Victoria lifts onshore gas ban, but fracking ban to stay
Victoria allows conventional onshore gas exploration but fracking ban made permanent.
The Victorian government has lifted a ban on onshore gas exploration from July 2021, paving the way for the state to boost production as supplies decline from the offshore Bass Strait fields.
Following a three-year investigation, Premier Daniel Andrews said there will be an “orderly restart” of onshore conventional gas exploration and development from July 1 next year while a temporary ban on fracking and coal seam gas exploration will be made permanent.
The state has faced significant pressure to ease the gas ban amid forecasts of gas supply shortages looming by 2022 partly due to production drying up from the once prolific Bass Strait.
Big industrial users have been among vocal critics of the government’s move saying it had pushed up the price of locally priced gas and made it more difficult to compete with their interstate and international rivals.
Potentially significant onshore gas resources could be extracted from the state’s Otway Basin which stretches into South Australia where an industry already operates.
Companies including Lakes Oil, backed by billionaire Gina Rinehart, have been preparing for the ban to be lifted with plans for drilling already in place.
Production of Victoria’s resources could generate $310m annually for create 6400 jobs over the lifespan of projects, the government estimates.
Any gas produced will be prioritised for the domestic market in line with a federal government push to establish a domestic gas reservation scheme. The moratorium was due to expire on June 30 this year.
“The government will now work with industry and communities to develop rigorous engagement and transparency obligations, and improve the regulatory framework – to guarantee a world’s best practice approach,” Mr Andrews said in a statement. “Landholders will also be supported to better negotiate access rights and compensation with exploration companies.”
The Labor government will introduce the two bills on Tuesday.
Industry body APPEA said it was the right decision given warnings about supply shortfalls.
“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,” APPEA chief executive Andrew McConville said. “The Australian Energy Market Operator 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.
Gas shortages on the east coast are set to emerge within three years and prices will remain high for the next decade ratcheting up pressure on large industrial users struggling with soaring tariffs, EnergyQuest has also warned.
The eastern states of NSW, Victoria, South Australia and Tasmania won’t have enough gas to meet demand as soon as 2022, requiring Queensland to substantially boost the supplies it sends south, according to the consultancy.
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