Lakes Oil goes public with Victoria gas plan after govt rejection
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Gina Rinehart’s Lakes Oil has publicly released a proposal to overturn Victoria’s ban on gas exploration after approaches to the State government were ignored.
Earlier this year Victoria suspended conventional onshore gas exploration until 2020 and permanently banned unconventional exploration including hydraulic fracturing (or fracking’) and coal seam gas.
Lakes Oil (ASX:LKO), which is suing the Victorian government for preventing exploration, outlined seven points in the proposal — some of which had been flagged as part of the Liberal State Opposition’s energy policy this week.
Lakes Oil chairman Chris Tonkin told Stockhead he released the proposal to the market after getting no response from Victorian Premier Daniel Andrews or Employment and Industry Minister minister Wade Noonan (who stepped down last week).
“The idea is to try to reach a situation where we can come to some sensible arrangement,” Mr Tonkin said.
“Because we haven’t been able to get any response … we needed to start going public with some of these matters.”
A spokesman for the government provided this statement in response:
Under the proposal Lakes Oil would:
Moratorium on gas exploration
Victoria became the first State to suspend gas exploration in 2012 when it introduced a moratorium on coal seam gas.
This year the ban was extended to conventional gas until 2020.
Victoria is also spending $42.5 million to research what gas reserves may exist — a task and cost normally undertaken by the commercial sector.
Mr Tonkin says the government has not provided any acceptable reasons for the temporary ban, or latest moratorium.
In May, Premier Andrews said there were “no proven or probable onshore gas reserves in Victoria”.
A 2015 State Parliamentary inquiry found that while onshore conventional gas had been found in Otway Basin, those reserves were deleted by 2006.
But Lakes Oil, 14 per cent owned by Gina Rinehart, drilled four wells in its Gippsland Wombat field before the 2012 ban.
They want to drill a fifth well to see if it produces a commercial gas flow. If it does, the company says it could get gas to market in about 18 months, at a cost of $50 million.
It also wants to explore in the Otway Basin, near the now-deleted Iona gas field.
Victorian Government lawsuit
Lakes Oil launched a lawsuit against the State government in October 2016, seeking a judicial review of decisions preventing it from carrying out exploration.
The company followed that in December with a damages suit seeking compensation for losses of $2.7 billion allegedly caused by the State “depriving the company of its opportunity to use its exploration permits (grants) for the purpose for which they were intended”.
The sum includes $92 million of past expenditure and an estimated $2.6 billion in lost future earning from conventional gas resources.
A trial date has been set for March 14, 2018.
Lakes Oil shares gained 25 per cent to 0.2c on Wednesday, valuing the company at $61.6 million.