Lakes Oil hopes to end its long-running stoush with the Victorian government, insisting it could alleviate the state’s energy crisis within 18 months should it be allowed to fulfil its exploration obligations in south-west Victoria.
The ASX-listed company, part-owned by Gina Rinehart, believes it could recover $700 million worth of onshore conventional gas a year from three Victorian sites if allowed to undertake activity and was provided with a government loan of between $50 million and $100 million.
The company’s claims are adding pressure on the Victorian Labor government, which has hung its gas exploration ban on the uncertainty of Victoria even housing any gas resources.
“Given the desperate situation in Victoria we believe we could get these ducks lined up quickly,” said Roland Sleeman, chief executive of Lakes Oil.
“We’ve got extremely promising results, we’ve had some gas flows and if we could finish proving up the resource, there are plenty of rigs around to get gas flowing at commercial rate.”
Lakes Oil wrote to the Victorian resources minister this week proposing the deal that, according to the company, would see new gas piping into the network within 18 months.
But the Victorian resources minister Wade Noonan resigned suddenly on Monday and a new minister has not yet been appointed.
The company is embroiled in a bitter lawsuit with the Victorian government – totalling almost $3 billion – launched after Premier Daniel Andrews introduced a moratorium on onshore conventional gas exploration until 2020.
“The government has been retrospectively adding parts to legislation that prevents us from fulfilling our legal duties as operators of exploration licences, granted before the ban,” said Mr Sleeman. “We’ve basically been at a standstill for three years.”
Shares in Lakes Oil have been in a trading halt since 2014.
Gas prices have tripled in Victoria as Queensland’s huge liquefied natural gas export industry has drawn gas previously used for dometic consumption north.
If elected next November, the Coalition has promised to lift the government’s legislated June 2020 moratorium on conventional gas extraction and exploration, in a bid to increase gas supply
Mr Sleeman suggested the Wombat gas field in Gippsland could provide up to 20 petajoules of gas per year for the next 20 years.
“That’s about 10 per cent of Victoria’s demand and go a long way to solving the current problem, which is only getting worse” he said.
The company’s proposal promises to prioritise gas for Victoria’s domestic and industrial markets, compensate farmers and land owners and vowed not to use the controversial fracking method.
Hydraulic fracking, or otherwise known as unconventional gas extraction, involves extracting gas by injecting high-pressure water and chemicals underground.
Victorian opposition leader Matthew Guy announced on Monday a scheme to allow landowners to receive a 10 per cent share of royalties from the government for any gas sold and that landowners could veto any gas exploration, should the coalition be elected next year.
Rocketing energy prices in have dominated political discourse this month and energy minister Josh Frydenberg has threatened to reduce GST payments if Victoria and NSW don’t move to ease their restrictions.
The Federal government this week hinted it was unlikely to adopt the Clean Energy Target, a Finkel recommendation that would transition ‘s energy policy after the current Renewable Energy Target peaked in 2020.