gas industry

The Victorian Government has made the decision to remove the ban on onshore conventional gas exploration and production.

It introduced two Bills to Parliament: one will enshrine Victoria’s fraccing ban into the state constitution, And the other allows for an orderly restart of the onshore conventional gas industry in Victoria. It will also introduce measures aimed at ensuring newly sourced gas within Victoria and state waters will be prioritised for domestic use.

In 2017, the Victorian Gas Program set about determining the potential for new onshore conventional gas discoveries and what would be the risks, benefits and impacts of allowing exploration and development.

The program has now delivered a large amount of work to answer these questions. The scientific studies have found there are likely to be onshore conventional gas resources in south-west Victoria and Gippsland.

The three-years of studies has concluded that an onshore conventional gas industry would have no significant impact on farming because of the low risks to the environment or groundwater.

The gas program has shared the science with the community via more than 800 separate engagements.

Following the passage of the Bill in Parliament, the department will start working with industry and other stakeholders to amend the Petroleum Industry Regulations 2011

In line with the findings of the Victorian Gas Program, community engagement elements of onshore conventional gas projects will be strengthened.

In practical terms, the orderly restart will commence immediately with some specific milestones in place as the industry moves into gear from a standing start.

Onshore conventional gas development could potentially start from 2023–24 if industry makes a gas discovery, considers it commercially feasible to develop and secures the necessary regulatory approvals.

The Australian Energy Council (AEC) supported the Victorian Government’s decision. AEC Chief Executive, Sarah McNamara, said the decision was a sensible one supported by science.

“Ensuring reliable gas supplies into the future will help affordability for domestic, commercial and industrial customers,” Ms McNamara said. 

“Readily available gas will also be an important, flexible backup fuel that is likely to help ensure the reliability of the state’s grid as older coal-fired power plants retire and more wind and solar generation comes into the system.

“This decision should boost Victoria’s energy security.”

Ms McNamara said that while the lifting of the conventional gas ban was a step forward, the AEC remained disappointed by the ongoing ban on unconventional gas.

“We acknowledge that the Victorian Government took its position to an election, but believe unconventional gas can also make a valuable contribution and as shown by previous reviews, such the Northern Territory’s, can be effectively managed,” Ms McNamara said. 

Minister for Resources, Water and Northern Australia, Keith Pitt, also welcomed the decision to lift the moratorium on onshore conventional gas exploration and development.

“This is an important step forward for an industry that has the potential to be a major economic contributor to Victoria and Australia once the ban is lifted from mid-2021,” Mr Pitt said.

“I am pleased the Victorian Government now accepts the true science around the benefits of developing the state’s gas industry and what it will mean for manufacturing.

“Not only will the decision help boost domestic gas supplies, it will generate millions in royalties for Victoria.”

While the decision on conventional gas is a good win for the state, Mr Pitt also said he was disappointed Victoria didn’t take the opportunity to reverse its ban on unconventional gas exploration.

“Victoria has potentially enormous shale and tight gas resources that could generate billions in revenue and create thousands of locals jobs,” Mr Pitt said.

Likewise, the Australian Petroleum Production and Exploration Association (APPEA) welcomed Victoria’s decision. 

APPEA Chief Executive, Andrew McConville, said, “The government’s decision to lift the moratorium is a step in the right direction to help ensure that Victoria continues to have ongoing supplies of natural gas into the future.

“The Australian Energy Market Operator (AEMO) has forecast shortfalls in Victorian gas supply as soon as 2024 if more supply is not developed. Shortages could happen earlier if winter demand is high.

“Victoria is a state that heavily relies on gas. Around 80 per cent of Victorian homes are connected to natural gas, and an average household in Victoria uses nearly twice the amount of natural gas as a household in any other state in Australia.”

Mr McConville said the lifting of the moratorium aligned with Victoria’s Renewable Energy Target and its position on reducing emissions.

“As a low emissions fuel, natural gas has an important role to play in helping Victoria reach its emissions reduction targets,” Mr McConville said.

“Under every scenario modelled for the Victorian Government, natural gas has an increasing role to play in delivering stable, cleaner energy to Victoria.”

Charlotte Pordage is Editor of Utility magazine, a position she has held since November 2018. She joined the team as an Associate Editor in October 2017, after sharpening her writing and editing skills across a range of print and digital publications. Charlotte graduated from Royal Holloway, University of London, in 2011 with joint honours in English and Latin. When she's not putting together Australia's only dedicated utility magazine, she can usually be found riding her horse or curled up with a good book.

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