By PHILIP HOPKINS

 

MARTIN Ferguson, a former president of the ACTU and former federal Labor Minister for Energy, has called for a gas-fired power station in the Latrobe Valley to secure and generate jobs for the region in the energy transition.

He also urged a major campaign by the federal and state governments to drive more private investment as the best way to create these jobs.

“I am very worried about the future of the Latrobe Valley,” he said in a forthright interview with the Express. The big wind and solar projects were unlikely to create large numbers of long-term jobs, he said.

Mr Ferguson has had long-standing ties with the Valley through his trade union activity and his years as the federal Minister for Energy and Minerals from December 2007 until May 2013.

His relationship with the Valley and Gippsland has since continued through his position as chairman of the CO2CRC, which is leading research into carbon capture and storage in Gippsland, along with CarbonNet. The aim is to secure carbon dioxide emissions in empty oil and gas reservoirs under Bass Strait.

Mr Ferguson said the Valley’s brown coal could be gasified in an environmentally friendly way.

“The Valley has done it previously, they had already done it, ” he said, referring to Morwell’s Lurgi plant, which was successfully commissioned in 1956 to produce gas. The associated high pressure gas pipeline to Melbourne was the first such project in Australia, but the plant’s economic viability was undermined by the subsequent discovery of oil and gas in Bass Strait.

A decade ago, HRL proposed an advanced ‘integrated drying, gasification and combined cycle (IDGCC) 600MW plant – world class technology – in the Valley, but this was stymied on environmental grounds because it was burning coal.

Mr Ferguson said a gas plant using coal was viable through the use of CarbonNet.

“With all the work done by Geoscience and other agencies when I was the Minister, Victoria was the standout on potential CCS because of the proximity of the existing wells and you could repurpose the existing pipeline infrastructure,” he said.

“We knew CarbonNet was potentially the centre to attract other industries to the Valley, including hydrogen, hence the Japanese HESC pilot project supported by the Victorian and Australian governments.”

When he was the federal Energy Minister, Mr Ferguson said he had an exceptionally good working relationship with Victoria’s then state Labor Energy Minister, Peter Batchelor, and his Liberal successor, Michael O’Brien.

“Both were very committed to doing something in the Latrobe Valley, including support for CarbonNet and the idea of R & D (research and development) projects across different operations. There was no pushback from either governments; both were supportive, including on offshore CCS, which was a world first. We were exploring every available option as we were thinking, ‘What is the future of the Valley?’,” he said.

Mr Ferguson said the state government had just changed its position on gas – “you can keep your (gas) stove and we are going to facilitate offshore gas storage”.

“That is interesting; I wonder where the gas is coming from to be stored,” he said.

Lakes Blue Energy is about to make an application for a conventional gas well near Seaspray.

Mr Ferguson said its predecessor, Lakes Oil, had wanted to drill in 2013-14.

“History will show the Coalition went to water with the (Peter) Ryan byelection in Gippsland and the Labor Party because the seat of Melbourne was in a byelection at the same time. Both these byelections have set Victoria back decades. They killed onshore gas development and then led to the Labor Party having a religious commitment to killing gas led by Lily D’Ambrosio,” he said.

“With gas, including trying to attract another gas-fired power station, we don’t have to replicate the grid – what a waste of money.”

Gas has recently gained more traction as a transitional fuel as back-up for renewables at an official level. Energy Australia’s chief, Mark Collette, in a major speech in June said gas-fired power generation was integral to the energy transition as the coal-based transmission system comes to an end.

Mr Ferguson said he could not see any commitment by government to attract new investment in long-term private jobs in the Valley.

“Governments’ history shows they cannot deliver on meaningful long-term jobs; that has to be driven by private sector,” he said.

“The hydrogen project is a primary example of something that the Victorian government should be hungry on, going to and from Japan at every available opportunity to try and get that investment. This is the cheapest hydrogen potentially in Australia as previously recognised by the former Chief Scientist, Alan Finkel. The grid is there; we should be doing everything to develop onshore and offshore.”

