Australia’s quarterly oil and gas exploration spending hit a 10-year high in the March quarter at A$471 million ($329 million), government data released in June showed, as the state and corporate machinery moved to keep gas flowing for export and domestic supply. The money is pouring into drilling while ordinary people are left with the costs, the uncertainty, and the environmental fallout that comes with decisions made far above them.
Who Has the Power
Rystad Energy expects spending to rise about 10% in 2026 to more than $1 billion. The rebound has been driven by growing Asian gas demand, technological advances and an improved investment climate, with the Iran war underscoring the urgency to develop supply after years of sluggish spending. That’s the language of the market and the state working in tandem: demand abroad, profit at home, and a scramble to lock in more extraction before anyone can slow it down.
Energy investment sentiment has improved in part following last year’s election of a more supportive second-term Labor government, which faces pressure to fill a looming end-of-decade domestic gas shortfall without harming valuable LNG exports. The government’s job, as framed here, is not to stop the extraction machine but to manage its contradictions. Keep the gas moving. Keep the exports valuable. Keep the shortfall from becoming a political problem.
Much of the drilling is focused on three gas-rich regions: the Otway Basin offshore western Victoria, the Beetaloo shale in the Northern Territory and the Taroom Trough in Queensland. The Otway is the most established and is close to existing infrastructure. That infrastructure didn’t appear by magic. It exists to serve the same extractive order now demanding more.
Who Gets Crushed
In the Beetaloo, the territory government is pushing development of what it hopes can become an LNG-scale shale gas resource. It recently offered new acreage in the area for prospective explorers, along with co-funding. That’s public power and public money helping private drillers chase another fossil fuel prize. Australia’s No. 2 gas producer, Santos, is set to drill three appraisal wells there this year. In March, Japan’s Inpex took a stake in a Beetaloo permit. Development of the Beetaloo could eventually provide the company with an onshore gas source for its Ichthys LNG plant in Darwin, the Northern Territory’s capital.
Drilling in the Beetaloo has benefitted from the arrival of more powerful rigs, used by companies such as Tamboran Resources, capable of drilling long lateral wells with many fracking stages. Bryan Sheffield, a co-founder of U.S. private equity firm Formentera Partners, which is working with Tamboran and invested along with Inpex, said, “Shale developers are the answer to the short supply in Australia.” Sheffield, who ran Parsley Energy focused on the giant U.S. Permian shale, cited a more welcoming regional government. “They want Americans to come in,” he said at the Australian Energy Producers conference in May, adding that officials want the U.S. service companies and flex rigs.
Rick Wilkinson, CEO of advisory firm EnergyQuest, said, “I think the experience of Texas is very relevant ... They prove that they're able to do massive multi-stage fracks.” Bill Hare, the founder of Climate Analytics, raised concern that drilling the vast shale resources could be “very destructive,” due to the impact on the land and emissions when gas is burned. “Quite apart from the climate issue, the water demands are huge in an extremely arid region,” Hare said. The people living with the land and water don’t get a vote in these boardroom calculations. They get the consequences.
What They're Calling Supply
In the Otway, exploration has jumped, with companies sharing rigs to cut costs, but their campaigns have had mixed results. Amplitude Energy CEO Jane Norman told Reuters, “There is a lot more activity in the Otway than we've seen in years.” U.S. major ConocoPhillips drilled two wells in late 2025, the country’s first offshore wildcat wells in several years, with one well yielding gas and a second finding gas but not at the level predicted and with a much higher carbon dioxide content than expected.
Some industry watchers have suggested that if ConocoPhillips can develop a steady supply of gas to the tight east coast market, that could defray obligations to supply the market from its export project, Australia Pacific LNG. A Conoco spokesperson said, “Further work is now underway to progress an Offshore Project Proposal for a potential offshore development to bring more supply to the domestic market.” That’s the familiar trick: promise relief for the domestic market while keeping the export project intact.
Amplitude drilled a well that was deemed “non-commercial” in March and is reviewing whether to proceed with a follow-up well. Wilkinson said offshore exploration, such as in the Otway, was promising but remained expensive. “We think it's a proven petroleum basin — it's got great rocks. The only issue is that CO2 sometimes shows up,” he said. The rocks are great, the carbon dioxide is inconvenient, and the extraction march goes on.
The government’s plan to require LNG exporters to hold 20% of their gas for the Australian market may deter smaller players from investing more in exploration, because the increased supply could keep a lid on domestic gas prices. Canberra has yet to spell out how the gas reservation will work. Brett Woods, CEO of the country’s No. 3 oil and gas firm Beach Energy, told Reuters, “Capital wants to find happy, comfortable places to invest, and at the moment the confusion is making it very hard to invest.” Even the bosses want clarity. The public gets the bill and the uncertainty.
Nevertheless, explorers have been raising capital since late last year to drill for tight gas in the Taroom Trough. One of them, Omega Oil and Gas, found oil instead, while UK major Shell recently shipped light oil to a local refinery after entering the region several years ago. Taroom’s liquids potential prompted the state government to fast-track development to boost Australia’s limited domestic oil supply, though any meaningful output is seen as years away. Woods said, “What I'm really excited about, in terms of the portfolio we have today, is the Taroom offers real scale potential in terms of liquids production, which is desperately needed by Australia.”
The language is always the same. Need. Supply. Investment climate. Meanwhile, the drilling expands, the co-funding flows, and the people below are told this is how order works.