. I like a joke as well as he does, but this is a very serious matter. At the end of 1960 £186,000,000 was invested in marketing facilities for oil in Australia. Not all of that was Australian capital; a good deal of it was foreign capital. In the refining of oil, £135,000,000 was invested. Another £62,000,000 was invested in exploration for oil in Australia and the Territories. A total of £383,000,000 was invested in the oil industry in Australia then, although this is not an oil-producing country at present. We can imagine what the investment would be if we were able to produce all of the oil that we require. We certainly would be in the big time - whatever that expression means - if that day arrived.
I understand that the taxation concessions to oil search companies cost £1,000,000 in one year - a substantial sum - and that the subsidies cost £2,700,000. It is some time since I read the Minister’s second-reading speech, and he may have said that between 1959 and the time when this bill was presented £2,700,000 had been spent on subsidies. However, I do not care two hoots what is spent, provided that the Minister can produce the goods. If what he does leads to the production of oil in Australia, it will be quite all Tight with me. He can go ahead and spend a few more millions of pounds. I appreciate fully the importance of oil to Australia at present and what would be the effect on our prosperity if we were in the fortunate position of producing locally the oil that we require.
I understand that drilling for oil is like any other calling in that certain techniques are used and you can learn those techniques only by engaging in drilling operations in a practical way. There are certain things that cannot be taught by saying them or by writing them down. It is necessary to do them in a practical way to understand fully the techniques associated with them. That is true of the oil-boring industry. Ever since we first .tackled the .task of boring for oil, certain knowledge has been obtained. I understand from the Minister that it has been handled in a proper manner and that we now -possess a wealth of knowledge because, over the years, we have accumulated certain information which was not previously available in the .Commonwealth. I admit that that is a step in the right direction and that it may lead us somewhere. Sooner or later, some companies will disappear and others will come on to the scene. If the newcomers can obtain immediately the information that was available to other companies, they will be able to make a start towards their objectives. The amendment moved by the Leader of the Opposition (Senator McKenna) seeks to add the following words to the motion that the bill be read a second time: - but that this Senate is of opinion that the Government should take the lead in the search for oil and accelerate the search by developing the activities of the Bureau of Mineral Resources in mapping, geological and geophysical surveys and in drilling ‘for oil and should develop research in the production of oil from coal and shale.
I want to say something about the words “ and in drilling for oil “. I am sure that if my party is returned to office on 9th December next - the Government has only a few more weeks to occupy the treasury bench - we will have again two deep boring plants in the Commonwealth. We will say to the clever officers in the Bureau of Mineral Resources: “ There are two deep boring plants to start with. You go and discover oil somewhere in Australia. You can back your information by going out and trying to discover oil.” While I am saying that, I want it to be clearly understood that this legislation that we are discussing has a .contractual element in it. Therefore, it must .carry on into the future. I cannot ‘see legislation of this kind being terminated ‘for years to come. I am speaking now, ‘not pessimistically altogether but having in mind that so far we have not discovered oil in payable quantities and that it ‘may be several years more before we do.
– What do you think about Senator Matter’s opinions?
– 1 would love to hear your -opinions about Ihe oil industry. When do you think -we will discover oil?
– Very soon, I. hope.
– Will-,,y.o.u tell rae where and when, and which company .will discover it? That is the information I want. <Senator Sir Neil O’sullivan. - It will be discovered in the Maranoa district.
– Y.ou may be correct. 1 honestly think ‘it will be discovered by accident; a .grazier in the western portion of Queensland will be boring for water and will bring up oil. The sooner that day arrives, the better it will be for Australia.
; - We have just listened to a most interesting speech from Senator Benn. At the Outset, I congratulate the Government on the generous attitude that it has taken, and necessarily so, in assisting private industry in the search .for oil in Australia. ;I do not believe that .the Government can do ;much more in this field than it is doing at the moment. The Leader of the Opposition (Senator McKenna) has moved an amendment which suggests, in part, that the -Government should .develop research in the production of .oil from coal .and ; shale )I remind honorable senators .opposite of our experience in 1947, 1948 and 1949, under a ‘La’bour government, in trying to obtain oil from shale. The efforts that were made ‘then were an utter -fiasco. If my -memory serves me correctly, the cost of producing oil from shale in 1949 was 4s. 2d. or 4s. 3d. a gallon of refined oil, not talking into consideration distribution, depreciation and capital costs.
If honorable senators opposite remember our experience of those times they may be prepared to withdraw the parts of the amendment that refer .to the production of oil from shale. As we know, most of the production came from Glen Davis, in New South Wales. According to the geologists, who should know, the whole of New South Wales contains only sufficient oil-bearing shale, if properly mined, to provide Australia with less than one year’s supply of oil. That assessment -indicates the nature of the .amendment which the Opposition has moved. J do not .think .that we should go back to the conditions that existed in 1949. Having .regard to .present-day costs, by the time .that oil produced .from shale reached the consumer, a gallon of .motor spirit would cost >6s. or 7s. I .think .those figures are correct, because I have given this matter quite a lot. oi* thought. : Let,me -break down the costs of mining and processing at Glen Davis. The mining .cost per ton of shale in 1949 was £2 ls. 5d., or 11.3d per gallon of crude oil, or 21’.9d. per gallon of motor spirit. The cost of crushing was 2s. 6d. per ton of shale, or .7d. per gallon of crude oil, or 1.3d. per ‘gallon of motor spirit. The carbonizing cost was 7.6d. per gallon of crude oil, .or 11. 6d. per gallon of motor spirit. The refining cost was 8. Id. per gallon of motor spirit, making a total of 42. 9d. per gallon of motor spirit. If interest, depreciation and distribution costs were added, the total cost would have been 6s. 2d. per gallon. On the basis of 1949 figures, when the crude oil cost was 19.6d. per gallon, the cost of a gallon of crude oil produced from shale to-day would be about 30d. We can bring crude oil into Australia at .a cost -of between 7d. and lOd. a gallon, depending upon the source from which it comes. So much for shale oil.
Now I shall refer to the production of oil from coal. The Government has taken a keen interest in this subject, which has been under continuous review for many years. The Commonwealth and New South Wales Governments established the Oil and Chemicals from Coal Committee in 1957, under the chairmanship of Mr. Cochran, chairman of the Joint Coal Board. The committee examined proposals put bEfore :it .and reported to the two governments in 1958. As a result, further investigations by the Joint Coal Board were authorized and they are now in progress. ‘Subsequently, the ‘Commonwealth constituted the Coal Utilization Research Advisory Committee, with wide terms of reference. In its interim report of 4th August, 1960, .this committee advised that the manufacture of oil from coal was not at present economical. So much for the second part of the Opposition’s amendment. I suppose that the Opposition must come forward with something in order to oppose the Government.
– The amendment does not -say that this is economical. We ask for experiments.
– Nothing is any good unless it -.is economical, but nothing -that the Labour Party did was economical.
– That does not me., that you should not continue to experiment.
– We have carried ou many experiments, which up to date have proved that oil cannot be produced economically from coal. I do not think that it will ever be possible.
– That is only your view. Others think differently.
– If I had my way, this committee would not continue to function, because the proposition is impossible when coal must be produced from underground at £2 or £3 a ton and oil, when found, just flows out of a pipe. In the production of oil from coal, one is at a distinct disadvantage. However, there are other uses for coal which this committee is investigating. I do not think we will ever be successful in obtaining from coal oil that will be able to compete on Australian and world markets.
– In a national emergency it would be important.
– In a national emergency, it may be possible. During the last war we were forced to use producer gas. I think I have disposed of the amendment. I should not be at all surprised now to see many Opposition senators vote with the Government.
I return now to the bill. I congratulate the Government upon extending the provisions aimed at intensifying the search for oil in Australia. In 1957 the Government decided to subsidize stratigraphic drilling on approved sites to the extent of 50 per cent, of the cost. In 1959 the legislation was amended to provide subsidies for geophysical work in the field on approved areas on a 50/50 basis. In 1959 or 1960, the taxation legislation was amended to allow a total write-off for income tax purposes of money paid to oil companies in calls. Later, tax concessions were granted to commercial oil companies or subsidiaries from overseas. Now we are going forward to increase the subsidy on a different basis and to apply it to different categories of oil search. Any person approved by the Government will be able to gain a subsidy for drilling a well which may discover oil, and not only for stratigraphic drilling. There are three or four different categories.
To-day we have reached a stage at which Austraiian taxpayers paying 10s. in the £1 in tax and subscribing to a company, will receive a concession for taxation purposes of 50 per cent, of the amount they subscribe. The Commonwealth will therefore be coming in on a 50/50 basis. For every £1 that those taxpayers subscribe to the company, they will receive a taxation concession of 10s. The company may obtain as a subsidy 50 per cent, of its expenditure on drilling and 50 per cent, of its expenditure on seismographic and geophysical surveys. So in actual fact at this stage the Commonwealth is contributing 75 per cent, of the amount privately invested in the search for oil in Australia.
The Government and the oil industry believe that there is oil in Australia. It is interesting to note that following the granting in 1959 of a subsidy on seismographic work and geological surveys the number of seismic teams or geophysical teams working in Australia increased from four to sixteen. The Petroleum Exploration Association Limited of Australia came forward with a four-year plan which it believed would, if followed closely, crash through and lead to the finding of oil within that period. The scheme involved expenditure by the Government in concessions, other than taxation concessions, of £25,000,000, and expenditure of £25,000,000 by oil exploration companies operating in Australia. The expenditure suggested to 30th June, 1962, was £3,000,000 for seismic work and £2,500,000 in drilling subsidy; to 30th June, 1963, £6,000,000 for seismic work and £7,000,000 in drilling subsidy; to 30th June, 1964, £5,000,000 for seismic work and £8,000,000 in drilling subsidy; to 30th June, 1965, £4,000,000 for seismic work and £9,000,000 for drilling subsidy.
