Gathering dust for a decade, the Exxon gas plan needs to be considered

Victorian Premier Jacinta Allan should review the 2014 Exxon plan and perhaps raise a small amount of money to drill a few wells. Picture: NCA NewsWire / David Crosling

The good news for Victoria is that there is now open debate over the extent of the state’s onshore gas reserves.

I am not a geologist, so I can’t be sure that Victoria has large, deep gas reserves that are dissolved in water and do not require fracking to extract. Today I want to explain why I regularly highlight Victoria’s unique potential gas situation and the role of its Government and Opposition in its concealment.

Earlier this week, The Australian published the case that claims that gas does not exist which lets the Victorian government off the hook.

To its great credit when The Australian finds its columnists have different points of view, it allows both views to be expressed.

In the journalistic business there is often one incident that gives you confidence to pursue a conclusion that is different to those in authority and where you don’t have personal expertise.

Many years ago, after I first published that Exxon was prepared to spend $100m to develop Victoria’s deep water dissolved gas in Gippsland, I was at a business function when a top Australian Exxon executive quietly took me aside and said: “Robert, you got your facts wrong in that article. We planned to spend $200m not $100m.”

Exxon’s enthusiasm for the deposit extended to doing a joint venture with BlueScope Steel which operates a steel rolling mill at nearby at Western Port Bay.

A company known as Ignite, through its wholly owned subsidiary Gippsland Gas had spent some millions researching the deposit and earlier Exxon data. Exxon on examining the results, combined with Gippsland Gas to put the $200m proposal to the 2014 Victorian Coalition government.

The Premier faced with making the 2014 decision was the Liberal’s Denis Napthine but in matters like this the Premier was greatly influenced by his Deputy Premier and leader of the Nationals Peter Ryan.who was also the member for South Gippsland.

Ryan feared any development of onshore gas would frighten farmers who did not want gas development and believed (incorrectly) it would require the fracking process to extract the gas. Napthine blocked Exxon, Gippsland Gas and BlueScope.

Daniel Andrews became Premier in December 2014 and continued the ban and made it very clear to Exxon that he would attempt to stop any drilling and, if he failed Exxon would not be given a production licence.

The giant multinational has oil and gas prospects around the world and had no interest fighting an Australian state government. It backed out. And because the original ban decision had been made by the coalition of Liberals and Nationals, the Victorian Opposition was reluctant to make it a major issue.

Ten years have passed and there has been no detailed drilling.

The $200m Exxon development plan of 2014 first required wells to be drilled to determine permeability. If those wells failed then obviously Exxon would have considered walking away.

Its $200m plan involved bringing the fields to full development stage and of course proving the extent of the gas reserves.

Victorian Premier Jacinta Allan at the Clean Energy Council & Energy Efficiency Council Clean Economy Jobs Fair in Melbourne. Picture: NCA NewsWire / David Crosling

Given the Victorian government headed by Daniel Andrews spent $42m concealing any gas reserves and was adamant they should not be developed, no one in their right mind would spend money to prove or disprove the initial estimates provided by one of the world’s greatest gas reserve estimators, MHA Petroleum Consultants, (now part of the giant Sproule group).

Those suggesting that MHA Petroleum would publish estimates of gas as part of a marketing exercise don’t understand the traditions of both MHA and Sproule.

With Bass Strait gas now running out and the Victorian government in a mess, it’s time for the Australian Energy Market Operator to step in and review the MHA calculations and the 2014 Exxon plan.

The first step in any intervention must of course be to alert the community to the looming crisis but there is no point in continuing to do that when the first obvious solution – the 2014 Exxon plan – is gathering dust in the files.

The looming gas crisis is so serious that current Victorian Premier Jacinta Allan and her deputy Ben Carroll need to combine and take personal charge.

They should review the 2014 Exxon plan and perhaps raise a small amount of money to drill a few wells – the first stage of the plan.

If the gas flows as it has in earlier wells, then it will be possible for Victoria to do a lucrative deal. It certainly needs help.