Onshore gas miningUDV information night - Timboon 15 April 2015

Claire Miller

Manager, Policy Strategy

Trade & Strategy Group

Dairy: a whole of supply position

– Australian Dairy Industry Council is developing a whole-of-supply chain policy position on unconventional gas mining in dairy regions.

– Consultation with farmers, state dairy organisations, milk companies

– Policy discussion is being guided by the fundamental principle that:

The Australian dairy industry must continue to operate and prosper

without compromising the natural resources upon which the

industry relies, and without loss to reputation as a producer of high

quality, safe dairy products.

– For fact sheets, reports and more information, visit the Dairy Australia website www.dairyaustralia.com.au/Environment-and-resources

Onshore gas potential in Victoria

• No CSG or shale gas production or confirmed resources yet

• CSG potential for Victoria’s brown coal is less known than Qld and NSW’s black

coal deposits.

• Any CSG in Victoria’s brown coal may be harder to extract and hence more

costly to produce than CSG from black coal deposits.

• Geological factors such as low permeability in the Gippsland basin would require

deep horizontal drilling and fracking, increasing costs. Otway basin is deep and

has high C02 content, so may need more processing.

• 22 exploration licences targeting CSG: 18 in Gippsland, 4 in SW Vic. Exploration

does not necessarily lead to mining.

• Lakes Oil has five exploration permits for tight gas: 3 in Gippsland and 2 in

western Victoria.

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Victoria & CSG LicensingMinerals Resources (Sustainable Development) Act 1990

Exploration Licence (EL) Enables the holder to carry out exploration activities on the land covered by the licence for five years.

Cancelling of Petroleum Applications

Bye-back of Petroleum (onshore) Titles

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NSW Reforms (NSW Gas Plan)

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– States are largely responsible for regulating this industry, including:

• licensing exploration and development; setting licence conditions; assessing environmental impacts; monitoring and enforcing industry adherence to regulation; and collecting royalties

Victoria– Less mature and coherent legislative framework than NSW & Qld.

– CSG under Mineral Resources (Sustainable Development) Act 1990 (MRSD)

– Tight & Shale Gas under the Petroleum Act 1998

– Administered by the Earth Resources Regulation Branch in the Corporate Planning and Compliance Services Division of the Department of Economic Development, Jobs, Transport and Resources.

– The relevant decision maker is the Minister for Energy and Resources, but may have input from Environment and Planning portfolios.

Regulatory frameworks

Victorian Legislative Control Measures

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PlanningPermission for production is subject to the Planning and Environment Act. Infrastructure such as treatment or processing facilities is subject to both the Planning and EPA Acts

EnvironmentEES required for any project that could significantly affect beneficial use of water.

EES not an approval process, unlike Qld and NSW; not binding on decision makers.

Water Management– Victorian Water Act yet to specifically address onshore gas exploration and production:

eg, groundwater interference and beneficial use.

– Only deals with existing industries like agriculture, manufacturing; groundwater use.

Codes of Practice– Victoria has no codes of practices relating to onshore gas activities or land access,

either voluntary or enforceable.

-- Farmers do not ultimately have a legal right to veto access for exploration or mining.

Moratorium and review

Moratorium on exploration and fracking introduced by Coalition on 24 August 2012

Extended by Labor Government from mid-2015 until at least July 2016, pending

parliamentary inquiry. ToR to be released soon.

Community and stakeholder consultation from April 2014. Interim report released in

January: http://naturalgasinfo.vic.gov.au.

Hydrogeological studies to evaluate impacts on Victorian water assets, reviewed by

an Independent Scientific Reference Panel.

Victoria has an opportunity to learn from mistakes in NSW and Queensland, and

evaluate best practice regulatory initiatives in those States.

Economic drivers easing: AEMO 2015 energy outlook now expects no shortfall in

supply to meet demand, due to manufacturers switching energy sources.

Mark HarrisDairy farmer, Gloucester, NSW

CSG in Gloucester

Gloucester population: ~2500 in town

Declining economic base: forestry closed and fewer farms (19 dairy)

Gateway to Barrington Tops National Park; influx of tree-changers

Little groundwater in geology; groundwater quality is naturally poor

Community divided over AGL Gloucester Gas Project

Three progressive stages proposed, with 110 wells in each stage

Currently in four-year application phase seeking approval for stage 1

- trial gas wells

- trial fracking (on a property leased to a dairy farmer)

- Groundwater and emissions monitoring

- Irrigation trials with treated produced water

- Community consultation and engagement

- Locals employed, with prospect of long-term jobs

Mark Harris

500 ha dairy farm, 300 cows, property in the family for 43 years

Exploration gas well on property for five years, now plugged.

AGL used farm road for access, daily during active flaring phase

for 6 months, then monthly checking for leaks when dormant.

Compensation for use of Mark’s land. Hard gravel well pad retained at Mark’s

request, as a pad for fertiliser and feed storage.

Initially concerned about potential effects on farm operations, air and water quality

Concerns allayed after research, including visit to Camden, 60km

South of Sydney

-- active CSG production field since 2001

-- 86 active CSG wells, some within 100 metres of suburbs

and others on farms including NSW DPI dairy research farm