– Is that projected or proposed?
– That was proposed by the association.
– Was it accepted?
– The Government has not accepted it, but I do not know that the Government has fallen very far short of it. By the time this legislation has passed through both Houses and the oil drilling companies have got themselves into gear to carry out increased seismic and drilling work, the expenditure stipulated in this four-year plan might be achieved. The Government is increasing from £2,400,000 to £4,100,000 t’he amount spent to encourage the search for oil. Last year the subsidy amounted to £1,400,000. This year direct assistance will amount to £1,400,000 and the subsidy to £2,700,000, making a total of £4,100,000. I doubt very much whether the companies engaged in the search for oil in Australia will be able to spend all of the money that is available to them. If they are able to spend all of the money, it should be a challenge to the Government to find additional finance to subsidize the work on which those companies are engaged. Since the Government decided to amend the taxation laws to grant concessions for money subscribed to companies searching for oil in Australia, and the Territory of Papua and New Guinea, to my knowledge there have been only two or three capital flotations of such companies in Australia and they have been oversubscribed. Any person who is paying a high rate of income tax has a wonderful chance to demonstrate his pioneering spirit by subscribing to companies engaged in the search for oil and thus helping those companies to obtain the additional concessions provided by the Government. The Government meets 75 per cent, of the cost of the search for oil in Australia. This is a challenge to the companies engaged in the search for oil to find additional capital so that the search may be continued with the use of Australian capital. Oil search is so expensive that the Government cannot expect all the necessary finance to be provided from within Australia. This is a small nation with a population of less than 1 1,000,000 people. Oil search is costly. The Government has granted taxation concessions in order to encourage the people of Australia to provide money to assist in the search for this vital commodity that is so urgently needed in this country. The Government’s policy in this regard has been successful because I do not know of a flotation that has not been over-subscribed. A recent capital issue floated by a company called Continental Oil, was well and truly over-subscribed. That is because the people of Australia believe that oil will be found here. I have always believed it.
– The people are always behind you.
– I do not know about that. Are you one of them? I have travelled around Australia and have taken an interest in the search for oil. I have watched the various companies in the field. The companies engaged in exploration at Wapet and Rough Range knew that oil would be found at those places, and they were proved right. They knew that oil would be found at Cabawin. Nobody doubts that oil exists in Australia. 1 have no doubt that oil exists in commercial quantities around Cabawin and Surat. The French petroleum research team that came here at the request of the Government drew up a list of places where it thought oil might be found. It is just a matter of time before we strike oil. The more that Australians subscribe to companies engaged in the search for oil, the bigger will be Australia’s equity in the oil when it is found. Nobody wants to see the rewards for the discovery of oil go out of Australia, but the search for oil is too costly for Australia alone to undertake. The attitude adopted by the Opposition, the statements that it makes to the press and the amendment that it has moved to the bill, do not help in the search for oil. Mr. Calwell has said-
– He is our leader.
– He is the honorable senator’s leader. I have no personal bias against Mr. Calwell. I like and respect him very much, but if he, as Leader of the Opposition in another place, makes a statement to the press with which I disagree, I am entitled to criticise him. Under the heading “ Opposition Bid on Oil from Coal “, the “ Newcastle Morning Herald “ of 14th September last reports -
The Opposition will seek more finance for research into the production of oil from coal and shale when the petroleum search subsidy bill is before the Senate.
The report states that the Opposition would seek to move an amendment. The report continues -
The amendment would be aimed at developing the activities of the Bureau of Mineral Resources in mapping, geological and geophysical surveys, drilling for oil, and developing research in the production of oil from coal and shale.
This is the old 1949 bogy again. The report continues -
If the Government refused to accept the amendment-
– You have the numbers. Why would you not refuse?
– If Senator Dittmer had been in the chamber earlier he would have heard me say that I think, many honorable senators opposite will vote with the Government in the division on this amendment. If he had heard my reasons for saying that I think he, too, would vote with the Government.
The report continues -
Mr. Calwell said the Opposition disagreed with the Government scheme of subsidizing private companies in the search for oil.
The Government should try to ensure that Australia found oil to meet its own needs by aiding the Slates to establish oil refineries and to conduct oil searches.
The search for oil in Australia had been lessintense and systematic than in any other continent or region, Mr. Calwell said.
The Federal Government should engage directly or through the States in the search, for oil.
– Is anything wrong with that?
– A lot is wrong with that statement, as I will explain to the honorable senator if he- will listen, and f am sure he will. Senator Dittmer recently travelled through a large part of the north of Australia, giving advice to the people and telling them what the Opposition would do if it formed a government. 1 have read what the honorable senator said. J was very interested in the statements that he made to the press. Most of his statements were completely ridiculous. They were the’ statements of some one in opposition trying to make a nuisance of himself. The people of the north would not have a bar of Senator Dittmer.
When we consider the work of the oil refineries in Australia, we can hardly believe that a statement such as that made by Mr. Calwell would be made by a responsible member of the Opposition. At the present time Australian oil refineries are catering more than adequately for Australia’s needs. Indeed, I believe that approximately 1,000,000 tons of oil is exported annually from Australia. In spite of that, the Leader of the Opposition in another place, supported by Opposition senators in this place, judging by the look on their faces, advances the proposition that State refineries should be built to compete with the refineries that ace at present being operated by private enterprise. The’ State undertakings would go bankrupt, because they would not be able’ to compete: I do not want to hit honorable senators opposite too hard, but I> invite then* to recall what happened to the Government shipping line and to TransAustralia Airlines in 1949: Labour could not run anything profitably. A Labour government has never done so yet, and ! do not believe that one could hope to start doing so now.
I do not intend to provoke the Leader
Of the- Opposition. I have the feeling that the Opposition will withdraw its amendment. If it does not, probably a vote on it will’ have to be” taken. I venture to suggest that if a vote is taken the amendment will’ be thrown out. 1 have much- pleasure in supporting’ the bill.
.- The measure before the Senate is very important and should be regarded very seriously indeed. I was astonished to hear Senator Scott treat’ it so lightly. His statement about Australian oil refineries being; able- to cater more than adequately for our needs is quite sound if we can be assured, that crude oil will be available to those refineries at all times. But I remind the Senate that we are situated in the Pacific area miles from sources of supply of crude: oil and that we are at the mercy of shipping’ companies and international oil com*panies in obtaining supplies for our refineries. In those circumstances, it is to be expected that any responsible leader in this country would give thought to providing. Australia with a continuing supply of crude oil from- within her own borders.
This bill is designed to encourage the production of petroleum within Australia. On the other hand, it is quite reasonable’ to expect that, if we are unable to find oil’ here, we will develop other resources as Germany did during the last war when she used the hydrogenation process to extract
Oil from coal.
– What about the State refineries?
– That remark showsjust how frivolous is your approach to the problem. I applaud the efforts of the Government in encouraging the search for oil in Australia and the Territory of Papuan and New Guinea. As the Minister for National Development (Senator Spooner) has said, the object of the bill now before us is to extend the period of operation of the Petroleum Search Subsidy Act. This measure illustrates the success of the existing legislation. As the Minister has pointed out, in 1959 there were four seismic crews in the field, but to-day there are sixteen. That development is a sound tribute to the efforts of this Government. While those seismic crews and the oil companies are engaged in the search for oil, they are obtaining a better picture of the oil prospects of very large areas. I pay tribute also to the Bureau of Mineral Resources, which has done excellent work in the field of geological mapping and geophysical surveys, and in obtaining information about the sedimentary basins that have been mentioned by the Minister. I understand that the extent of 24 sedimentary basins of a total area of 1,362,000 square miles on the mainland, and of two major basins of a total area of 100,000 square miles in New Guinea, is known. I should like the Minister to indicate whether he was referring to New Guinea or Papua, because that information is germane to some matters I should like to clear up in the course of my remarks. As a result of the work of the Division of National Mapping, too, we have quite an extensive library of topographical maps which are readily available for geologists and geophysicists.
Encouragement has been given to exploration companies in the form of taxation concessions amounting to £1,000,000 and subsidies amounting to £1,400,000. The Minister has stated that in this financial year direct assistance amounting to £1,400,000 and subsidies amounting to £2,700,000 will be made available. He has stated also that since 1959 a total of £3,494,000 has been paid or committed by way of subsidy for 68 geophysical operations and 24 drilling operations.
The kind of activity that is encouraged under the existing legislation and the measure now before us includes stratigraphic drilling, detailed structure drilling, test drilling, assessment drilling and development drilling. All these activities are necessary to obtain a complete picture of the sedimentary basins and a complete geophysical survey of oil-bearing areas.
Because of the supreme importance of the finding of oil to the Australian economy, the encouragement of such activity is highly commendable. If our sources of supply of oil were suddenly cut off, there would be chaos within a very short space of time. Within six weeks or two months the wheels of activity in this country would grind to a standstill. For that reason, the search for oil in Australia should be given top priority. Any information that is available, any research work which is being done and any interest that is being shown should be followed up conscientiously by the Government.
I have been handed a rather interesting article written by Dr. Gerrit Mulder, a fellow of the Australian National University. I understand that the Minister for National Development, the department and various companies that are concerned in drilling in Papua have received a copy of this article. It will be very interesting to know whether the Minister has seriously considered it. It contains certain deductions, certain statements, the authenticity of which should be tested to the ultimate. I should like to know whether the department has perused that very serious article, and whether any statement has been made about the truth or falsity of the matters outlined by Dr. Gerrit Mulder. I would suggest that departmental officers give some thought to making a statement about the matters set out in the article. The amount of money involved in subsidies and in testing is of such great dimensions that the people of Australia should be kept informed of each phase of the development of the search for oil.
