Opposition Leader Michael O’Brien has announced that under a Liberal Nationals Government, the moratorium on conventional onshore natural gas in Victoria would be lifted, while maintaining the ban on fracking.

Under a Liberal Nationals Government, onshore conventional natural gas exploration and extraction would be encouraged on a case-by-case basis with rigorous environmental assessment. Landowners would be given a right of veto over conventional gas exploration and extraction on their land, meaning that no gas exploration or extraction could occur without the consent of the owner of the land.

Landowners would also benefit from the Liberal Nationals’ royalty sharing scheme with commercial payments going directly to landowners.

To ensure maximum downward pressure on local gas prices, Victoria’s onshore natural gas would be quarantined for domestic use and not available for export.

The Opposition does not support fracking or coal seam gas extraction in Victoria and would therefore maintain a permanent ban on fracking in the state.

“The Liberal Nationals’ policy ensures that Victoria can produce its own reliable power supply while also protecting landowners rights,” Mr O’Brien said.

According to the Australian Energy Regulator, Victoria’s need for gas-powered electricity generation has increased 173 per cent since March 2017. This was the same month that Daniel Andrews legislated ban on onshore conventional natural gas exploration came into effect in Victoria and Labor’s policies forced the closure of the Hazelwood Power Station.

A secure future supply of natural gas for Victoria’s electricity generation market is also essential in providing a pathway for Victoria to transition to a low emissions future.

Australia’s Chief Scientist, Dr Alan Finkel, recently noted that “natural gas will play (a) critical role” in transitioning to a lower emissions future.

The January 2020 interim report of the Australian Competition and Consumer Commission’s (ACCC’s) inquiry into gas supply in Australia states:

“Concerns about the adequacy of future gas supply are exacerbated by the blanket moratoria and regulatory restrictions in some states and territories which inhibit further gas exploration and development of new gas resources, especially in Victoria and New South Wales.”

APPEA Chief Executive Andrew McConville said Victoria has an ongoing requirement for more natural gas. Around 80 per cent of all Victorian homes (nearly two million households) are connected to natural gas, and thousands of jobs in the state’s manufacturing sector depend on reliable gas supply.  The ACCC report found that Victoria continues to be the nation’s biggest user of gas.

“With declining gas production offshore in Victoria, exploring and developing the state’s onshore gas resources ought to be an urgent priority of the state government,” Mr McConville said.

“Without more local supply, families and businesses in the state will pay more than those in states continuing to develop new supply.  As the ACCC has highlighted; shipping gas from Queensland to southern customers adds $2 to $4 in transport costs, increasing the wholesale gas price by between 20% and 40%.”

Mr McConville said while Victoria has significant potential unconventional gas resources, lifting the moratorium on conventional development and getting gas explorers and producers back into the state is a necessary first step.

“The decision to impose a moratorium in the first place sent a strong message to the gas industry that it was not welcome in Victoria, and unsurprisingly investment went elsewhere. Getting that investment to come back to Victoria will take time and lifting the moratorium in conventional drilling will be a crucial first step.”