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ABC - By Mark DeBonoThe Victorian Government, very much out of...

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    ABC - By Mark DeBono

    The Victorian Government, very much out of the blue, announced a ban on the mining process called fracking late last week.

    No-one saw it coming, not even the five Victorian shire councils and community groups opposed to coal seam gas exploration (CSG) and calling for a mining moratorium.

    Fracking is the process of pumping highly pressurised gas, like liquid nitrogen, down an exploration well into coal, shale or rock deposits containing hydrocarbon gas.

    The hydrocarbon will not flow on its own because it is bound up in the structure.

    The pressurised gas expands and fractures the structure, releasing the hydrocarbon so it can escape up the well to the surface.

    Environment groups and landholders have grave concerns, specifically about fracking and generally about mining.

    Landholders do not like being told that miners have the rights to the resources under their properties and farmers want more control over access to their land.

    That applies to gas exploration, even though the exploration wells are relatively small and unobtrusive.

    More of a threat to the land is the push for more open-cut coal mining in Gippsland and western Victoria.

    The agriculture industry begrudges any reduction in available land.

    Gippsland, in particular, is viewed as one of the country's great food bowls.

    The tourism industry likewise, would prefer farmland and bush rather than open-cut mining as a drawcard.

    Gas exploration is a separate issue, and while there are very different types of gas exploration happening and proposed in Victoria, the latest Government ban has lumped them into one category.

    Most of the concerns aired by environment and landholder groups are about coal seam gas exploration.

    As the name suggests, the gas is captive in coal seams relatively close to the surface and close to, or in contact with, underground water supplies.

    Those supplies are a valuable agricultural resource and a significant proportion of the state's agricultural production is watered by bores tapping into those aquifers.

    Towns like Sale in Gippsland get their domestic water from underground aquifers and these hidden supplies become even more important during droughts when surface water supplies for irrigation are limited.

    Opponents fear the fracking process not only opens up cracks in the gas-bearing coal seam, but also to the underground aquifers, causing cross contamination of the fracking chemicals and the water.

    Along with the ban on the fracking process, the State Government has also banned the use of a raft of chemicals in the mining process known to be carcinogenic.

    This month Australian environment groups raised new concerns that the exploration wells let the target gas escape into the atmosphere, and they say the estimates of volumes lost are far too low.

    The gas released from the coal beds is methane, and has about four times the impact that carbon dioxide has as a greenhouse gas.

    Environment Victoria says studies in the US have found the gas escapes into the atmosphere initially after fracking, but then continues to leak in measurable amounts for the life of the well.

    The second type of exploration happening onshore in Victoria is for tight gas.

    These deposits are in rock or pressurised sands and are far deeper underground than coal seam gas deposits.

    Where CSG deposits are typically 600 metres under the ground, tight gas can be up to three kilometres down.

    The wildcat exploration company, Lakes Oil, has been drilling exploration wells for tight gas in Gippsland and fracking at 11 sites for about five years.

    The company was formed at Lakes Entrance in the 1940s.

    Lakes Oil has never had problems getting approval for the process and the Government's temporary ban took it by surprise.

    The company's executive chairman, Rob Annells, has always been up-front about the company's operations and methods, publicly and with the Government.

    He proudly announced his company was pioneering fracking in Gippsland when it first started drilling onshore wells at Longford, along the Rosedale Ridge, and at Seaspray near the Ninety-Mile beach some years ago.

    Mr Annells says tight gas exploration is a very different to CSG exploration because of the depth and the nature of the structures.

    He says his company is drilling well below fresh water supplies and any water coming from its wells is saline.

    Lakes Oil stopped its operations last Friday because of the fracking ban and the Australian Securities Exchange has since put a stop on its share trading at the request of the company.

    Mr Annells found out about the ban through a phone call last Thursday night, only hours before it was publicly announced.

    He was in New York on a capital-raising mission.

    The ban is doubly significant for the company's future because of the nature of the business.

    Exploration companies generally do not expect to sell gas and make profits for many years, and only after spending many millions of dollars.

    They operate by seeking investment from like-minded speculators, by share issues and joint ventures.

    Lakes Oil has been drilling holes in Gippsland for years and is still not in commercial production.

    It is the nature of the game.

    The ban has not only stopped the company's drilling operations but instantaneously evaporated any short-term prospects for capital raising.

    Mr Annells is an optimist, as anyone in his industry must be.

    But in interviews over the last few days a tinge of bitterness has infiltrated his patter.

    "I'm very disappointed that our operations have been lumped in with coal seam gas in this ban, it's not the same" he said.

    "I'm also very disappointed that someone from the National Party didn't have the courtesy to call me and ask for our input into the decision; we could have quickly cleared up any confusion.

    "I've always kept our National Party MPs in Gippsland informed about our operations, including Peter Ryan and I'm disappointed I didn't get the same courtesy," he said.

    The State Government's ban applies until the completion of a national plan for coal seam gas exploration, which is expected in December.
 
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