The article to which I have referred is confined more or less to the recent events that have led to the present stage of oil search activities in the western half of Papua. At the present time an exploration programme is being conducted by three companies, the British Petroleum company, the Standard Vacuum company and Oh Search Limited, which jointly own and operate the Australasian Petroleum Company and the Island Exploration Company. Certain public statements have been made by these companies and by the Bureau of Mineral Resources, but apart from that very little information has been made public. We can take it for granted that statements made by these companies and by the bureau are authentic. It can certainly be said that statements made by the Bureau of Mineral Resources are reliable and completely beyond suspicion.
In view of the importance and seriousness of the article to which I have referred I should like to ask the Minister some questions in addition to those I recently put on the notice-paper and which he answered to-day. The answer that the Minister gave to-day related to the Iehi hole which was the last one that was drilled. I asked the Minister -
Was any subsidy paid to Oil Search Limited for drilling at Iehi and Barikewa in Papua?
The Minister said that a subsidy was paid in respect of drilling operations at Iehi, but not in respect of operations at Barikewa, because the latter were commenced prior to the introduction of the Petroleum Search Subsidy Act of 1957. I further asked -
What information, if any, concerning the cores of the holes drilled at Iehi and Barikewa has been made available to the Bureau of Mineral Resources?
The Minister stated that cuts of all cores taken in Iehi No. 1 were submitted by the company to the Bureau of Mineral Resources in accordance with the provisions of the agreement between the Commonwealth and the company in respect of this operation under the Petroleum Search Subsidy Act 1959. He said that the bureau received also full information on the results of analysis of cores from the reservoir beds, the analysis of reservoir fluids and the results of formation tests.
My third question was -
Is the Department of National Development satisfied that all available information about these drillings has been supplied to it, particularly details of drillings between the 5,700 feet level and the 8,700 feet level?
The Minister replied -
Yes. It is assumed that the interval 5,700 feet to 8,700 feet mentioned in this question refers to Barikewa No. 1.
It does not refer to Barikewa No. 1. The information that I seek relates to Iehi No. 1 . The information that has been given to me through the article to which I have referred shows that the Iehi structure is a very large anticline twelve miles north of Barikewa which had already been mapped in sufficient geological detail at an earlier period by these companies. Both structures are located in the moderately folded shelf area of deposition south of the narrow cretaceous basin and were drilled to test the cretaceous sandstones. Mountain building occurred in Papua during the miocene period. We can construct two geological models, pre-orogenous and postorogenous, which would represent conditions along a line running from south to north through Barikewa and Iehi. If oil were generated in this region, it would have taken place in the basin in the pre-orogenous period and the fluids so formed would have moved upward to the highest point in the porous sandstones in ascending order of specific gravity, the lighter hydrocarbons - that is gas - ahead of the heavier hydrocarbons - that is oil - to be followed by brine.
I shall point out later, Mr. President, that from the information that has been given on both the Barikewa and the Iehi wells, the drills entered the cretaceous area at Iehi at 2,400 feet and they entered the cretaceous area at Barikewa at 4,400 feet. In the Iehi well the drill struck on sand, siltstones and fine sandstones down to an area of 4,612 feet, and it struck mudstones, siltstones and sandstones between 4,600 feet and 5,700 feet, but the area from 5,790 feet down to 8,923 feet contained fine sandstone, siltstones and mudstones. No reports have been circulated or issued of this critical area in the drillings. What has happened?
The Barikewa well discovered large quantities of gas in two sandstone sequences between roughly 5,400 feet and 6,100 feet. If this gas was wet gas - that is significant because the Minister has said in his answer that it was not wet gas - it would indicate that in the pre-orogenous period it was associated with oil which, other things being equal, could have been trapped in any closed structure that was formed between Berekewa and the ancient basin by buckling during the orogenous period. Although the companies have persistently claimed that the Barikewa gas was dry, the well is designated as a wet gas well in report No. 41 A of the Bureau of Mineral Resources. This is contained in the Summary of Oil Search activities in Australia and New Guinea to June, 1959, Plate 2. The target of the Iehi drilling operation was therefore the sandstone from which those wet gases flowed in Barikewa.
Mr. Minister, I sought information and I was advised as follows in respect of wet gases, which is the term used here: -
The drilling operations at Iehi No. 1 were completed in November, 1960. However, the following information is available. Out of nineteen separate formation tests of eleven perforated intervals covering four zones which were selected for testing on the core and electric logs evidence, only one produced a large volume of dry gas. The remaining zones were impermeable and produced either water or no fluids at all. It can be stated, therefore, that in this particular well drilled to a total depth of 10,042 feet, the formation tests produced no evidence of oil or condensate.
On 29th November, 1960, Mr. G. B. Kater, the chairman of Oil Search Limited, said -
Testing of the Iehi well will be conducted from top to bottom. As there are a number of zones to be tested, this could go through to january There are a number of zones below the originally reported occurrences (i.e., below 5,486 feet) which will be tested. It is known that some of these contain water, but they will be tested only to obtain pressure evidence.
A little later, on 24th December, 1960, Mr. Kater said -
The gas obtained from the 4,708 feet sandstone is dry, and there can be no oil associated with it. It is of no use to the company.
He said that unless results of testing got better he expected the other partners to go out. He emphasized, however, that the tests were not yet finished.
The Minister has said - there is no sound basis for the report that oil has been sealed off in those two Papuan wells. However, the possibility of finding oil on Barikewa or Iehi structures by further drilling cannot be entirely dismissed.
The chairman of the company, on the one hand, has said that he is expecting the other partners to go out and the gas is dry. According to this article that has come to me from Dr. Mulder, the Australasian Petroleum Company Proprietary Limited, in its progress report of 14th December last year, said -
The Iehi hole has been deepened 442 feet to 10,042 feet and a seven-inch liner has been cemented between 5,413 feet and 9,978 feet. Flow tests of the several sandstones encountered between 4,708 feet and 9,020 feet are now being undertaken.
The progress report of 23rd December. 1960, said -
A drill stem test of a sandstone below 4,708 feet yielded a gas flow at the rate of 31 million cubic feet a day. No condensate was produced with the gas. Drill stem tests of sandstones below 5,240 feet and 5,350 feet recovered water with some solution gas. Further testing of sandstone at 4,708 feet will proceed. Directors o/ Oil Search, B.P., and Vacuum Oil Co. will mee in London for discussions on January 10 and 11.
The very important point is that these two drillings in the structure - Barikewa and Iehi - are only 12 miles apart. According to this article, there should be no appreciable differences in the cretaceous sequences and their thicknesses. Barikewa was drilled on the crest of the anticline and passed through a zone of interest between 5,018 feet and 6,100 feet, having entered the cretaceous at approximately 4,400 feet. Since it was drilled on the crest, the drill intersected the layers at an angle of 90 degrees, or near enough to that as to make very little difference. Entering the cretaceous at 2,400 feet, the Iehi drill would have reached the corresponding zone of interest at about 3,018 feet if it had been located on the crest. It did not enter the zone of interest until it had reached a depth of 4,708 feet, hence it was drilled on the slope of the anticline. This places the real target, corresponding to the wet gas producing sandstones of Barikewa, in the interval between 5,710 feet and 8,766 feet, and in that interval of 3,056 feet the drill traversed these sandstones for a distance of approximately 2,200 feet.
In answer to my question, the Minister said -
It is assumed that the interval 5,700 feet to 8,700 feet mentioned in this question refers to Barikewa No. 1.
The information which I was seeking and which should be available to the Minister and the department relates to this specific area between 4,612 feet, which was reached on 13 th September, and 8,932 feet which was reached on 8th November. That is a zone of interest in which there were three sandstones, two of which did not produce formation fluid and the third of which was found to contain brine, in an area of fine-grained sandstone, siltstone and rnudstone which, as is pointed out in this article, is the structure in which oil is most likely to exist and has actually been found in the form of wet gas, as is admitted in respect of the Barikewa hole.
– But there is still no oil.
– Wait until I continue. After 23rd December, 1960, there have been no further statements issued on the Iehi well by the Australasian Petroleum Company Proprietary Limited. The only work that was done after that date was a 50-hour flow test of the dry gas from the 4,708 feet sandstone, which could, of course, not possibly alter the picture. Although the report of 14th December stated that the several sandstones between 3,708 feet and 9,020 feet would be tested, almost three-quarters of that section - the interval between 5,710 feet and 8,766 feet - has remained untested. Are we to assume, then, that there were no sandstones at all in that whole 3,056 feet thick interval? Yet the stratigraphy given in the progress report of 9th November, 1960, for the 5,790 feet to 8,932 feet section, which was fine grained sandstone, siltstone and mudstone, makes this rather improbable. If all that there was to be tested was two groups of sandstones, one between 8,766 feet and 9,020 feet, and one between 4,708 feet and 5,710 feet, surely no one would have prefaced the report by saying, “ Flow tests of the several sandstones encountered between 4,708 feet and 9,020 feet are now being undertaken”.
