Explorers could be back on the (conventional) gas hunt in Victoria
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Victoria has given the green light for onshore conventional gas exploration to resume in the state, a measure that could unlock millions for regional economies and generate thousands of jobs.
The approval comes after three years of detailed scientific studies found that it would not compromise the state’s environment or its agricultural sector.
However, Victoria continues to maintain its staunch opposition to unconventional gas, noting that a bill to permanently ban fracture stimulation and coal seam gas exploration is also before its parliament.
The ban had scuttled the unconventional gas ambitions of Australia’s oldest petroleum explorer Lakes Oil (ASX:LKO), which lost an appeal late last year after a three-year battle against the state’s decision to halt its petroleum exploration.
However, the company can now pursue conventional gas on its existing permits in the Victorian section of the highly-prospective Otway Basin — a prolific gas producer across the border in South Australia — and the onshore Gippsland Basin.
Lakes noted in February that it had several projects ready for quick implementation including the drilling of the Wombat-5 well in the onshore Gippsland Basin, which seeks to commercialise a known gas resource that could supply up to 10 per cent of Victoria’s gas demand.
It is also waiting on the moratorium on exploration to end to drill the Otway-1 well, which can be quickly commercialised in the event of a success thanks to its close proximity to the existing Iona gas field, which is currently used for gas storage.
“The work of the Victorian Gas Program gives us the confidence that an orderly restart of the industry can deliver benefits for all Victorians and create jobs, without compromising our clean and green farming reputation,” Victorian Minister for Resources Jaclyn Symes said.
“Securing gas sources isn’t needed just for Victorian homes and businesses – it’s a key ingredient for manufacturing. That’s why we’re making sure all new gas projects are prioritised for local use.”
Oil and gas industry body the Australian Petroleum Production & Exploration Association welcomed the decision with chief executive officer Andrew McConville saying it would help ensure that Victoria had ongoing supplies of natural gas.
The Australian Energy Market Operator has forecast that Victoria could face shortfalls to its gas supplies if new supply is not developed, noting that gas could be prioritised for gas-fired power plants during the winter of 2024 and possibly 2023 if fields stop production earlier than expected.
“Victoria is a state that relies heavily 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,” McConville added.
The Victorian Greens have been opposed to the move, noting that the state government has underestimated the environmental impact that an expansion of the gas industry would cause.
Its deputy leader, Ellen Sandell, said earlier this month that rather than opening up the state for gas drilling, Victoria should focus instead on building its renewable energy capacity.
Other companies with interests in Victoria’s onshore petroleum basins include Cooper Energy (ASX:COE) and Vintage Energy (ASX:VEN), which both have acreage and/or interests in the onshore Otway Basin.