THE decision not to re-release an oil and gas exploration permit near the Rowley Shoals Marine Park shows the offshore Kimberley region is proving difficult for the sector, an analyst says.
Federal Resources Minister Martin Ferguson will not re-offer the exploration permit W11-5, some 200km from the Kimberley coast and close to the Rowley Shoals, because no companies have applied for it since it was put up for grabs in April last year, his spokeswoman has confirmed.
There were also community concerns, she said.
Conservationists were up in arms in early 2012 when three permits including W11-5 were offered for exploration, although the hunt for oil and gas has been going on in the area for many years.
Shell's East Mermaid 1 well - smack in the middle of those three permits - was drilled in 1973 but abandoned due to technical problems and poor geological conditions.
The Rowley Shoals are a popular scuba diving site and are considered among the world's healthiest atolls.Woodside, no stranger to protests by conservationists with its contentious Browse gas hub plan at James Price Point north of Broome, is currently conducting seismic studies on permits north of Rowley Shoals, but says that activity is just to meet its obligations to retain the leases.
"This whole area is very difficult - you have to jump through a lot of hoops to get it going," State One Stockbroking analyst Peter Kopetz said.
While WWF Australia was pleased the W11-5 well was temporarily off limits to the oil and gas sector, it urged the federal government to create a permanent exclusion zone to the industry in the area.
On Browse, Mr Kopetz said it would be the economics of the project, not the vocal opponents, that would be the deciding factor in whether it proceeded.
Shell, with its preference for floating gas production, did not appear to be pushing the operator Woodside hard and was sitting back to see what happened, Mr Kopetz said.
While WA Premier Colin Barnett remains insistent the Browse hub must be built onshore where royalties will flow through to the state - rather than offshore, where the royalties will go to the Commonwealth - the project proponents would only choose a site that met their profitability criteria, he said.
"Why would someone lose money to appease someone?" Mr Kopetz asked.