According to this article, the position is that Mr. Kater has fought a gallant battle for the continuation of testing, but he has failed. We should examine the question of these drillings because over a period of years this area almost certainly will be the recipient of substantial subsidies under the bill that we are discussing. Now that Oil Search Limited controls the operating companies and is to finance and manage the next stage, as the annual report of British Petroleum Limited puts it, why is not that further testing being done now? I think that question is the crux of the whole of this article, and the one to which the Minister should give the most serious consideration. Why is not that further testing being done, and why is not the information available to the Australian public in the form of reports from the company to the shareholders who have invested their money in it? Most of the shareholders in this company are Australians. That would also give the people of Australia the much-needed impression that we are on the right track and that the Bureau of Mineral Resources is doing a fine job by getting on with the task of exploration. It appears that if what I am saying can be substantiated - I believe it is the duty of the Minister to make a definite statement on the matter - the question is: Why is not further testing being done? Usually the answer is that when you are dealing with oil, you are dealing with the most powerful international financial combine that the world has ever known. I have said before in this chamber that when I was flying a Spitfire in the defence of London during the blitz on that city a subsidy - although an indirect subsidy - was being paid to the Germans in respect of the fuel that was being used by the Spitfires. That gives an idea of the ramifications of the international oil combine. During the last war there was no rationing and there were no blackouts in the head-quarters of the combine at Lichenstein in Europe. The oil companies override governments and economic systems. They never lose from a war, because both sides use their products. Therefore, we are not dealing with what could be called chicken feed when we are dealing with the international oil companies.
In this instance, we are dealing with the British Petroleum organization and the Standard Vacuum organization of the United States, in conjunction with the poor little Australian shareholders in Oil Search Limited, the Australasian Petroleum Company and the Island Exploration Company. It all comes down to hard cash - to pounds, shillings and pence. Let us suppose that oil is discovered in the structure located where Iehi is, but some distance inland and in most difficult terrain, and then ask ourselves what the cost of development would be. I do not think that it would be much less than £40,000,000 - and that is a conservative estimate. Before the London conference was called in January of this year, after the discovery of these various sections of the Iehi wells, Mr. Kater had fought a battle for the continuation of testing and had made a plea for greatly increased governmental assistance. Oil
Search Limited would not be able to bear the expenses of opening up roads and the other tremendously large expenses that would be involved in going right into the inland of Papua to develop these fields - or it would not be able to bear those expenses unless it made a big issue of shares in order to get capital.
However, it would appear that the British Petroleum organization and the Standard Vacuum organization are. in on the party. It would also appear that Oil Search Limited would be very glad indeed to get into business. After all, that is the purpose of the company’s activities. Australia wants the company to get into business because of the Australian balance of trade position. If oil were found there, that would be a solution to many of our economic problems. If Oil Search Limited could meet the requirements of the refineries of which Senator Scott speaks, many of our national economic headaches would be cured. Of course, lack of capital is the greatest difficulty facing the company. Last November, in an address to the shareholders, Mr. Kater said -
It is well known that practically all the large oil companies have an excess of crude oil on their hands and one of their major current problems is how to dispose of this crude oil.
Dr. Gerrit Mulder says in his article that it is clearly not in the interests of the large companies to spend huge sums of money to make this major problem of theirs more acute. On the other hand, they have spent £27,000,000 in Papua, most of it in the years in which the world still thought in terms of oil shortages. It is equally clear that it would not be in their interests to write those millions off. They would rather carry on to the stage at which this expenditure would be covered by potential assets, to be realized when needed at some time in the future.
By normal business standards, these companies have as much right to discover mineral resources and to hold them in reserve as has the Broken Hill Proprietary Company Limited. That latter company has iron ore reserves scattered all over Western Australia and other parts of Australia. According to the laws of this land, the oil companies have just as much right as has B.H.P. to hold minerals in reserve. The average Australian, however, would hate to think that that was being done in this case.
– You do not really think it is being done, do you?
– I want every person associated with the Bureau of Mineral Resources, and the Minister and Senator Scott, to make certain that it is not being done. I want them to assure the people of Australia that this sort of thing could not happen. It is important to Australia that oil deposits should not be held unused. I hope that the suggestions to that effect that have been made, can be disproved. I hope that the Minister will regard this matter seriously enough as to disprove them, although he may have great difficulty in doing so unless he receives advice from independent people outside the companies concerned.
– What do you believe yourself? You have not said what you believe.
– I believe there is oil there. I believe that that is the only place in Australia or in its territories from which we shall get oil. I do not believe that we will find oil in commercial quantities on the Australian continent. This continent is too old for that purpose. It came up from the sea too long ago. Papua, however, came up from the sea comparatively recently, geologically speaking. The sedimentary basins there are newer than those on the Australian continent. Plankton is compressed under the sea to form oil pockets. The strata in which those pockets are held in Papua rose to the surface comparatively recently. There is more likelihood of our getting oil from Papua than from anywhere on the Australian continent. There is oil all over that archipelago. In Sumatra, to the north, there is oil in plenty, and Sumatra is on the same continental shelf as Papua. It is more logical to assume that oil will be found in Papua than in this old continent. There were large oil pockets in this continent, I believe, but they have dried up. We find little pockets here and there, but all the signs are that this land is too old still to hold
Large pockets of oil. The oil has permeated the various strata and has dispersed.
We found little pockets of oil recently at Cabawin and, a few years ago, at Rough Range. Those discoveries show the ingenuity of the men in this country connected with oil search. They study the geography and the geophysics of certain areas and say, “ I think oil should be found here “. Small pockets of oil are to be found in this old continent, and in some cases they drop straight on to them. They are miracle men, I think, when they do that.
I agree with Dr. Gerrit Mulder when he says that the presence of oil in the Barikewa-Iehi basin has been more or less established, but at the moment it is in the hands of the powerful international oil organizations. An interesting feature is that since the vital section of the last hole, the Iehi well, has been left untested, there has been a certain alteration of the shareholding. Top representatives of the three companies, the British Petroleum organization, the Standard Vacuum organization of the United States, and Oil Search Limited, which are the shareholders in the proprietary companies - the Australasian Petroleum Company and Island Exploration Company - met in London, and then switched the venue of their meeting to New York, the home town of the Standard Vacuum organization, in January of this year, to discuss the future of the search for oil in Papua. These discussions have led to an agreement in principle to transfer directly from the British Petroleum organization and the Standard Vacuum organization 65 per cent, of the equity in the operating companies to their Australian associate, Oil Search Limited, leaving 20 per cent, to British Petroleum and Standard Vacuum and lodging 80 per cent, with Oil Search Limited. If that is so, and it can be worked out arithmetically, over a period of about four years British Petroleum and Standard Vacuum could be paying 60 per cent., the Australian investor in Oil Search Limited, 20 per cent., and the other 20 per cent, would come from Government subsidies. If that is a correct statement, it is an excellent economic proposition. I hope that the Minister will be able to make this matter clear. Since, according to statements that have been made publicly, the vital section of the hole has not been tested, the voluntary transfer of the shares could be quite a profitable transaction.
At present, shares in Oil Search Limited are not worth very much. I admit that it would be difficult for the company to raise anything like the amount that would be necessary for it to undertake the development alone. However, if the case that has been outlined is correct, there is surely a need, as Senator Benn suggested earlier, for the Bureau of Mineral Resources to obtain its own drills and to go into those areas and spend money on drilling, because there is more likelihood of oil being found there than in any other areas. There is no indication that the untested section of the Iehi well will be tested. If it is done under pressure, the result will not be given credence unless the work is entrusted to independent experts not selected by the board of directors. Therefore, Dr. Mulder submits that independent outside opinion should be sought on whether or not this basin in Papua holds the answer to the great problem that we are debating, as to whether the taxpayers’ money should be used in subsidies and in other forms of assistance, in addition to the taxation concessions that are allowed.
There are between 30,000 and 40,000 shareholders in Oil Search Limited. The overwhelming majority of them are little people who are interested in having a gamble in oil. They have not a very strong voice in the company. I think that the Government and this Parliament are in duty bound to protect the interests of those little people. Senator Scott and Senator Mattner challenged me on the question of the accumulation of gas and oil. Of course, it is natural in an oilfield to find a combination of wet and dry gases, sandstone, brine and oil. Those substances will be found in the pockets and the basins. There is no doubt that large accumulations have been discovered, particularly in the Barikewa structure. It is also known that over and over again company spokesmen have stated that these gas reserves were useless. This was confirmed by the Minister for National Development on 20th November, 1959, when he said, in connexion with the Bwata gas flow, that in a remote area like New Guinea, such a strike of gas was of no economic significance whatsoever.
The Bwata gas flow has been stated by the company to amount to 30,000,000 cubic feet per day. Unless the exploitation of gas resources in Papua can go hand in hand with the -development of an oil field, it is not an economic proposition.
– You supported that yourself, a few months ago.
– Yes. I can say that there is an outlet for gas on a commercial scale. The shareholders were told by their chairman at the general meeting of shareholders of Oil Search Limited on 10th December, 1959, in reply to a question, that tenders, closing on 31st December, 1959, had been called for the sale of gas obtained from the Barikewa and Kuru wells and that three separate parties were interested, one of them being Comalco, which wanted to use it as a source of power for the large bauxite development at Weipa, in Queensland. The company has never referred to this matter again, but there was an interesting development in October, 1960. In that month the Burmah Oil Company, closely associated with British Petroleum, finished a seismic survey across the Torres Strait. It was assumed, in the “ Pacific Islands Monthly “ of November, 1960, that this was an oil exploration survey, but that assumption was false, for no exploration leases were taken out by the Burmah Oil Company and no government subsidy was given for ‘the seismic survey.
The “ Pacific Islands Monthly “ overlooked these facts, as it overlooked the fact that such a seismic survey is also needed if it is proposed to lay a submarine pipeline, as has been done in many parts of the world. In the Middle East, and also in the Far East, pipelines to carry gas and oil are quite common. A study of the Fourmile maps of the region between the Torres Strait and Berikewa shows that the direct route - in fact the only feasible route - for a pipeline between Barikewa and the Torres Strait is across the mouths of the Fly and Turama rivers. Seismic traverses across the mouths of these two rivers were run by the Island Exploration Company in April, May and June of this year. Iehi, it will be remembered, is situated only twelve miles to the north of Barikewa. Weipa lies on the west coast of Cape York Peninsula.
