July 17 (Bloomberg) -- Australia will step up calls on companies to bring undeveloped oil and gas fields into production as dwindling reserves make supply security a ``major concern,'' Energy Minister Martin Ferguson said.

The government will scrutinize undeveloped fields and determine whether they could be profitably developed, Ferguson said today at a conference in Darwin. The minister said he had been ``working closely'' with BHP Billiton Ltd. about developing the Macedon field to supply the Western Australian market.

Explorers need to boost work in frontier areas to avoid a A$28 billion ($27 billion) petroleum trade-deficit within a decade, the Australian Petroleum Production & Exploration Association said in April. Australia's oil reserves will last about a decade at current production rates, Ferguson said.

``There's going to be a process by the department, running the finger over whether or not some of those options are commercially viable now, whether these companies should be pushed to bring the project on,'' Ferguson told reporters later. ``It's appropriate that the department, having proper regard for commercial considerations, has a look at some of these leases in terms of our national interest and our domestic gas responsibilities.''

A government department will produce a report on potentially viable fields later this year, Ferguson said. Companies that hold the licenses containing the fields will have 12 months to consider their position and advise the government whether there are barriers to development that haven't been taken into account, or explain how they will proceed with development, Ferguson said. Otherwise they may be stripped of the lease, he said.

Western Australia

BHP, Australia's biggest oil and gas producer, said in April it was considering the development of Macedon for the Western Australian market, which is suffering a shortage of gas because of a pipeline blast. Starting up Macedon would require a change in Western Australian regulations on gas specifications and Ferguson said today discussions were taking place with the state government on ``some regulatory issues.''

Emma Meade, a spokeswoman for Melbourne-based BHP, wasn't able to immediately comment.

``There is a capacity potentially to bring on some of these domestic gas opportunities from a commercial point of view to assist Western Australia,'' Ferguson said.

Excise Tax

Ferguson said the decision to remove an excise exemption on condensates production from the Woodside Petroleum Ltd.-operated North West Shelf venture was warranted, particularly given the venture's profitability and the surge in world energy prices.

``The change to condensate is appropriate,'' Ferguson said. ``We're not talking about a development that's on its knees. We're talking about a highly profitable and mature investment.''

It's more important to encourage the development of new liquefied natural gas ventures, such as Chevron Corp.'s Gorgon venture, Woodside's Browse LNG venture and Inpex Holdings Inc.'s Ichthys LNG venture, Ferguson said.

Inpex is considering rival locations for the onshore LNG plant for Ichthys, including the Maret Islands off northwestern Australia, Darwin and a proposed LNG ``hub'' on the mainland of far northwest Australia. The decision is a commercial one for Inpex, Ferguson said.

The Northern Territory government is ``fighting'' to get Inpex and joint-venture partner Total SA to build the Ichthys plant in Darwin, Northern Territory Chief Minister Paul Henderson said at the conference. The A$12 billion project would be worth A$50 billion to the Northern Territory economy over the next 20 years, he said, citing a report by ACIL Tasman Pty, an economic consulting firm.

LNG output may rise from less than 16 million metric tons in 2007-2008, to 24 million tons by 2011-2012, before potentially more than tripling to 76 million tons by 2029-2030 on new projects, the Australian Bureau of Agricultural and Resource Economics said in December.

To contact the reporter on this story: Angela Macdonald-Smith through the Sydney newsroom at

amacdonaldsm@bloomberg.net

Last Updated: July 17, 2008 05:24 EDT