Victoria approves further offshore gas exploration and sails into early criticism

Pro-energy lobbyists and environmentalist are once again at loggerheads in Australia. This time it’s Victoria that has induced the rallying cry of resources companies keen to bid on new offshore gas tenements, only to be met with opposition from the war cries of Labor politicians and environmentalists.

Opposition energy and resources spokesman David Southwick says the release of new oil and gas reserves off Victoria’s west coast makes a “complete mockery” of the state’s onshore gas exploration moratorium.

Meanwhile, Victoria’s state government officials have defended the move by saying the release of new oil and gas reserves is not a breach of existing safeguards.

“This doesn’t breach the moratorium. It’s not against the spirit of the moratorium. It’s perfectly legal and it’s the subject of a vigorous environmental process,” Premier Daniel Andrews said on Thursday.

With the war of words in full swing, exploration companies have until February 2019 to bid on five new tenements that have been made available by the state government.

Commercialising the Otway basin

The blocks are up to three nautical miles off the coast in the Otway basin and it would involve drilling down onshore then drilling horizontally into the seabed.

The areas being released are near major existing producing gas fields, established infrastructure and underground gas storage, including the Otway Gas processing plant.

According to the Geological Survey of Victoria, the offshore Otway basin has the highest potential for new discoveries of gas in the state, with existing production generating 400 petajoules of gas, with around 200 being exported meaning the state produces more gas than is needed by local residents.

To follow up its estimates, an airborne gravity survey of the Otway basin will be conducted later this year, covering up to 30,000 square kilometres, with data made available to explorers to help them discover additional offshore gas.

Victoria’s Labor government has banned onshore unconventional gas exploration via techniques such as hydraulic fracturing (fracking), as well as coal-seam gas development. The political party also extended a moratorium on conventional onshore gas exploration until 2020.

“Many Victorian homes and businesses rely on gas and we support new exploration and development of our vast offshore gas resources to ensure long-term supply,” said Tim Pallas, Victoria’s resources minister.

With a ban on fracking remaining in place, but offshore gas exploration being actively encouraged (including the use of horizontal drilling), critics with raised eyebrows are saying Victoria is jumping through technical loopholes to access larger gas reserves locked up in the Otway basin. In other words: conducting fracking via the back door.

As the war of words between proponents and opponents continues, several oil and gas companies are considering tabling a bid for new tenements.

The downside risk is not so much on the technical side in terms of flow rates and reserve numbers, but rather, the negative publicity and reams of environmentally-cognisant administrative red tape that will have to be negotiated by firms brave enough to wade into Victoria’s Otway basin.