Against the background of these facts it is easy to guess what was in store. In due course of time the directors of Oil Search Limited would have said something about the development of the gas resources, and its shareholders would have been invited to contribute towards the cost of development. At about the same time, Papuan Oil Search Limited would have been floated to carry on the search for oil. Since the anticline is a very large one, something like six or eight test wells would have had to be drilled. This would take from two to two and a half years, so that in 1964 the time would be ripe to drill a production well. That would fit in very well with the programme of subsidies provided for by this bill.
I sincerely hope, Mr. President, that the Minister will give serious consideration to the plans that have been made and that he will have his departmental officers make a thorough investigation with a view to examining the accuracy of the statements made in the article to which I have referred. I am sure that people throughout the Commonwealth know that conscientious men in the field, geophysicists, geologists, and men who are manning the drills, bearing the heat and burden of the hard work, are working for a great national purpose. I believe that these men have that feeling in their hearts. The stakes are very high. The effect upon the Commonwealth of the discovery of oil in payable quantities, to pour through our refineries and supply over 2,000,000,000 gallons a year of the various types of fuel needed, would be dramatic. It would, in my view, be the greatest shot in the arm in the history of this country. Anything tending to bring about that flow of crude oil into our refineries would be welcomed by one and all.
I support the amendment moved by the Leader of the Opposition, seeking the acceleration of oil search by developing the activities of the Bureau of Mineral Resources in mapping, geological and geophysical survey, and in drilling for oil. As I said at the beginning of my speech, in view of this country’s need of reliable sources of oil we should, to be on the safe side, develop research into the production of oil from other sources.
.- I thank the Senate for its interest in the bill. True it is that the Leader of the Opposition (Senator McKenna) has moved an amendment on which, in the fullness of time, we shall no doubt declare ourselves, but apart from that it is reasonable to say that this has been an interesting debate, with honorable senators on each side of the chamber indicating their acceptance of the importance of the task that confronts the Government and my department. Needless to say, the Government will not accept the amendment proposed by the Leader of the Opposition, which falls into two parts, one criticizing the conduct of the oil search campaign and the other suggesting research into the production of oil from coal and shale. It would be wrong to say that there is no connexion between the production of oil from coal or shale and the search for oil. There is some connexion, but the two activities are quite separate and distinct in the Government’s programme. If time permits, I shall give some outline of what has been done in developing better uses of coal, but I propose to restrict myself, in the early stages at least, to comment upon the search for oil proper.
I think it is regrettable that the Leader of the Opposition has moved this amendment. It creates a wrong atmosphere. It will, in my judgment, be more apt to weaken interest in the search for oil, with which we are all concerned, than to attract increased interest. To talk in terms of increased governmental activity in drilling is not apt to attract the private investment that is so essential a part of the programme that Australia has to mount. It would be a pity if the amendment were taken sufficiently seriously to yield that result, because one of the aspects in which we should all take some satisfaction is the great change that has occurred in the atmosphere surrounding oil search in Australia in recent years.
There is now confidence that we have oil in Australia. There is confidence not only on the part of those who have the professional qualifications to express such an opinion, but also, I think, on the part of the man in the street. I do not think it is overstating the case to say that that confidence, which is basic to a successful conclusion of our endeavours, has been produced, to a large extent, by the Government’s programme of subsidizing activities. This carries with it the implication that activities which are subsidized are at least professionally sound and start upon a sound foundation. When the professional world and the investing public see a programme, the various phases of which have been vetted and watched by good, sound professional men, they take confidence in the view that we have oil in Australia and that we are going about the search in the right way.
It was not difficult to anticipate what might be the Opposition’s criticism on these matters. One could easily anticipate the two points of criticism that Senator McKenna has made, first, that we should be spending more money, and, secondly, that the additional expenditure should be on government account. I shall deal with those two charges, I hope, in the time available to me. Before going into the Opposition’s criticism, I should like to take up Senator McKenna on the point that he made, which is incorporated in the publicity that comes from the Australian Petroleum Exploration Association, which is composed of some but not all of the Australian companies, to the effect that there should be a crash programme for oil search. That is a manner of approach in respect of which we should all be particularly careful. I think that we have incorporated in’ this bill most of the proposals that the association suggested. I gave a ‘great deal of time to representatives of the association and talked the matter over with them. I incorporated in this legislation, I think, most of the things that they wanted. It might well turn out to be a sad error of judgment if we started a hasty procedure by means of a crash programme. Forcing events might create the impression that we expected an early successful outcome to our endeavours. If that did not come to pass, in the final analysis we might set back the search for oil as a result of people becoming disappointed because there was not a quick, early result. Instead, we should go about it in a sound way.
We do not want a crash programme so much as the programme that is outlined in this legislation, which will lay down a foundation. We know that we will, as a government, continue the search for oil until it is found in commercial quantities, whether it be next week or next month, as we hope, or next year. We are so confident that we want to put down on a sound foundation a programme which will continue and grow in momentum until we are successful in our efforts. I say that without decrying the enthusiasts or this association. It is better to be sound rather than to go into something with a policy that cannot be sustained because it is technically unsound, financially impracticable or in some way results in dissipated effort or in effort not as sustained as the circumstances warrant.
The Government has, by and large, proceeded with three main objectives in view. The first objective is to provide funds for basic work by the Bureau of Mineral Resources. That work entails basic surveys, basic photography and the provision of basic information for the use of those who come later in the search for oil. That is the basis upon which the programme is founded.
I have a little feeling of resentment that the Government should have to take the lead in the search for oil. Since it has been in office the Government has taken the lead in the search for oil. It has done that through its technical officers in the Bureau of Mineral Resources and it will continue to give that leadership until success crowns our efforts.. Our next objective has been to encourage private investors to assist in the search for oil.
There is still too little appreciation on the Opposition side of the Senate of the tremendous task that confronts us, of the great areas of sedimentary basins that are to be covered and of the need for us to attract as many companies as possible into the task. In this job the wider we spread our efforts the better will be our chances of success. This is a job in the performance of which, above all else, we do not want to be inbred in our thinking or restricted as to the number of different lines of investigation that are undertaken. Nor do we want to be restricted as to the areas in Australia that we investigate. Success seems to crown efforts in one area at one particular time. True it is that the professional advice of the department ranks the Territory of Papua and New Guinea first as being an area likely to produce oil, despite the setbacks that we have had there. But the department also places very high on the order of priority quite a number of areas within Australia. We want to see as many companies, with as many ideas as it is possible to explore, engaged in the search for oil as we can induce to undertake this task.
That brings me to my third point, which 1 have perhaps somewhat anticipated. One of our primary objectives is to obtain as much know-how and experience in Australia as possible, whether that know-how and experience be developed in Australia or whether it comes from overseas. Our three objectives are to continue with the basic work of the Bureau of Mineral Resources - to let the bureau continue to provide the lead that it has provided up to date - to attract as much capital as possible to the task, and to attract as much technical skill, technical experience and know-how as we can.
I think that we may fairly claim that we have been successful in achieving those objectives. A lot of the basic work of the Bureau of Mineral Resources has been done. Of course, a lot yet remains to be done. As Senator McKenna pointed out, it is so easy to criticize the fact, for instance, that the bureau is not at full strength. One of our great problems is to get people with scientific and technical knowledge to do the work involved. The bureau is below strength only because of the difficulty of getting men with the required qualifications. How obviously unsound it would be to appoint to the staff of the bureau men who did not have the desired qualifications! One of our achievements has been to get these additional seismic teams from overseas, bringing with them something like 200 qualified technical and scientific people to add their knowledge to that of the people available in Australia.
We have covered a lot of ground. We have provided subsidies for drilling operations. We have gained a great deal of information from those operations. We subsidized the geophysical work in order to obtain information. That work has pinpointed the possibilities of finding oil in Australia. If my summing up of the situation is correct, the subsidizing of those geophysical operations has placed the search for oil on a better and firmer basis than it was on previously. The Government’s action has given knowledge to those interested. Knowledge is power and the acquisition of such knowledge is the only way in which to commence a task of this kind.
This legislation proposes to take the programme forward to the next logical phase and to subsidize geophysical and drilling work not only for the purpose of obtaining information. Those subsidies will continue, but the Government will go a step further and will provide subsidies for work right up to the stage at which oil is found in Australia in commercial quantities. Persons investing in companies engaged in the search for oil will be able to claim a deduction for income tax purposes in respect of capital subscribed. Alternatively, the companies will have the right to deduct from the profits they earn when they find oil all of the capital expenditure incurred up to the stage at which oil is found, and distribute that money tax free in the hands of shareholders, becoming liable for taxation only after the capital outlay has been recovered. Moreover, this is possible in a situation in which, for all practical purposes, it has obtained subsidies up to 50 per cent, of the capital cost involved up to the time at which it finds oil in commercial quantities. We beg leave to think that that makes the search for oil at least as attractive in Australia as it is in any other country. I say “ at least as attractive “ because I do not know of any country in which more attractive conditions are available, but I may be wrong.
What is the situation at present? A number of structures are now ready to be drilled, but that is a task not so easy to undertake as many people are apt to think. There are still a number of structures that show good signs and which indicate that something should be done. The subsidy will encourage people to carry out work on structures such as those - work that they may not previously have contemplated. It is of no use to suggest that this is work that could be done by government activity. If it were left to the present staff at the Bureau of Mineral Resources, the additional geophysical and drilling work that needs to be done on the structures already known would take from ten to fifteen years. We are asked what we have done up to this stage. I point out that whereas initially three seismic teams - two Commonwealth teams and a South Australian team - were operating, now approximately sixteen teams are looking for work to do. I point out to the Leader of the Opposition that it is not correct to say that those teams are not being fairly fully occupied. There has been competition between them, because in recent times there has not been available in the United States of America the same amount of work as was available previously. By and large, these teams are now almost fully employed.
