BP BP Plc

By Sarah Kent 

LONDON--Australia's oil and gas regulator on Wednesday threw a wrench in BP PLC's plans to drill deepwater oil-exploration wells off the country's southern coast, requesting more information on how the company intends to manage environmental risks before it will provide approval. BP said it plans to start drilling this year, subject to receiving the necessary permits.

Australian environmental groups have criticized the British oil giant's plan to explore for oil in the Great Australian Bight, a remote stretch of ocean that is home to whales, sea lions and other wildlife. They say a deep-sea well blowout could imperil endangered animals, and that BP's emergency-response plans are insufficient.

"The risks posed by this project to the environment and the economy of coastal communities across southern Australia are simply too great," Peter Owen, the director of the environmental protection group The Wilderness Society in South Australia, said in a prepared statement.

Australia's National Offshore Petroleum Safety and Environmental Authority has given BP a month to provide additional information before reconsidering the company's proposal.

"This is not a rejection or an acceptance--it is a request to clarify aspects of our plan and for us to provide information that has not been included in the plan," BP said in a prepared statement.

This is the third time the offshore petroleum authority has asked BP for changes or additional information about its environmental plans, and comes after academics, environmentalists and politicians critical of the proposal claimed BP didn't have an adequate strategy to respond to a spill. The regulator didn't give a reason of its latest request for more information, and a spokesman for the authority said he wasn't permitted to speak about the specific details it requested.

The decision comes during a difficult time for the oil and gas industry, which has been buffeted by a steep drop in oil prices over the past two years. Companies have slashed their budgets and laid off thousands of workers as profits plummeted. BP expects to spend less than $17 billion on finding and producing oil this year, down from nearly $23 billion in 2014.

The Australian Bight remains attractive for its potential to become a vast new oil basin. BP has said its geology is similar to some of the world's biggest oil and gas regions, such as the Mississippi Delta. Other oil companies including Chevron Corp. and Statoil ASA have licenses to drill in the region.

Australia first gave BP permits to explore in the Australian Bight in 2011, months after a fatal blowout on a BP-operated rig in the Gulf of Mexico claimed 11 lives and sent millions of barrels of oil spewing into the ocean. BP says the disaster has led to significant changes in the industry and the company, which have been applied in its preventive planning for Australia.

"Since the 2010 Deepwater Horizon accident in the Gulf of Mexico, BP and the industry have advanced equipment, procedures and training/competency management in the areas of drilling safety and prevention; containment; and oil spill response," BP said in a submission to the Australian Senate in March.

"Whilst the priority for planning is to prevent any accidents, the impact of potential unplanned events--e.g. oil spills--is modeled and prepared for in significant detail," it said.

Write to Sarah Kent at sarah.kent@wsj.com

(END) Dow Jones Newswires

September 28, 2016 09:24 ET (13:24 GMT)

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