South Australia's (SA) state government is targeting more exploration as part of its energy and minerals policy, unveiled this week as part of a broader economic recovery plan to counter the downturn from the impact of the Covid-19 pandemic.

Private-sector exploration expenditure will increase from A$158mn ($112mn) a year in 2018 to a sustainable average of A$300mn a year by 2025, the SA government said. The exploration spending target covers upstream and minerals activity. The state is also a producer of minerals such as copper, uranium and gold.

The state's oil and gas sector is experiencing an increase in exploration and production activity in the Cooper and Otway basins, as well as emerging opportunities for opening new onshore and offshore frontiers, the government said. The onshore Cooper-Eromanga basin has produced more than 5 trillion ft³ (141bn m³) of gas and more than 340mn bl of petroleum liquids since it was opened in 1969. Early indications are that the Cooper basin could produce considerably more oil and a further 200 trillion ft³ of gas, it said.

Upstream exploration in SA rose to A$135mn in the 2019-20 fiscal year to 30 June, which was the highest spending in three fiscal years.

The Haselgrove 3 gas discovery has rekindled interest in the onshore Otway basin by Australian independent Beach Energy, which has also made further drilling at wells at Haselgrove 4 and Dombey 1. It has developed a gas processing facility to replace the Katnook gas plant, which operated between 1991 and 2013.

Gas continues to play a significant role in SA electricity generation with supplies from the onshore Cooper Basin in the northern part of the state and revived production from the Otway basin. Gas fuels around 50pc of South Australia's electricity generation. But this share is expected to fall as solar and wind power continue to increase their share of generation.

Greenhouse gas emissions associated with oil and gas production will need to be addressed, the government said, with technology such as carbon capture, utilisation and storage a promising solution.

"Central to South Australia's future in energy and mining will be an even stronger investment in our clean energy transition and more modern, lower impact development of our natural resources," said its minister for energy and mining Dan van Holst Pellekaan.

SA's ruling Liberal-National coalition state government has set a renewable energy target of 100pc by 2030. The state has also targeted electric vehicle sales penetration of 15-50pc by 2030.