response - vic minister for energy & resources

Thank you for contacting the Minister for Energy and Resources, the Hon. Michael O'Brien MP, regarding Lakes Oil. The Minister has asked that I respond on his behalf.

I apologise for the delay in responding,

The extraction of natural gas, both onshore and offshore, has been safely regulated by the Victorian Government for more than 40 years, protecting both local communities and the environment while providing an affordable source of energy for households and business.

As Victoria’s known offshore oil and gas resources deplete, there is a need to establish new sources in order to keep energy prices affordable in the future. This will include seeking to discover whether Victoria has any onshore resources of this type.

However, the development of Victoria’s natural resources must be carried out in a responsible and sustainable manner. This requires the protection of our environment (including water resources) and seeking positive outcomes for our rural and regional communities.

In June 2012 Victoria signed a National Partnership Agreement with the Commonwealth on coal seam gas and large coal mining development. This Agreement provides Victoria with access to independent expert advice as well as research funding which will be used to better understand and protect our water assets.

Victoria is also participating in the creation of the National Harmonised Framework for coal seam gas regulation. This aims to ensure that the very best regulatory practice will operate in Victoria (and elsewhere) to give the community confidence that the development of any onshore gas resources will be consistent with the protection of other economically and environmentally significant assets.

The national framework process is considering leading practice approaches to the regulation of the coal seam gas industry, including water management and monitoring, well design and integrity, hydraulic fracturing, chemical use and industry and community engagement.

State and Federal Energy and Resources Ministers are expected to consider the framework in December 2012.

The Victorian Coalition Government has recently announced reforms that will provide greater certainty for rural and regional communities and energy industries while the national reform process for coal seam gas is progressing.

The reforms which come into effect immediately are:
A hold on approvals to undertake hydraulic fracturing as part of onshore gas exploration and a hold on the issuing of new exploration licenses for coal seam gas until the upcoming national framework proposals have been considered; and a ban on the use of BTEX chemicals (benzene, toluene, ethylbenzene and xylene) in hydraulic fracturing in Victoria.

These measures do not affect exploration activity approved under existing licences that does not involve hydraulic fracturing, such as surveying or drilling for core samples.

The Victorian Coalition Government will also:
Seek to strengthen resource policy and legislation to ensure better consideration of mixed land use issues during the application process for coal seam gas exploration activity; and use impact statements at the exploration stage in circumstances where there will be a significant material impact on the environment, to better manage mixed land use issues for all minerals exploration, not just coal seam gas. This power currently exists under section 41A of the Mineral Resources (Sustainable Development) Act 1990.

At the time of the Government's announcement no approvals were operating for the conduct of hydraulic fracturing anywhere in Victoria, nor had any application been received by the regulator for any such approval.

In response to your specific reference to Lakes Oil, the company was informed of the key elements of these reforms the day prior to the public announcement.

As noted above, the hold on hydraulic fracturing will remain in place until the national framework proposals have been presented, and then considered and responded to by the Victorian Government.

This approach will help to avoid a situation where applications for hydraulic fracturing works might be approved now, only to be inconsistent with new standards to be set in the near future.

The hold on approvals will ensure that Victorians can have confidence the strongest protections will apply to the regulation of onshore gas exploration, while providing regulatory certainty for any future activity.

I trust this information is of assistance.
Yours faithfully,

Office of the Minister for Energy and Resources