An easy fix for our east coast gas mess

The coalition opposition in Victoria are blocking a simple and effective fix to the country’s energy crisis.

It’s no surprise that Victorian Premier Daniel Andrews does not want gas but the Coalition attitude is stunning and underlines why a third political party may be required to solve Australia’s energy problems.

In an amazing twist to the Australian east coast gas crisis, the giant ExxonMobil group believe that there is a huge reservoir of onshore, low-cost gas that solves the Melbourne and most of the Sydney gas shortages.

And absolutely no fracking is required to extract it. But the party that has blocked the development and is therefore pushing up gas prices in Sydney and Melbourne and boosting unemployment is none other than the Victorian Liberal and National Coaition.

It’s no surprise that the left wing Victorian Premier Daniel Andrews does not want gas but the Coalition attitude is stunning and underlines why a third political party (left or right wing) may be required to solve Australia’s energy problems.

I emphasise that the Federal Energy Minister Josh Frydenberg is an in principle supporter of the enormous nation changing project, particularly as it has the potential to insulate large parts of Victoria’s Gippsland farmlands from drought; enriches farmers with cash and goes a long way to overcoming the Latrobe Valley unemployment problem. It may also prevent the possible closure of the Altona petrochemical complex because of the looming gas shortages as Bass Strait runs down.

ExxonMobil has walked away from the $2 billion project because of the attitudes of both the Coalition and the ALP towards solving the gas shortages in Sydney and Melbourne. Exxon are not committed to returning but unless president Trump’s tax slashing changes the game, they almost certainly would return if the two Victorian parties wanted to solve the gas shortage.

To understand how Australia has been lumbered with an unnecessary Melbourne and Sydney gas crisis requires background. We all know that the Queensland export contracts drained Australia of gas. But while that was starting to happen, a group of local and US investors took out a massive 2,000 square kilometre lease containing vast quantities of deep lignite — a similar material to brown coal. They planed to use the deposit to convert lignite to oil using a technology developed in Australia. That technology is now to be used in Canada and the UK but that’s another story.

Lignite is like sponge and is 70 per cent water. It is nothing like black coal, which requires fracking to release its gas, as used in Queensland.

In that lignite water methane gas dissolves (there’s similar gas in Victorian brown coal but it dissipates in the air when the coal is mined). The water laden lignite sponge is 450 metres to 1.2 kilometres deep (much lower than the water tables used in farming). In testing, drill pipes sent into the material easily pumped the water to the surface and the gas came with it.

Exxon signed a $100m initial development contract with the Ignite Energy Resources Ltd (via its subsidiary Gippsland Gas) but the deal was blocked by the Napthine Victorian Coalition government in 2012 because they thought drilling might upset farmers and they did not understand the magnitude of the looming gas crisis. There was also fear fracking was involved.

When the Andrews government embraced a similar policy, Exxon walked away with the non-binding indication that they would return if the Victorian Coalition and the ALP were interested in solving the gas shortages. I emphasise that not until the $100m is spent testing and evaluating the immense field will the project be ready for commercial development. But Exxon’s preliminary estimates were that the water in the lignite sponges contained 9 trillion cubic feet of gas, roughly equal to the amount of gas in Bass Strait.

I must confess I did not know about the project until I researched a press release and read Pia Akerman’s coverage (Victorian gas ban ‘wasting chance to save economic future,’ Feb 7).

Subject to that $100m work, here are the advantages of the project:

• The pipes from Bass Strait to the Exxon Longford gas treatment plant run through the property and, as the gas is similar to Bass Strait, the basic infrastructure to pipe the gas to Melbourne and Sydney is in place and can be used.
• Because it’s a simple extraction of water from the lignite sponges (which is replaced naturally) there is no fracking required.
• The ten or so holes that were drilled produced, as by-product, water that was agricultural grade and was used by a delighted farmer to get through a drought at the time of the testing. And he also enjoyed receiving money although nothing like the big royalties he will receive if production starts.
• Because the operation is low-cost, the non-listed public company Ignite Resources (Ignite has 450 shareholders about 35 per cent in the US) is prepared to include in its environmental approval worthwhile royalties to farmers as are paid in Queensland. Those farmers lucky enough to have gas on their property will experience some inconvenience from drilling but will help drought proof their farms and offer big a income outside of farming.
• The land is close to Sale and much of it has low-grade vegetation, which is not farmed and can be used with surplus water to grow carbon-absorbing vegetation to store carbon in the ground -- offsetting at least part of the carbon in the gas.
• Bass Strait gas feeds the Altona Petrochemical plant, which currently has a doubtful future. At Longford they extract components of the Bass Strait gas and pipe them to Altona. Subject to the $100m study, this will continue enabling the Altona complex to be modernised and expanded.
• The closure of Hazelwood power will enable the valuable skills in the Latrobe valley (about an hours drive away) to be employed on the $2bn project. A gas power plant might be considered for the Latrobe Valley.
• The Shell proposal to erect solar (or wind) renewable facilities backed by a gas power station for base load when weather affects renewable generation suddenly becomes possible. If the renewables are to be solar then the panels can be erected in north western Victoria.

I could go on. Yet we have elected politicians on both sides who turn their back on such developments, preferring to have voters either run short of gas or pay higher prices. It is no wonder that ordinary people are sick and tired of the established parties. Victoria is ripe for a third party. That party maybe led by people like Bernardi and Hanson but just as likely it may come from the left. Unions are now required to submit to inner city greens. Many unions understand that jobs for their members are more important than winning inner city seats dominated by green voters.

In the US, Bernie Sanders from the left and Donald Trump from the right tapped this deep sentiment. Bernie lost a close race to Clinton in the democratic nomination but, had he won he may have beaten Trump because they both tackled the party anti-job establishments albeit from different directions. When parties forget ordinary struggling people, as we are seeing in Victoria, they invite the Trumps and Sanders to start looking after voters.