Vic unconventional gas needs capable regulation

APPEA Chief Operating Officer Eastern Australia, Paul Fennelly

APPEA Chief Operating Officer Eastern Australia, Paul Fennelly

The oil and gas industry’s peak body has backed the Auditor General’s call for an improved regulatory system to manage unconventional gas in Victoria, but called for the moratorium to be lifted to allow research to be undertaken.

The Victorian Auditor General’s (VAGO) assessment of onshore unconventional gas was released today and called for the moratorium to be upheld amid claims the existing regulatory system is incapable of managing the industry.

“The current regulatory system will not be able to effectively manage unconventional gas risks. The system is complex and fragmented, making it difficult for DEDJTR to effectively implement and administer,” the report said.

APPEA Chief Operating Officer Eastern Australia, Paul Fennelly said “for the most part” the Auditor General made some salient points including the admission that onshore gas production can occur safely in Victoria, and that while there are 1.8 million gas users in Victoria, the state still has no clear future energy plan.

“Continuing to delay exploration will leave manufacturers, food processors and households exposed to unnecessarily higher gas prices,” he said.

“Victoria will never know how much gas is available when it prohibits any activity. We need to get serious about determining the size of gas resources and plan accordingly.”

APPEA’s submission to the Victorian Onshore Gas Inquiry recommends establishing an independent Gas Fields Commission, similar to that of Queensland, to lead community engagement and education in relation to unconventional gas.

VAGO’s 70-page assessment of unconventional gas in Victoria comes a day after representatives from the Department of Environment, Land, Water and Planning and the Department of Economic Development, Jobs, Transport and Resources (DEDJTR) fronted the inquiry and were criticised for failing to provide a clear viewpoint on the issue.

The Auditor General rallied the criticisms of the government department, saying the DEDJTR failed to assess the risks or plan how it could strengthen the regulation of these activities prior to 2012 when the moratorium was installed, despite growing public concerns about the potential risks.

The DEDJTR administers the Minerals Act and the Petroleum Act for the Minister for Energy and Resources. This regulatory system spans some 58 Acts plus a host of regulations, codes of practice and guidelines, according to VAGO.

The fragmented nature of Victoria’s regulatory system “severely compromise its transparency, clarity, efficiency and effectiveness”, the auditor continued.

“There are major problems with applying the current regime for regulating earth resources to unconventional gas activities, which DEDJTR has used to regulate those activities to date,” the VAGO report said.

“DEDJTR’s response to regulating unconventional gas has been largely reactive, particularly before 2012, and characterised by the absence of many ingredients essential for better practice regulation. As a result, the regime has too few environmental controls, weak consideration of the competing interests for the land involved and potential social impacts, a lack of early community engagement and too much ministerial discretion.”

Auditor General John Doyle concluded that Victoria is not well placed to respond to the environmental and community risks and impacts that could arise if the moratorium is lifted allowing unconventional gas activities.

And citing a five-year lead time to any commercial production of unconventional gas if the moratorium is lifted, Mr Doyle said continuing the ban on exploration and development provides “an ideal opportunity for the government to evaluate the full range of issues, risks and impacts of unconventional gas.”

“Crucially, there are also no existing land-use planning or impact assessment mechanisms that adequately consider social, environmental and economic values and impacts when determining if, where and when unconventional gas activities should occur—and before licences are granted,” Mr Doyle said.

Eddie Morton is the associate editor of Gas Today:

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