Moratorium angers industry

A State Government moratorium on coal seam gas exploration has angered oil and gas exploration company Lakes Oil, which said there was insufficient consultation with industry before making the decision.

The company, whose subsidiary Commonwealth Mining is exploring coal deposits in the Toongabbie area, was intending to carry out hydraulic fracturing in its exploration for tight gas before Christmas 2012, in exploration tenements between Longford and Seaspray. However an indefinite State Government moratorium placed on fracturing practices last week has prevented Lakes Oil from applying for a fracturing licences.

Hydraulic fracturing, or “fracking”, uses chemicals to release natural gases contained within coal bed seams and rock formations, a method which has faced a groundswell of opposition from Gippsland landholders in the past 18 months amid fears the process could compromise water aquifers.

In a letter from Lakes Oil chairman Rob Annells, the company informed shareholders its plans to frack in South Gippsland had been “unfortunately” impacted by the moratorium, and said the company had not been properly consulted by government before placing the indefinite ban.

“Sadly, the government did not seek input from either Lakes Oil or the wider resources industry before it instigated this freeze of fracture stimulation,” Mr Annells said in the statement.

“Lakes’ tight gas activities have only involved fracking at considerable depths below the water table and without any effect on the important shallow water bearing horizons and reservoirs which are so vital to the farming and local community.”

A State Government spokesperson said Lakes Oil had been informed of key reform elements that would affect future applications and approvals the day before the moratorium announcement.

She said however approvals given to Lakes Oil for hydraulic fracturing in 2009, under the former Labor government, applied only to the activity undertaken at that time, and no further fracking licence applications had been made since.

“If a company chooses to contract equipment before a works approval is sought from, or granted by, the regulator, that is a matter for the company,” she said.

The spokesperson said the moratorium would remain in place until a national reform process, currently underway, reported back to state and federal ministers in December, which the State Government would consider and respond to.

“(The national reform) process may result in new standards, including water management and monitoring, well design and integrity, hydraulic fracturing, chemical use and industry and community engagement,” the spokesperson said.

“This approach will help to avoid a situation where applications for hydraulic fracturing works might be approved now, only to be inconsistent with new standards to be set in the near future.”

Friends of the Earth campaigns coordinator Cam Walker, who has consulted extensively with Gippsland landholders about the pursuits of mining companies in the area, said the utmost scrutiny of all fracking processes, for coal seam gas and tight gas, was required.

“This is an emerging industry; we are only at test phase here, and (Lakes Oil) has not been transparent about what chemicals they use in tight gas fracking,” Mr Walker said.