We are hoping and expecting that an extension of these subsidies for another three years will encourage more teams to come to Australia. We could not train such teams in this country in the time within which we want to find oil. In our opinion, to bring these teams from overseas is the quickest way in which to get the results we want.
The expense involved in drilling for oil is often overlooked. If I have time I shall reply to what Senator O’Byrne said about New Guinea. But first, I ask him whether he realizes that the two holes about which he was talking - Barikewa and Iehi - cost £1,750,000 and £750,000 respectively. Not only is the matter of expense involved. Skill and judgment are needed in deciding whether a hole should be sunk at a particular place. We cannot generalize in stating the cost of drilling a hole. The cheapest holes on the mainland of Australia have been sunk for as little as £70,000. On the other hand, some have cost much more than £1,000,000. But from whichever way the problem is approached, the cost is so high that careful consideration is needed before deciding to sink a hole.
What progress has been made? We have greatly increased the number of geophysical teams that are operating. Secondly, we have made a useful increase in the funds allocated to the Bureau of Mineral Resources to enable it to increase its activities. Thirdly - this is the immediate problem - we have surplus drilling capacity in Australia. The immediate objective in paying the subsidy is to get the drills to work on the targets that are known and those which will be turned up. There has been talk about a geophysical programme to turn up 30 or 40 targets a year. That is a far more optimistic approach than has been adopted by the Government’s professional advisers. A great deal of preparatory or basic work is undertaken, not all of which leads to turning up targets. One is reminded of the old saying, “ Many are called but few are chosen “. I repeat that a lot of work is done which does not lead to the definition of targets. What we want - this is the theoretical approach - is to have enough seismic and geophysical work done to turn up sufficient targets to keep the drilling plants occupied permanently.
Where do we stand at the moment? As I said earlier, there has been a substantial increase of the number of geophysical teams available. We are not using the drilling plants to their full capacity. But we are hoping that the extension of the subsidy to the exploratory work will result in the drilling plants being used to full capacity. I repeat that this effort is not a flash in the pan; we have not undertaken a crash programme. Our task is to have a permanent, continuing programme, based on the best opinions we can get, until oil is found. I do not adopt a doctrinaire approach to this problem. I approach it from the standpoint of obtaining the best results we can. It is not only a matter of undertaking a certain volume of work or of spending a certain sum of money on the search for oil. It is also a matter of acting upon the best advice we can obtain. We want this work to be undertaken in as many parts of Australia as is possible. Just as one city claims to set the fashion for women’s hats, so one part of Australia is regarded as being the place in which oil will be found. But, hey presto, it may be found in another part! When oil is first found in Australia in commercial quantities, the probability is that there will be half a dozen or a dozen other areas which have just as good prospects as had the area in which it will be found.
I look upon the programme for the search for oil as being one which is designed to get the first commercial strike of oil as quickly as possible and then to get the same happy result in other parts of Australia. Those who say that the Government should do this, that and the other thing should ponder this fact: It is not only a matter of providing money or of having available skill and experience; it is also a matter of continuing the effort after the first oil is found. After oil is found, vast amounts of additional capital expenditure will have to be undertaken by those who find it. To those who take the view that the Government should be apprehensive about capital coming from overseas and who suggest that we should make certain the Government has a stake in the result let me say that the Government always gets its share. The time will come, no matter how rich the strike may be, when the company concerned will be paying, at existing rates, 40 per cent, of its net profits to the Government in taxes. Then the shareholder, if he is as rich as is Senator Dittmer, who has been interjecting to-night, will probably be paying 15s. in the £1 on the dividends he receives.
We are prone to underestimate the amount of money that is being invested by Australian companies in the search for oil. In the calendar year 1960 Australian companies drilled 40,690 feet in eighteen bores.
There are bores outside the Senate as well as inside! Joint Australian-overseas companies drilled 47,693 feet and overseas companies proper drilled 8,722 feet. The Australian companies do not show up badly in those circumstances. In my view a very desirable position is developing. Australian companies are tending towards making arrangements with overseas companies in which the Australian company keeps its equity or an equity and gets the benefit not Only of capital from overseas but also experience and know-how from overseas. This is a very desirable thing. i am not as optimistic as Senator Scott to think that after my speech the Leader of the Opposition will change his mind and Withdraw his amendment. However, I hope that what I have said has been convincing. In the time left to me I shall try to deal With the points that Senator McKenna raised. He said that drilling rigs were working at half capacity and that seismic Crews were under-employed. What he said about the drilling rigs is true. One of the main objectives of this legislation is to solve that problem. What he says about the seismic crews is not correct. In general, seismic crews are fully engaged. One or two crews of mining companies may be not engaged temporarily because the companies either lack funds or have no programme in hand.
The Bureau of Mineral Resources is dow.n on its establishment by 92 officers, and the Department of National Mapping is down by ten officers. That has resulted from recruiting difficulties which are especially acute in the case of geophysical professional staff. The geophysicist is a highly trained professional man who is not available, both in Australia and elsewhere, in the numbers desired. The Leader of the Opposition claimed that the petroleum technology section has been overwhelmed with administrative work. It is a specialist section. Other sections of the Bureau of Mineral Resources - the sedimentary basin section and the geophysics branch - are engaged in the bureau’s own work related to the search for oil. This is a section which supervises the subsidy contracts. It has a task of its own. The assessment that is made requires technical skill. It has to determine whether the proposition is worth while, and the proposed cost has to be verified. Not all oil companies get the amount they ask for in their estimates of costs. Results as they become available have to be watched.
– Can the Minister give the Senate an idea of the number engaged in vetting these applications?
– No. If I can obtain the information I shall give it to the honorable senator during the committee stage.
I pass on to what 1 regard as a major point raised by Senator McKenna. If 1 do not state it in proper terms I know he will forgive me. He raised a doubt about whether the appropriation of £2,700,000 this year would be sufficient. I want to make it perfectly clear that that estimate of £2,700,000 was most carefully made. The estimate was not arrived at by the Bureau of Mineral Resources on its own; it was made by the Bureau of Mineral Resources after consultation with every company, without exception. The programme of every company for next year was considered and consultation was had with the mines departments in each State. It is the view of my department that £2,700,000 will provide for the amount of subsidy needed for every operation to be carried out during the financial year ending 30th June, 1962. I admit that there is room for misunderstanding and doubt. Some companies calculate their programme over the calendar year for 1962. There could be a misapprehension because there is a possibility of a difference between a programme and the cash outlay. A company may decide on its programme and say in effect, “This is what we are going to do by the 30th June next”. The programme may include cash appropriations in subsequent months. However, the department has gone into this matter as carefully as it possibly can and it believes that the £2,700,000 will be sufficient to subsidize every operation that is justifiable after 30th June, 1962. Expressing my own personal opinion, I would be delighted if I had to come to the Senate next June and ask for an additional amount because this estimate was wrong.
– You will not be in a position to ask for it then.
– Is that so? You wait and see! The suggestion has been made that 35 or 40 targets could be found if the seismic crews were available. The professional comment on that suggestion is that that is quite unlikely because last year, with practically full employment in the seismic crews, only about twelve targets were unearthed.
Another comment made by Senator McKenna was that the Government should undertake all geophysical work and there would be no need for any subsidy. That is a dangerous argument. Little as I know about the search for oil, I do know that, as in another sphere, kissing goes by favour. You can bring in your experts, your geologists and geophysicists and say that a certain thing should be done, but the people on the other side of the table have their experts as well who may place a different interpretation on the same information.
Debate interrupted.
page 823
The PRESIDENT (Senator the Hon. Sir Alister McMullin). - Order! In conformity with the sessional order relating to the adjournment of the Senate, I formally put the question -
That the Senate do now adjourn.
Question resolved in the negative.
page 823
Debate resumed.
– We have to be very careful about what I call this inbred approach. We want as many activities as possible. The criticism of the Bureau of Mineral Resources for being slow in getting out reports has to be looked at against the background that, when the bureau carries out its investigation of an area in which a company is operating or is interested, more often than not the company concerned is issuing progress reports as it goes along. The company makes such information available to the bureau’s officers as and when it becomes available. If the actual completion and printing of the report come some months later, that is regrettable; but the practical work has been done and the practical benefit of it has been obtained.
I hope that Senator Dittmer is not leaving the chamber to miss this final thrust of mine. In his usual form, he lamented the fact that Queensland was being neglected. Loud applause and heavy spitting! Senator Dittmer always talks about Queensland being neglected. I say to Senator Dittmer and to any one who may take him seriously that in 1960-61, 60 per cent, of the subsidies that the Government paid were paid to people searching for oil in Queensland. In those circumstances, if Queensland is neglected
– It is still not enough. What was the amount involved?
– Order!
– What was the total amount involved?
– Order! Senator Dittmer must cease interjecting.
– I am sorry, Sir.
– Finally, I want to reply to Senator O’Byrne. I am sorry to say that I have not seen the report to which he referred and my departmental advisers have not seen it either. I start off on this basis: What is the professional standing of the person who wrote the report? I answer that myself by saying that as he comes from the Australian National University he must be of good standing. However, this is the old, old story. As it appears to me, this is a case of some one producing a theory, an idea or something that he says might or should be done.
I can only answer Senator O’Byrne in general terms. First, there is not the slightest ground for any thought that anywhere in this field of oil search there has been any concealment of results. To think that there has been is just ludicrous. It is just being foolish. If ever a door was wide open, it is the door of that company. It is open to the officers of my department and of the Papua and New Guinea Administration. Those officers see the results as they come to hand. In regard to what should be done in the future, I do not think I am telling any tales out of school when I say that the company concerned has brought consultants from overseas. They are making a complete re-appraisal and a complete examination of all the areas that the company holds. I would be telling tales out of school if I gave any indication of what the proposals are; but I hope that the proposals achieve the success which the company well deserves.
