LAKES Oil chief Rob Annells is upbeat: he believes south Gippsland’s unconventional gas reserves will create an economic bounty for the region.
South Gippsland will be able to outcompete the Latrobe Valley, he says, creating a new power source that will attract value-adding industry and not damage agriculture.
“Cheap, good gas creates industry, which creates jobs,” he said during an interview with the Gippsland Times.
Lakes Oil, after a decade of exploration and testing for ‘tight’ gas, is waiting patiently in the starting lane for the gun to go off — the lifting of the Victorian Government’s moratorium on fracking and new exploration licences for coal seam gas.
Exploration is still allowed subject to Victorian mining laws.
Fracking involves pumping a fluid, mostly water and sand, under pressure into a coal seam or rock.
This pressurised fluid opens up fractures in the coal or rock, allowing gas to move and come to the surface. Critics fear damage to water resources.
‘’We have done 11 fractures over the past 10 years – no one took any interest in those days,” Mr Annells said.
A development deal with Beach Petroleum fell over when the state government imposed its moratorium. Beach left.
“They voted with their feet. Capital will go where it’s wanted,” he said.
“We have been sitting there ever since, waiting. There is a lot of gas there and potentially we think oil as well.”
The main area of exploration is the Wombat field, just near Seaspray, but Lakes Oil has an exploration area in Gippsland of 2624 square kilometres.
MrAnnells said Lakes Oil was included in the moratorium because Esso started looking for coal seam gas in the brown coal deposits. The moratorium referred to coal bed methane, not unconventional gas.
“We got caught up in it because we were fracking also. I don’t believe that was the intention, but we have to live with that,” he said.
“We drill through those coals all the time and we have never seen gas there, but they (Esso) can obviously see something we can’t see.”
Mr Annells said the federal government had investigated how to create a new national harmonised regulatory framework for CSG.
“The Victorian government asked Peter Reith to do an independent assessment. My understanding is that will be presented to the government shortly with his recommendations on what should take place,” he said.
MrAnnells is clear in his mind what needs to be done from there: there should be a series of public meetings where all players are represented, including an independent hydrologist.
“Most of the concern is with the water table, with good reason. We all have to live on this planet and I certainly don’t want to do anything that damages future generations. That’s not what I do,” he said.
“From my point of view, it’s a matter of explanation. I believe in the technology and believe ultimately the science will overcome the objection.”
He conceded there had been some bad experiences in the US.
“They are far more lax. Farmer Jones can drill his own well, so stuff slips through that could never happen here.”
However the US also points to the massive economic benefits that can come from cheap, unconventional gas. This gas is credited with creating a cheap energy resource that is helping to rejuvenate the American economy, particularly manufacturing.
Mr Annells is upbeat about creating small power stations with low greenhouse gas emissions.
“Our gas has less than one per cent carbon dioxide coming to the surface before you burn it. Now, Bass Strait can have up to 20-24 per cent CO2 and that as to be vented. In central Australia, it can be up
to 40 per cent CO2, and is also vented,” he said.
“Our situation is unusual to have such low CO2. We have the Rolls Royce of gases.”
Mr Annells said any new gas-powered generation has not restricted to the Latrobe Valley.
“It could go into Seaspray or thereabouts. Gas-fired power stations are not very big — there is one at Bairnsdale. There is no noise, no pollution — they are just jet engines. You could do it fairly quickly,” he said.
“We have had talks with a big overseas group looking at putting a petrochemical plant in the Sale region using our gas. That fell over when the moratorium came in. It could go on the agenda again if the moratorium is lifted.”
Lakes could undercut any competitor in the Latrobe Valley that gasified the brown coal.
“If you think you can turn coal into gas and then gas into something else, cheaper than I can produce gas, think again,” he said.
“All those plans are on the basis there is no onshore gas. I do not believe that to be the case.
“We believe when we frack Wombat 4, that will clearly demonstrate the commerciality of the Wombat field. We would then go into production.”