The changing state of Australia's original oil and gas province, Bass Strait, is being played out in its pipes.
At a time when infrastructure companies such as APA group are trying to increase their pipe connection to Bass Strait to carry growing volumes of gas north to NSW, ExxonMobil is about to reduce the capacity of the 186-kilometre pipe that carries Bass Strait crude oil and liquids to a processing plant on Melbourne's south-eastern fringe. The 55-year-old pipe will be replaced by one just half the size, with documents seen by Fairfax Media showing the diameter will reduce from 700 millimetres to 350 millimetres.
The change has been made to reflect the declining volumes of crude oil and condensate being extracted from Bass Strait, whose gas reserves are becoming far more sought after than its crude oil.
Crude oil production in Bass Strait began in the 1960s and peaked at about 500,000 barrels a day in the 1980s. Daily production has fallen to less than 10 per cent of that, but Exxon has stated in recent times that it expects crude oil production to continue until at least 2030.
The region's gas initially was an inconvenience but is now hotly sought by energy retailers and manufacturers on Australia's eastern seaboard, who are fearing a gas shortage later this decade.
With exports from Gladstone set to suck up much of the gas produced in Queensland's coal seams and South Australia's Cooper Basin from 2017, and states such as NSW and Victoria shunning the development of unconventional onshore gas, Bass Strait's reserves are shaping as a key source of domestic energy supplies.
Exxon's most recent estimate is that about 7 trillion cubic feet of gas remain in the Gippsland Basin part of Bass Strait, where Exxon has worked in partnership with BHP Billiton since the 1960s.
The figure quoted by Exxon includes undiscovered volumes of gas, and is the joint venture's estimate of possible resources in the province.
BHP's head of conventional oil and gas Steve Pastor indicated in December that production beyond 2030 was increasingly possible. ''We see the remaining wet gas resources producing significant volumes and strong returns for many, many years ahead,'' he said.
Former Howard government minister Peter Reith, hired to assess the domestic gas market for the Victorian government last year, reported there was another 30 years' of gas in Bass Strait at existing production levels. But recent supply deals, including a multibillion-dollar long-term purchase by Origin Energy, suggests gas production will increase significantly in coming years.