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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