Victorian Gas reserves can drive economy - 31st March 2016



Victorian gas reserves can drive economy

March 31, 2016 10:30pm
Our gas reserves in Bass Strait are gradually drying up or becoming ever more expensive to access, writes Theo Theophanous.

CHEAP, clean, reliable natural gas has been the backbone of Victoria’s economy for decades.
It has powered much of our industry and led to the greatest penetration in household and business usage of any state. It is intrinsic to our prosperity.
This is now in danger of being progressively reversed by groups like Lock the Gate, in an unholy alliance with the Greens and the Nationals.
Our gas reserves in Bass Strait are gradually drying up or becoming ever more expensive to access. Yet, rather than welcoming gas exploration onshore the Liberal government in 2012 imposed a statewide ban following pressure from the Nationals and fringe groups.
Upon election the Andrews government established a parliamentary inquiry to consider the issue but it became hopelessly caught up in electoral politics rather than addressing the economics or the science.
Predictably, the Greens opposed all forms of gas exploration, whether using conventional or unconventional means, and the committee failed to deliver a majority report.
The issue is now due to be considered by the Andrews government and a robust discussion in Cabinet is expected. The debate will centre on whether to allow gas exploration and extraction using conventional means. Unconventional means have already been ruled out in the immediate future.
But ruling out unconventional gas is not good enough for the fanatics in Lock the Gate and the Greens. They want all gas on shore to be locked up forever. If they had their way they would stop even our existing supplies of offshore gas. They would literally “Lock the Gate” on Victoria and throw away the keys.
So, while other states are desperately trying to catch up with Victoria in finding gas to drive their economies and allowing both conventional and unconventional exploration, Victoria is in danger of banning both.
Let’s be clear: conventional gas is where you drill a well and the gas flows naturally without injecting water, sand or any other proppants into the reservoir to stimulate the flow. So no fracking.
Fearing the Andrews government may decide to allow conventional gas, Lock the Gate and its allies have started a new campaign based on a thin-edge-of-the-wedge argument. This is despite the fact that unconventional can be banned through regulations while still allowing conventional.
A lot is at stake. It is estimated that onshore gas using conventional means will cost a quarter of that to produce offshore gas and the industry agrees that this gas will be used for Victoria and not shipped offshore. This means cheaper prices for all Victorians and energy security for the nation.
The Greens have changed their initial view of gas as a transition fuel. They now lump gas in with coal, designate both as fossil fuels and want to ban the lot. Yet, all over the world relatively clean gas is being used to transition economies away from much dirtier coal while the world waits for breakthroughs in renewable technology.
If Victoria could replace its two most polluting coal-fired power stations (Hazelwood and Yallourn) with combined cycle gas-fired stations it would reduce pollution from these power stations by 70 per ce
nt. That would amount to the greatest reduction in carbon emissions in Victorian and Australian history and greater than that envisaged by the federal government’s emissions reduction scheme.
Preliminary assessments also suggest that onshore gas will have fewer impurities such as H2S or mercury. Only the Greens and their political allies stand in the way of the use of clean, efficient natural gas to replace coal.
Sensing the potential, a number of large international companies have expressed interest in using the cheaper onshore gas to promote existing and new industries, including the construction of a base-load power station. These projects could be a hedge against expected job cuts in manufacturing. Cheap gas will also reduce farm costs as it is widely used in production of feedstock.
The potential benefits of increasing gas supply to our economy are massive. In the US there have been over three million wells drilled, some conventional and others unconventional. The US economy recovered on the back of this cheap energy.
Opposition to Victorian gas exploration comes from the Greens and people who mostly don’t live in affected regions. When councils and landowners are consulted they are generally supportive of conventional gas, as was shown by the parliamentary inquiry. They see the potential benefits of sharing royalties with local councils and landowners alike. The Andrews government must ensure science and sound economics, not ideological opposition groups, dictate the future of the gas industry.
THEO THEOPHANOUS IS A FORMER ENERGY MINISTER AND ADVISER TO GAS COMPANY, LAKES OIL

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