Question put -
That the words proposed to be added (Senator McKenna’s amendment) be added.
The Senate divided. (The President - Senator the Hon. Sir Alister McMullin.)
AYES: 24
NOES: 29
Majority . . 5
AYES
NOES
Question so resolved in the negative.
Question put -
That the bill be now read a second time.
The Senate divided. (The President - Senator the Hon. Sir Alister McMullin.)
AYES: 29
NOES: 23
Majority . . 6
AYES
NOES
Question so resolved in the affirmative.
Bill read a second time.
In committee:
Clauses 1 and 2 agreed to.
Clause 3 (Definitions).
– Clause 3 proposes the insertion of new definitions. The Government has claimed that this measure will widen the scope of the operations covered by the 1959 act, but it seems to me, from a casual inspection, that the definitions in that act have a wider scope than those now proposed. In the act “ operation “ is defined as meaning a drilling operation, a bore-hole survey or a geophysical survey. When an operation is defined as meaning, among other things, a drilling operation, that definition is wide enough to cover any type of drilling. In the act, “ drilling operation “ is defined as the drilling of a hole for the purpose of obtaining stratigraphic information.
This bill proposes the omission of the definition of “ drilling operation “ and the inclusion of definitions of other terms, not to provide for the inclusion of those activities within the scope of the subsidy, but to provide for their exclusion. For instance, the term “ assessment drilling “ is defined solely for the purpose of excluding such drilling from the types of drilling covered by the proposed definition of the term “ detailed structure drilling “. The new definition is inserted for no purpose other than to exclude from the scope of the subsidy a drilling operation that might otherwise have been open to subsidy. The proposed definition of “ test drilling “ is as follows: - “ test drilling “ means .the drilling of a hole in a known rock sequence of an established structure . . .
That term is defined only for the purpose of making test drilling come within the scope of a drilling operation as re-defined.
I merely make the comment that it seems to me that some of the definitions of these terms have been introduced for the purpose of narrowing the scope of the operations permitted by the 1959 act to come within the scope of the subsidy. If I am wrong in that, will the Minister inform me what activities not already covered by the act will be covered by this bill? Or is my impression correct that this bill will cut down certain propositions? 1 agree that assessement drilling should be excluded. That is drilling that takes place after oil has been found and has the purpose merely of determining how wide are the oil resources of the area concerned. The Minister has claimed that this measure will widen the scope of the activities eligible for a subsidy, but does it not appear, from what I have said, that the scope will be restricted rather than widened?
– I bow to Senator McKenna’s legal knowledge in this matter. If I state the objectives of the bill, 1 have no doubt he will fit them into the legal pattern. The bill aims to make eligible for subsidy every drilling operation up to the stage at which oil is found in commercial quantities. When that stage is reached, the company concerned is not eligible for the subsidy. Perhaps I use an over-statement when I say “ in commercial quantities “. A stage may be reached at which it is believed that oil is being produced in commercial quantities, but it is necessary to make sure that that is so. In all such cases, I understand, no matter how good the find may appear to be, it is necessary to check around it and perhaps to drill four, or even as many as eight, holes within the area to make doubly sure that the extent of the deposit is known. Those operations are not eligible for subsidy. Having found oil, it is up to those who have found it to satisfy themselves that the flow is of worthwhile proportions.
– Such a find might have been eligible under the terms of the 1959 act?
– No. That act covered the obtaining of information. It did not cover wild-catting.
Clause agreed to.
Clause 4 (Approval of drilling and other operations).
– I refer particularly to paragraph (c) which seeks to add, after section 7 of the principal act, the following sub-section: - (2a.) In the case of an applicant who states in hill application that he desires any agreement in respect of the proposed operation to provide for payment of subsidy in accordance with section nine A of this Act, the applicant shall, in lieu of complying with the last preceding sub-section, furnish to the Secretary -
It has been put to me that, on the other hand, overseas companies which do not keep funds here until they are required, merely give a guarantee that at the required time the funds will be available. It seems to me that that system operates rather harshly against the Australian companies which ought to be permitted to go ahead with their operational work if their credit has been good to date, if they have certain funds in hand, not being nearly the whole of them, particularly if they have uncalled capital or assessable good prospects of raising more capital, and above all, if they have sufficient credit to engage a contracting company, for drilling, geophysical work or other operations. I ask the Minister whether it is correct that a very tight rein is kept on local companies and a much easier one on overseas companies. If there is a tight rein on local companies, why is it necessary? After all, the subsidy is payable only after the work has been done, or after it has reached a certain stage. There appears to be no chance of the Government being taken down on the subsidy. There is no payment in advance. The payment is made after the work is done, and then not to the full amount but only up to a certain specified percentage.
If the information that has been given to me is correct, that a local applicant is required to be able almost to put the money on the table, it seems that that policy is not justified since the department incurs no risk. If that is the practice will the Minister consider easing it?
– Is the honorable senator moving an amendment?
– No.
– I refer to section 8 (1.) of the Petroleum Search Subsidy Act 1957, which states -
An agreement entered into under this Act for the payment of subsidy to a person in respect of an approved drilling operation shall provide that, subject to the agreement, the subsidy shall be an amount equal to one-half of the costs incurred by that person in and in connexion with carrying out the drilling operation.
It is proposed that any hole that is drilled by a company in Papua and New Guinea, or in Australia, in the search for oil, shall qualify for subsidy. The Government may approve or disapprove of the payment of subsidy, regardless of the depth of the hole that has been drilled. According to a report entitled “ Where the Free World’s Oil has been Found “, approximately 95 per cent of the oil has been discovered in drill holes less than 8,000 feet in depth. That is very important, because it is tremendously costly to the company concerned to drill at greater depths, and it is also costly to the Government which subsidizes the company’s drilling operations. I have in front of me a chart showing average drilling costs of wells drilled in the United States of America in 1953, based on approximately 18,000 wells. The chart shows that the cost per foot to a depth of 2,000 feet was about £4 in Australian currency; to 8,000 feet, about £8; from 8,000 feet to 12,000 feet, about £16; and from 12,000 feet to 16,000 feet, about £48. I must say that those figures rather amazed me.
In view of the fact that 95 per cent of the oil so far discovered in the free world has been found at depths of less than 8,000 feet, I should like the Minister to consider either the refusal of subsidy in respect of wells that exceed 8,000 feet, or the payment of subsidy for such wells only in exceptional circumstances. As the custodians of the taxpayers’ money, we could then derive the utmost benefit from the drilling subsidy, and so too could the people in Australia who are investing in oil search.
– Dealing first with the point made by Senator Scott, I remind him that oil is where you find it. If we could find oil at 2,000 feet it would be much more profitable than if we had to go to 4,000 or 6,000 feet. I think, from memory, that the Rough Range well was about 10,000 feet deep.
– No. From memory, it was 3,600 feet.
– Grant Range, where no oil was found, went to 15,000 feet, and Entebbe went to about 10,000 feet. Oil was found at Cabawin at about 10,000 feet. We would like to find oil in shallow holes, but I would take some convincing that until we do find oil in shallow holes we should refrain from drilling deep holes.
– About 95 per cent, of the oil which has been discovered in the world to date has been found at less than 9,000 feet.
– But not in
Australia.
– Will you have a look at this chart which I have?
– I have seen it, and I am well aware of the way in which drilling costs increase as you go deeper, and more particularly if you have a core. These deep holes are a big item, but I would not subscribe to the view that we should restrict this subsidy in any way to shallow holes because I think that when we do find oil we shall have the answers to a lot of the problems which are puzzling us now.
It would be easy to reply to Senator McKenna’s question by saying, “ Yes, I will look into the matter and we will do something in this direction or in that direction “, but very big considerations arise in the payment of these subsidies. Is it a good company? Has it good technical advice? Has it the resources to carry out the programme? If it struck oil, has it the resources to carry the job through? Is it doing a fair thing on the tenement which it holds? If it has a big tenement should it be doing more than it is doing? Of course, progress payments are made. It is the exception rather than the rule that the work is completed before application is made for a progress payment. Progress payments are made on most operations with the Government not going beyond the 80 per cent, until the whole of the work has been completed. I do not know whether there is criticism against the department on the point. If there were, I would approach it with a pretty open mind, and I would not be disposed to feel that the Government was in error. The possibilities are that if the department wants this, that or the other thing done there may well be a reason for it.
– I am obliged to the Minister for his reply on that point. I ask only that he look at the question at leisure and see if the action taken in that matter is too stringent.
I should like to refer now to paragraph (e) of proposed new sub-section 2b which relates to an applicant who is an overseas principal. He must maintain in this country an officer who will be responsible for dealing with the department. Proposed new paragraph (e) relates to the furnishing of information to the secretary with respect to the operation. That would be the operation which the overseas company is to conduct in Australia. I am concerned about what happens to this information when it is obtained, not only from the source of overseas companies but from all other geophysical and handdrilling operations which are subsidized. I understand that the bureau is given running information relating to the whole of the activities in this sphere. In due course that information is collated and, under the bill, will be made available to the public after six months and not twelve months as was the case previously. That is to the good.
What steps are taken to provide a correlation of all the information that is available in its annual publications? Does the department or the bureau maintain anything in the nature of an information centre to which one may go and ask for all the information which is publicly available in relation to a particular area or having any relevance to it? If this is not the case, would it not be a very desirable thing not only to have the information collated rapidly and thoroughly but also available publicly quickly upon application? Can the Minister say anything about that? If nothing of the kind is maintained, I should like him to tell the committee. Will he then give consideration to its establishment? My information is to the effect that very great service would be rendered to the search for oil if the bureau, which works admirably, according to every report that I have received, although it is short of personnel as the Minister has acknowledged, could make sure that the mass of information which is pouring into it all the time is digested quickly and disseminated readily. I know that this is a colossal problem, but does the Minister not think that if a special effort were made in that direction it would help the search for oil?
