Over the last quarter the magnitude of the decline in petroleum exploration expenditure was significantly larger than for minerals exploration expenditure.
Petroleum exploration expenditure fell by $232.4 million, almost one third, making up 84.5% of the total decline in exploration expenditure.
The decline comes as the price of crude oil is forced down by oversupply from the US and Arabian producers.
While oil exploration in WA takes second place to gas, the crumbling price means oil and gas companies are looking to reduce discretionary costs, usually exploration.
Combined, the reduced levels of petroleum and iron ore exploration contributed 97.9% of the total decline in expenditure on exploration, highlighting the importance of iron ore and petroleum as drivers of local market activity.
Since the September quarter of 2013 national offshore petroleum exploration expenditure has fallen by more than onshore activity with offshore exploration expenditure falling by 15.9% compared to a drop in onshore exploration of only 2.2%, although onshore exploration in Western Australia has been limited to just a handful of wells in the Canning and Perth basins.
Australia's total production of crude oil and condensate for the September quarter 2014 was 5,091 million litres, up 1.9% on the June quarter 2014, with production from the new Balnaves field in the Carnarvon Basin, increased output from the Gippsland Basin and the restart of the Vincent oil field all key contributors to the increase in production.
BHP Billiton's Pyrenees field also reversed previous results and increased production, primarily due to the completion of five new wells.
Production was somewhat subdued by the Fletcher-Finucane project being offline for part of the quarter.
Gas production in the September quarter 2014 reached a record high of 17,459 million cubic metres, a 10.3% increase on the June quarter 2014.
The September quarter increase replicated the trend seen in 2012 and 2013 of September quarter production increasing over the June quarter primarily due to the northern hemisphere's transition into winter, with large quantities of gas needed for heating.
Of course, there was also increased supply from the North West Shelf and Pluto LNG projects both of which had planned shutdowns in the June quarter ahead of the increased demand, plus, improved well performance in the Cooper basin and higher seasonal demand in Victoria.
Production growth is expected to continue to be strong, particularly in the medium term as Australia's seven major LNG projects under construction begin to start operations.
The Department of Industry and Science forecasts a 7% growth rate for 2013-14 to 2014-15.
Natural gas exports were down by 3.2% over the December quarter 2014 after a strong September quarter 2014.
The falling oil price has yet to fully hit natural gas export earnings, with the full impact unlikely to be felt until mid-2015 due to the lagged oil price link in many Australian natural gas contracts.
Crude oil has almost halved since September to average $US47.3 per barrel in January - its lowest level since February 2009.
This continued a downward trend that has been gaining pace since June 2014.
A bearish market is predicted for the first half of 2015, with Barclays and Goldman Sachs both cutting their forecasts in January. Barclays expects the West Texas Intermediate (WTI) spot price to decline further over the next few months with trading into the high $US30s, and an average of $US42 for 2015.
This short term outlook is shared by Goldman Sachs, but it forecasts a slightly stronger recovery in the second half of 2015 to average $US47 over the year.
LNG prices have already responded by falling 10% to $US4.3 per million British Thermal Units, the lowest level since May 2011 due to a mix of reduced demand and falling oil-linked contracts.
Gas is facing reduced demand with the nuclear restart in Japan and increased demand for cheaper coal.
Credit Suisse forecast average import prices into Japan to fall to $11/mmBtu in 2015, although Alliance Bernstein has forecast a longer term recovery for LNG as lower prices stimulate demand and projects yet to make final investment decisions are either cancelled or delayed.