In South Australia since 1958, 140,400 km of seismic have been recorded (75,500 onshore) and 882 wells drilled (of which 16 are offshore wildcats and 238 are development wells). Exploration and development have taken place in three distinct phases. The first followed the discovery of gas at Gidgealpa in the Cooper Basin in 1963. The second was the $1.4 billion ?liquids scheme? in the early 1980?s following Eromanga Basin oil discoveries and their combined development with that of liquids from the wetter gas fields. The third phase, which began in 1982 and is continuing, is the accelerated search for gas to ensure supplies for South Australia into the 21st century. As a result of successful exploration effort to date, pipelines now supply gas to Adelaide (85.4 PJ in 1987) and Sydney (95.7 PJ in 1987), while a liquids pipeline carries oil, condensate and LPG to the coast at Port Bonython (19.1 million barrels in 1987). Gross income generated in 1987 was $714 million on which royalties of $31 million were paid to the State. The central Eromanga and underlying Cooper Basin are currently recognised as the most prospective in the State. This region has been under licence continuously since 1954 and is held by Delhi-SANTOS. The Cooper Sector which covers the productive area is not subject to relinquishment before the licences expire in 1999. Farm-ins and company acquisitions have therefore been the traditional method of obtaining an interest in this sector. However the western Eromanga, Pedirka, Arrowie, Arckaringa and portions of the Simpson Desert Basins, which are contained in this licence, are subject to a 52,000 square kilometres relinquishment every 5 years, the next being in early 1989. Fourteen Petroleum Exploration Licences and 34 Petroleum Production Licences (including the Caroline CO2 field) are now in force onshore covering 329,000 km2 or 33% of S.A. Only one permit is current offshore. Estimates of 1988 activity include 102 onshore wells (72 of which have gas objectives) and 6,000 kilometres of seismic (1,350 km offshore) at a cost of about $110 million. Seismic, drilling and expenditure from 1978-88 are shown in Figures 2 and 3. Much of the onshore area of S.A. considered prospective for petroleum is now under licence or licence application. One play concept which deserves further attention relates to the thick Cambrian sequences in the State. Moderate to thick Cambrian sediments cover more than half of S.A. and oil shows are widespread. In part, these rocks underlie much of the Pitjantjatjara and Maralinga lands granted to the Aboriginal traditional owners. One little-explored region not under licence is the Stansbury Basin beneath Gulf St Vincent and southern Yorke Peninsula. Government policy in South Australia is to continue to encourage petroleum exploration and development in the State. Royalties remain at 10 per cent of the wellhead value and a market exists for new gas discoveries ? an uncommon circumstance in Australia today. Some explanation of the gas situation is therefore warranted. In order to promote the development of gas fields in the 1960s, it was decided to generate the bulk of SA?s electricity from natural gas such that about 65% of the State?s electricity is now generated from gas. An agreement was signed in 1971 by the Cooper Basin Producers to supply gas to AGL for the NSW market until 2006. This agreement has precedence over supplies to the Pipelines Authority of SA (PASA) whose gas sales contracts were due to expire in 1987. Due to uncertainties that sufficient gas had been proven up to meet the AGL contract (ie putting PASA supplies post 1987 in considerable doubt) and following unsuccessful negotiations with the Cooper Basin Producers for gas supplies post 1987, the Natural Gas (Interim Supply) Act was passed in late 1985 by which reserves of gas were set aside which would meet South Australian gas needs to 1992. This Act also cancelled the existing contracts to supply gas to PASA. As at the beginning of 1988 approximately 290 PJ of sales gas were reserved under the legislation, plus a quantity of ethane, which together would meet the State?s needs into the early 1990?s. Negotiations are in progress to secure additional supplies from both interstate and within SA., following confirmation in early 1987 that sufficient reserves had been proven to satisfy the AGL Sydney contract, and future discoveries could be dedicated to SA. Therefore a clear market opportunity exists to sell gas in South Australia. The current consumption of about 85 PJ/year (76 BCF/year) is anticipated to rise to 100 PJ over the next few years and then remain relatively constant provided prices remain stable and supplies continue to be available. In order to provide surety of supply for consumers, at least 10 years of forward cover are preferred. Provided the drilling rate remains at the current level of about 70 gas exploration and appraisal wells per year, this could be achieved by 1992.