I have obtained access to one of the most secret, but nation-changing documents in Australia – the Exxon estimates of Victoria’s massive low-cost, onshore, likely carbon neutral gas reserves that do not require fracking.
They are near the Longford, Gippsland, treatment plant and the east coast pipeline network. The best-case Exxon estimate is that the reserves total 4.996 trillion cubic feet (TCF) of gas or some 60 per cent of the last 50 years of Bass Strait production.
But there is a “high” estimate of reserves at 12.6234 TCF that makes the Victorian reserves second only to the North West Shelf.
The “secret” report titled ‘Onshore natural gas from lignite’ was prepared in 2014 by Gippsland Gas (then chaired by John White who was the chief executive of the company that won the contract to build the ANZUS frigates) and Exxon.
It was based on Exxon’s Houston researchers’ extensive technical review of the Gippsland Basin.
Houston studied oil exploration wells that been drilled in the 1950s and 1960s (some by Woodside) plus drilling conducted in earlier decades to map brown coal reserves.
Exxon found that many of these wells had encountered gas dissolved in water deep below the normal aquifers.
At the time, the drillers did not value the gas.
Exxon then took their Houston research to world-renowned gas and oil reserve estimator MHA Petroleum Consultants, now part of the giant Sproule group.
The MHA estimated a potential gas reserve bonanza, which now could replace the requirement to develop more expensive gas in Bass Strait.
The Gippsland Gas/Exxon revelations were first disclosed to the Denis Napthine Coalition government before the 2014 Victorian election.
Scared of Green votes, Napthine kept the lid on the discovery.
The ALP’s Daniel Andrews became premier after the election and banned further exploration and development of the gas, again for green reasons.
To conceal its existence, he spent large sums on an “expert” committee commissioned to check whether there was any likelihood of discovering onshore gas in Victoria.
The committee was forbidden to look at the area covering the massive Exxon discovery and other promising gas areas and dutifully reported that there was unlikely to be onshore gas in Victoria.
The local press, often with deep green views, did not disclose the obvious community deceit.
The Gippsland Gas and Exxon report told the government that water produced from the lignite could be used in agricultural activities to help grow carbon-absorbing plants “to a promote zero net emissions framework”.
Woodside, which is now a joint venture partner with Exxon, last week called for more exploration in Victoria, presumably knowing that the required gas has already been found by its Bass Strait partner and the reserves estimated by MHA.
Woodside say that if Victoria cannot explore for gas, then the only alternative is, what I regard as one of the most ludicrous proposals ever conceived in Australia – that gas-rich Victoria import high-cost liquefied natural gas.
The Victorian government itself wants gas being exported from Queensland to be sent to Victoria and NSW in the full knowledge that, subject to the tests, the state’s abundant low-cost gas can supply domestic demand on the East Coast of Australia.
And the Victorian gas, unlike Queensland, does not require fracking.
However I emphasise that the Gippsland Gas/Exxon report reveals that further work needs to be done, not to determine the reserves, but to make sure that production and permeability will duplicate the first test wells.
But they were so confident that they planned to spend $200m (in 2014) on the project, arranged for BlueScope and other major gas users to pencil intent contracts and signed six agreements with local landholders who would benefit from the development.
Those Gippsland farms would have become droughtproof had the gas development proceeded.
The report sets out that Exxon planned to drill six holes to test for gas saturation and coal permeability.
Each well would have taken between two and four weeks and a detailed drilling plan been established.
But faced with the antics of the Victorian government, Gippsland Gas and Exxon concluded that developing the gas was just too hard and they had better things to do.
As result, the leases are now owned by the Victorian Government.
Australia-wide the Greens do not want any more gas development and there will be similar sentiments in the inner suburbs of Melbourne.
But subject to the saturation and permeability tests, Australia has gas reserves with production costs at a small fraction of the current price.
Release of this gas would save large numbers of Australian industrial companies and slash the cost of gas to consumers on the east coast, reducing Australia’s inflation.
Snowy Hydro has now been forced to restrict using its gas-fired power stations.
These could be resumed and provide valuable back-up to make renewable energy more reliable.
And although it’s heretical to mention it, a new gas-fired power station that can be turned on when renewables are interrupted would enable massive reductions in carbon because Yallourn brown coal would be shut down much faster that is currently likely.
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