– Senator McKenna has pin-pointed one of the problems. The activities of the bureau in the search for oil have increased very materially over recent years. The bureau is experiencing difficulty in producing its reports as quickly as it would like to do. Because there is a call for its services in so many directions, it has some difficulty at times in having its reports printed. The bureau coped with this position up to a few years ago, when it issued a comprehensive report covering what had occurred up to that stage in the search for oil in Australia. From the inquiries which I have made, I have ascertained that the practical difficulties are not as great as may be imagined because the bureau is so closely in touch with the people operating in the area where its work is done, and the bureau’s doors are open to people coming in and making inquiries. On my information, there is a fairly constant stream of professional people consulting with the officers of the bureau and looking at the information which is available.
We are at the stage now at which reports have been finalized and issued in relation to about six of its operations which have been subsidized. A sustained and substantial effort is made to get the maps out promptly and J think that they are going into circulation without delay. I think that the reports of the bureau’s own activities are also going into circulation fairly promptly. This is one of those spheres of activity in which the bureau would like to do better than it is doing, but its deficiency is not as great as would appear to be the case from a description of it.
Clause agreed to.
Clause 5 agreed to.
Clause 6 (Alternative method of calculating subsidy).
– The clause reads -
I should like the Minister to consider stating as early as possible that the footage formula that will be adopted will be at least equal to 50 per cent, of the drilling subsidy, including the cost of dismantling and shifting plant. The Government, in proposing an alternative system of calculating subsidy equal to half the cost of taking the drill to the site, erecting it, and drilling the hole, with a certain allowance for dismantling the drill, has moved in the right direction by providing for a footage basis. In the initial stages the Government should endeavour to encourage drilling companies to agree to this alternative method.
– I thought that was what was being done.
– This will only give them the option of using this method. We want the companies to adopt the footage formula as soon as possible. I should prefer the Government to enforce the footage formula instead of leaving it as an alternative. The Government, if it so desired, could apply a formula that was so unattractive to drilling companies that they would not take advantage of the footage basis. We have nothing to guide us as to the Government’s intention. I should like from the Minister a guarantee that the formula will be on such a basis as to encourage drilling companies to take advantage of the footage basis instead of using the present formula, so that the Government may at some future time amend the provision and abolish the present system.
– We cannot devise a formula which is equitable for all parts of Australia, as geographical conditions are so different. The formula has not yet been finalized. I have had a peep over the department’s shoulder as to what is in contemplation. It is so close to what the Australian Petroleum Exploration Association requested that I shall be disappointed indeed if it is not acceptable.
Clause agreed to.
Clause 7 (Terms and conditions of agreement).
– This clause authorizes the Minister, in making an agreement, to make certain provision for the repayment of subsidy if oil is struck in payable quantities. This really is an addendum to section 10 of the act, which enables the Minister, in the case of a drilling operation, to set out the rights and obligations of the parties to any agreement that is made about subsidy, in the event of petroleum being discovered in the course of carrying out the operations. 1 re-state the case that I put in relation to Australian Oil and Gas Limited. On my information, two overseas companies have taken over the whole of the leases of this company, on the basis that they will control and, if oil is produced, take an 80 per cent, interest in the leases, the local lessee having only a 20 per cent, equity remaining. Having regard to the fact that no doubt the Government would be prepared to subsidize the activities of the overseas companies in their exploratory drilling, and that those companies will have to find only half of the total expenditure, with the Government finding the other half, does it seem reasonable to the Minister that those companies should take 80 per cent, of the reward for half of the expenditure and that the Government should be content merely with being repaid the amount of subsidy? 1 put it to the Minister that the overseas companies are making an exceedingly good bargain for themselves. The act authorizes the Government to negotiate for some continuing interest in the concern in the event of the activity coming to fruition and oil being found on a commercial basis, lt seems quite wrong that the Government does not do more than merely ask for a repayment of subsidy.
Has the Government considered seeking an interest with the entrepreneur in the event of the joint subsidized endeavour being successful? I appreciate the argument that the Minister addressed early, to the effect that in due course the Government gets something out of it, but surely there is something to be said for the nation itself, which has put in money co-equally with bodies of that type, having at least some interest in the subsequent activity, and some opportunity to participate in the development and the profits of that field.
– This is, I suggest, more a philosophical argument than an argument of another kind. I said earlier that I was not doctrinaire on this matter. My objective is to find oil. How best do we reach our objective? We have had discussions from time to time as to whether we should, if we subsidize exploration, secure an interest in the oil when it is found. The answer always is that our objective is to get more and more people to come in and search for oil. If proposals are put that the Government seeks an interest in the oil that is found, a harmful atmosphere is created, in my opinion, and people are driven away. They will not come in; they will be frightened away. Their attitude will be that they are asked to put in their money, knowledge and experience, that then the Government takes a small share, and that governments have a habit of taking larger shares as time goes on. This would undermine a developing situation in which there is confidence in other parts of the world and increasing interest in Australia.
– What did America do in that respect?
– I do not know of any scheme operating in America or Canada along the lines of that which Senator McKenna suggests. It is all very well to take Canada as an example. I remember that when Australian Oil and Gas Limited made this arrangement, everybody clapped hands for joy and said that it was an extraordinarily good arrangement. The Australian company, with over £1,000,000 of capital and with these areas, had its hands full in the Sydney basin. It was thought to be a fine idea that some one else would put in the whole of the money needed for prospecting, and add to our Australian organization the resources of two gigantic companies overseas which have been specializing in this form of work for years. I think there were few dissentient voices to the proposition that Australian Oil and Gas had made a first-class bargain.
– Was it realized that it was giving up 80 per cent of its total leases?
– Yes. It is a public company. I forget the details of the bargain. It did not just give up 80 per cent. of its rights. It said to these people, “If you do so and so you will qualify to get 80 per cent.”. It was not all one-way traffic.
– There was some drilling?
– The overseas company had to drill holes to a certain depth or spend a certain amount of money. Cabawin makes it look as though it is a good bargain, but we have not got to the end of the road yet. I hope it is a thundering good bargain for these overseas people, but it has yet to be proved. One thing which has happened up to this stage is that the results which have been achieved have created circumstances in which I have not any doubt at all that the capital that these overseas people will put into this venture, even if they do not succeed in the contractual obligations that they have, will attract capital investment into this area substantially in excess of anything contemplated at the time when the deal was made. I must say that I am happy to see these overseas companies coming in on these arrangements.
Clause agreed to.
Clause 8 agreed to.
Clause 9 (Operation to be carried out within specified period).
Senator McKENNA (Tasmania - Leader the Minister to explain to me the purpose of proposed new sub-section (2.), if he has a brief explanation available to him. This matter is rather technical and I do not want to weary the committee with it. It reads into present sub-section (2.) of section 11 of the act of 1959 some new words and it deems them to have operated as if they were put there in that year. That obviously will give to the sub-section some retrospective effect, or will permit it to operate retrospectively. Has the Minister a brief explanation of it? Are there facts which make it necessary to have that retrospective operation? I presume there are, since the provision is taken. What would be the general nature of the facto?
– The note I have is that this proposed new sub-section is intended to ensure the validity of the existing practice under which the Minister in appropriate cases extends the time allowed for a particular operation. In other words, if a hole has to be drilled within a certain time but is not and I am asked to approve an extension of time, I do so on the facts.
– I thank the Minister for his explanation. I assume he would not act to extend the period referred to in proposed new sub-section (1.) when section 11 is rewritten so as to read -
An agreement shall specify the period, being a period ending not later than the thirtieth day of June, One thousand nine hundred and sixty-five, within which the approved operation to which the agreement relates is, unless otherwise approved by the Minister, to be completed.
Apparently complete power is taken there to extend the period beyond 1965.
– It may be necessary, if something happens such as a drill getting stuck.
– It is to enable the subsidy arrangement to continue to fruition even if it carried slightly over the period defined by the act. Mr. Temporary Chairman, if you and the Minister will allow me to be slightly irrelevant here for a moment I shall be able to conclude my remarks more expeditiously. Suggestions have been made from time to time that the Minister might appoint an advisory panel from the operators in the oil search field to advise and discuss with him various aspects of the search. Has he given any favorable consideration or any consideration at all to the proposal to establish an advisory panel from the industry? If so, what has been the result? If he has not had time to consider it will he undertake to give it some consideration?
– Yes, I have given a good deal of thought from time to time to the idea of having an advisory committee, but not consisting of persons drawn from the industry. I have approached the matter from an altogether different angle.
– You mean that part of the industry engaged in the drilling for oil?
– Engaged in the search for oil.
– I had in mind the industry at every level, geological and geophysical - the whole operation.
– I think it is rather difficult to select the members of an advisory committee from an industry when that industry has its own interests and each member of it is a company which is interested in getting subsidies. I would have grave doubts about having on an advisory panel any one whose interests might be eligible for a subsidy. But I have given thought to the matter and have talked over with the department of having some one of impartial standing, with technical knowledge and business experience, but I have not got around to making a final decision about it. I have not discarded the idea or followed it through to a conclusion yet.
Clause agreed to.
Clause 10 agreed to.
Title agreed to.
Bill reported without amendment; report adopted.
Bill read a third time.
Senate adjourned at 11.29 p.m.
Cite as: Australia, Senate, Debates, 3 October 1961, viewed 22 October 2017, <http://historichansard.net/senate/1961/19611003_senate_23_s20/>.