By Adam Carey
Any move to boost gas production in Victoria by drilling onshore threatens to undermine Australia's commitment to cut its greenhouse gas emissions, energy experts warn.
Political pressure is growing for Victoria to cut short its moratorium on onshore gas exploration, after Opposition Leader Matthew Guy joined Prime Minister Malcolm Turnbull in blaming the ban for soaring power prices.
The state Coalition promised on Monday to open up Victorian farmland to gas extraction before the end of the decade, reversing a ban it brought in more than three years ago in order to allay community fears about fracking.
One Melbourne-based gas drilling company is already eyeing off reserves in Gippsland and the Otways, should the Matthew Guy-led opposition take power and lift the ban.
The Coalition wants to end Victoria's moratorium on onshore gas exploration.
But analysts warned that the promise to ramp up onshore gas production in Victoria risked undoing Australia's commitment to reduce its greenhouse gas emissions by 26-28 per cent of 2005 levels by 2030, as a signatory to the 2015 Paris climate change agreement.
Dylan McConnell, a research fellow with Melbourne University's Australia-Germany Climate and Energy College, said states had to find ways to reduce their gas output if Australia is to meet its climate target.
"We have to start burning less gas in the electricity system than we currently burn," Mr McConnell said.
"There is not much space in the future energy mix for new gas if you want to stick below the two degrees threshold or stick to the Paris agreement."
About 9 per cent of Australia's electricity supply comes from gas, according to the Australian Energy Market Operator.
Tim Forcey, an independent energy adviser, said onshore gas was often much more emissions-intensive than coal, especially when extracted by fracking.
"Any dabbling with fossil fuels, particularly gas which involves methane, a powerful greenhouse gas, certainly could drive up Australian emissions," Mr Forcey said.
Fracking would stay banned under a Coalition government, the opposition said on Monday, but a bipartisan moratorium on conventional onshore gas exploration would be lifted within 100 days of the 2018 state election.
Landowners would have the right to veto gas exploration on their land, and those who said yes to gas drilling would receive a 10 per cent cut of royalties paid to the government.
Industry welcomed the policy announcement.
Lakes Oil, a Melbourne company that holds permits for onshore gas exploration in Gippsland and the Otways, said the Coalition's "common sense" policy would give Victorians a readymade 10-20 year supply of natural gas.
"We'd like to think within 12-18 months we'd have the [Gippsland] field ready to go," Tim O'Brien, Lakes Oil operations manager, said.
The Turnbull government has raised the prospect of punishing states that refuse to frack for gas, by withholding some GST revenue.
Victorian Liberal energy spokesman David Southwick said ending the onshore gas moratorium would reduce Victoria's rising gas prices, by bringing much-needed supply into the domestic gas market.
"This policy gets the balance right – industry has a win and landowners have a win," Mr Southwick said.
But Jacinta Allan, Victoria's acting Minister for Resources, said ending the moratorium on onshore gas "would take Victoria on a slippery slope back to the introduction of fracking".
The Napthine government introduced a moratorium on onshore gas exploration in 2014, due to concerns in regional Victoria about its potential impact on farming.
The Andrews government last year banned fracking for good and extended the moratorium on onshore gas exploration until mid-2020.
It has not ruled out ending the moratorium after it completes a study of the state's available onshore gas reserves.