Via The Australian:
Energy Minister Josh Frydenberg says he is “absolutely” prepared to knock heads to ensure the domestic market gets a better share of Australia’s gas resources at a meeting with industry leaders today.
“We need some real action, because if it’s not fixed the only alternative is that you’ll see very widespread closures of manufacturing and the loss of thousands and thousands of jobs and those parties, the customers and the partners overseas need to understand that that is simply an unacceptable alternative and government would act to prevent it happening,” Mr Butler told the ABC yesterday.
“That’s wrong. We received a very important commitment from the LNG suppliers at the last meeting, namely that they would meet the gas shortfalls that the Australian Energy Market Operator had predicted would occur across the East Coast from the summer of 2018-19,” he told ABC radio.
“We also followed up that meeting with the LNG suppliers with a meeting with the pipeline operators, and we received a commitment from them that they will transport the gas to where it’s needed when it’s needed and we’re already seeing a positive impact of the Prime Minister’s intervention.”
…“Those commitments are very important, but I say to Mark Butler, join with the Coalition in saying to the Andrews Labor government in Victoria, and to the Labor government in the Northern Territory: ‘develop your conventional and unconventional gas resources, because you have enormous amounts that you are locking up and you are denying the manufacturing sectors in your economies and the households who rely on the gas, a cheaper, more reliable supply of energy.”
Well, Mr Frydengas, let’s see how you go today. As for whether or not Victoria and NT are “locking up” gas let’s take a look.
NT has gas but it’s costly to extract and even more costly to transport so let’s put that one aside.
Victoria has virtually no recognised onshore gas reserves. What it has is prospective geography for tight gas extraction but nobody has delineated how much nor costed the extraction. For the Victorian Parliamentary Inquiry:
Numerous sedimentary sequences in the onshore Otway Basin are prospective for gas.
The Waarre Formation is a proven target for conventional gas, especially in the Port Campbell Embayment. The Port Campbell Embayment has a working petroleum system that has been proven through the discovery and recovery of around 89 Bcf of gas (Department of Primary Industries, 2007). Further discoveries, although small relative to those encountered offshore, are possible in the area. The Pretty Hill Formation is a proven conventional gas reservoir in the South Australian Otway Basin. Reservoir quality in the Victorian Pretty Hill Formation would seem conducive to conventional hydrocarbon plays but the formation may also have tight gas potential.
The primary target for tight gas is the Eumeralla Formation. Tight gas within the Eumeralla Formation and the Pretty Hill Formation has been subjected to less direct investigation than conventional targets. Shows and indications from conventional wells suggest there is some prospectivity, and the companies presently holding exploration permits list these play types as being potential targets. Tight gas, specifically in the Eumeralla Formation, is prospective by virtue of shows and gas flows from the top of that formation in several previous wells, particularly in the Port Campbell Embayment. The extent of prospectivity beyond the confines of conventional traps in which these indications have been noted is yet to be established.
There is considered to be potential for shale gas in the Casterton Formation with some potential in the Eumeralla Formation. The existence of the Casterton Formation within other depocentres beside the known occurrences in the west of Victoria is not well established and would be of significance in determining the prospectivity of this unit for shale gas.
The ‘Killara coal measures’ so far tested at the northern margin of the Otway Basin have little coal seam gas potential but other unidentified black coals in the Eumeralla Formation may host ‘yet-to-find’ coal seam gas.
Poor results from drilling of the younger Eastern View Group and Werribee Formation brown coals suggests’ that coal seam gas potential in these coals is less likely. While only a small number of holes were drilled to assess coal seam gas potential, the nature of the work carried out under the exploration was technically adequate to evaluate the wells. The spread of holes in the basin is insufficient to make definitive statements but it is clear that the prospectivity for coal seam gas in the Otway Basin has been reduced rather than enhanced by previous exploration.
There is sufficient information derived from prior conventional petroleum and coal seam gas exploration to identify areas that are more prospective. There is less uncertainty associated with the geology in the onshore Otway Basin than for the Gippsland Region but some knowledge is better constrained in some areas and for certain geological units. For example, the distribution of some formations, such as the deeper Casterton and Pretty Hill formations is not well understood. As in the Gippsland Basin, where data does exist, it is often insufficient for the proper characterisation of unconventional gas potential. Unlike the Gippsland region where there has been only one proper test for coal seam gas content, in the Otway Basin, two separate exploration programs have tested gas contents and compositions.
In the offshore Otway Basin 850 PJ of gas have been produced, and an estimated 1292 PJ of conventional gas remains in place. This remaining conventional gas sits at the top of the resource pyramid (e.g. McCabe, 1998) where small volumes of high quality gas resources are relatively easy to develop and less costly to extract. For the most part, onshore gas resources, particularly the unconventional resources, sit at the base of the pyramid. These might be larger in volume but lower in quality and are more difficult to develop and at a greater cost.
To be clear, then, what Mr Frydengas is really saying is that the Victorian government is preventing the Australian oil and gas industry from rolling the dice on recovering quantities of gas that it is unsure exist at a commercial scale and price.
I support getting more gas out of the ground in Victoria and NSW but Mr Frydengas’s punt is hardly prudent public policy amid a crisis gas shortage, especially when the public is dead against tight gas extraction.
