Although commonly reservoired within Tertiary rocks, hydrocarbons in eastern Indonesia have generally been sourced from Mesozoic sediments deposited on the continental margin of northern Australasia. Fragments of this margin are now widely dispersed as allochthonous terranes throughout the area, one of the most far traveled examples being the island of Buton, southeast of Sulawesi. Asphalt reserves on Buton support a significant local industry and exploration continues for oil and natural gas. In common with other prospective Australian-derived terranes around the margins of the Banda Sea, Buton is now separated from Australia by the active plate boundary marked by the Java Trench and the collision trace along the Timor, Tanimbar, and Seram troughs. Buton differs from these other terranes in its distance from that boundary and its consequent insulation from the effects of the Pliocene–Pleistocene collision between Australia and the Banda arcs. Reconstruction of the geological history of the Buton terrane thus has an important role in guiding future exploration in the other Australasian fragments in eastern Indonesia.
Geophysical studies of the Buton region have used seismic reflection, gravity, and magnetic (including paleomagnetic) techniques. Seismic reflection images generally record extension rather than compression as dominating the recent history of the area. Gravity data define the present-day western limits of the Buton terrane and suggest that in the east the terrane includes the almost entirely submerged Tukang Besi platform. The gravity surveys also demonstrate that the ophiolitic rocks exposed on Buton are not attached to deep roots, but are thin and isolated overthrust sheets. Therefore they do not mark a terrane boundary and their presence has little bearing on the prospectivity of the area. Paleomagnetic results document the independent movements of thrust sheets on Buton during the Pliocene–Pleistocene.
The combined data from Buton record its separation from Australia as part of a microcontinental block in the Jurassic or Late Triassic, followed by collision with the Eurasian margin in southeastern Sulawesi in the Oligocene or early Miocene. Collision was followed by extension (as in Sulawesi itself) producing minor separation of Tukang Besi from Buton and much greater dispersion of other fragments of the microcontinent, some of which have since been incorporated in the new collision zone in the Outer Banda arc. The oil seeps and asphalt deposits of Buton are proof that hydrocarbons in the Banda arc fragments can be sourced from within these fragments and are not necessarily derived from the underthrusting Australian margin.