Fracking ban a social and environmental win, but gas prices may rise

Media release
31 August 2016

The Victorian Government’s decision to ban the exploration and development of all onshore unconventional gas in Victoria, including the controversial process of hydraulic fracturing (‘fracking’), is a social and environmental win for the state but may see gas prices rise, says Deakin University’s Professor Samantha Hepburn.

The ban applies to the issuance of all onshore unconventional gas exploration and production titles but will have no application to offshore gas exploration or production and onshore conventional exploration and production will be subject to a moratorium that will continue until the middle of 2020.

“Ultimately, the ban accepts that the economic advantages associated with onshore unconventional gas development, did not outweigh the social and environmental concerns associated with the extraction process, particularly given the likelihood that significant and commercial quantities of coal seam gas do not reside in brown coal,” said Professor Hepburn, Director of Deakin Law School’s Centre for Energy and Natural Resources Law.

“It also acknowledges the enormous problems that New South Wales has experienced in progressing onshore unconventional gas.”

The ban will come into place once new legislation is implemented later this year. Meanwhile the moratorium on any new onshore conventional and unconventional exploration or production titles being issued continues. As does the moratorium on hydraulic fracturing (fracking).

The Government’s decision draws upon extensive review, consultation and discussion affected stakeholders, scientists, geologists, industry and academics. Professor Hepburn was directly involved in the preparation of the Final Report on Unconventional Gas with the Victorian Auditor General in 2015, which the Premier relied upon in making his final decision to implement the ban. 

Professor Hepburn said the ban would completely remove strong environmental concerns regarding agriculture, water depletion and contamination and produced water disposal.

“It will also alleviate many of the social and economic concerns associated with the intersection between onshore unconventional gas, food security and regional tourism development,” Professor Hepburn said.

“The ban coheres with climate imperatives because fugitive emissions from coal, oil and gas production account for nearly 8% of Australia’s greenhouse gas emissions.”

The ban is likely, however, to have a deleterious impact on supply and may affect domestic pricing in the Southern market,” Professor Hepburn said.

“This is particularly so if the moratorium on onshore gas continues because international demand for LNG (liquefied natural gas) has the potential to outstrip supply and this has effected domestic pricing.  The importance of addressing future gas supply concerns was the specific focus of the Gas Market Report released by the Federal government in March this year.”

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