We can only speculate as to why Apache Corporation has declined to go to phase 2 of their development programme (Oil giant no longer in drilling partnership 15/1/13). However this decision indicates to me that oil and gas development on the East Coast is not economically viable at current pricing. Why else would they walk away after spending (supposedly) $100m on phase 1?
Any other drilling company that looks to make further investment on the East Coast is now going to be extremely wary given Apache’s decision, regardless of what Tag Oil might say. If it looks like a lemon and smells like a lemon, then it probably is a lemon.
The only other logical reason for Apache to pull out is because they have come to the realisation, as pointed out in the PCE’s report, that the East Coast geology makes it difficult to mange unconventional wells safely.
It also begs the question as to what value is now to be gained from the $100,000 rate payer funded East Coast Oil & Gas Exploration Economic Development report. What was the point in instigating this expensive piece of propaganda if the oil companies don’t find drilling economic?
I believe it would have been a better investment to fund a study on alternative revenue streams for the East Coast such as the viability of unconventional but high value crops, rather than attempting to justify the continuation of an industry that is stuck on 20th century thinking.