Mr Ferguson said it was not privatisation that caused the Valley’s problem.

The SEC was corporatised by the Cain government into separate units, but crucial was the pre-privatisation decisions of the SEC to dramatically downsize and offer redundancies. The Kennett government’s Treasurer, Alan Stockdale prepared the SEC for sale.

“Privatisation was not the cause of the job loss, but decision of government to get it in shape for privatisation,” he said.

“We collectively – Bachelor, O’Brien and me – could see the potential challenges for the Valley with the attack on coal-fired power. There was a potential need to attract other industries plus we were worried about the issue of energy security. In those days, there was overall consideration of all aspects of the debate – security, cost and emissions, not just what has occurred in the last decade where emissions have become the number one consideration, with not proper regard for cost or reliability.”

Mr Ferguson said he feared for the future of the Valley. In some areas, there were third generation unemployment, some moving into fourth generation; some suburbs were struggling and a few primary schools were in a poor state compared to Melbourne schools.

“Correctly the workers are being looked after and some get retrained in other opportunities. AGL, Energy Australia were always going to look after their workforces; I’ve read the industrial agreements – they are some of the best redundancy – and super provisions ever seen in Australia,” he said.

“But they will not want to move home to where these wind farms are. The construction is for a couple of years. Are Valley workers going to take their kids out of schools and relocate down there? It’s fly in and fly out, or drive in and drive out. They have secure jobs in the power industry that they will not have.

“Once you get to operation, there are no jobs – the same with the solar plant; once you do the installation using largely imported components, there are no workers.

“Where are the meaningful long-term private sector jobs for the Latrobe Valley? The Victorian government gives us a hub with public servants that don’t go to work in Morwell.”

In general, there was a great waste of money. In a government office near his work place in Melbourne, he said he had never seen a public servant at work.

“The Victorian government is increasing their wages to spend more time at home!” he said.

Mr Ferguson said crucially, the Valley was not in a marginal seat.

“In essence it’s ignored by state Labor governments and to a large extent by federal Labor governments, whereas Geelong is the centre of everything from the football stadium to roads – it’s all about votes in marginal seats. The Latrobe Valley is seen as second-class cousin because it does not count politically.”

Mr Ferguson said he wanted to see the heavy hand of Canberra getting the heavy hand with the Victorian government to get jobs in the Latrobe Valley – meaningful private industry jobs that are long-lasting.

“They are not there; a wind farm is built in a couple of years, and it’s all over,” he said.

 

There could be more gas in Gippsland

By PHILIP HOPKINS

 

A VICTORIAN gas company that has been active in Gippsland for decades is about to seek approval for a Gippsland project that could provide 10 per cent of the state’s gas needs from early 2027.

Lakes Blue Energy, previously Lakes Oil, maintains that if its conventional well is approved – it does not require fracking – it could lead to the Wombat Field near Seaspray, eventually producing 50 terajoules of gas daily, ultimately providing about 10 per cent of the state’s gas by 2027 when gas shortfalls are expected.

This would not only prove that Gippsland has a lot more gas than traditionally believed, but would also reinforce Gippsland’s gas sector as gas production from Esso’s wells in Bass Strait continues to slow.

It comes as the state government has also loosened its gas policy, approving a new gas extraction project at Port Campbell in western Victoria and will support more offshore gas storage in Bass Strait.

Lakes Blue Energy’s Chief Operating Officer, Tim O’Brien, told the Express that if approval was granted, drilling would begin at its Wombat-5 gas well in mid-2025.

“What we have been trying to do for the past 12 years is some conventional appraisal work at Wombat, in the Strzelecki Formation in the top weathered zone,” he said, going on to explain the background to the company’s activities.

The Strzelecki Formation consists of non-marine sedimentary rocks from the Earth’s Lower Cretaceous geological period. The Strzelecki Group outcrops extensively in the South Gippsland highlands and along coastal sections between San Remo and Inverloch.

“Back in the early Cretaceous a lot was eroded off. Groundwater was going through and clearing out some of the clay in the formation. That’s the top 100 metres or so of the formation, then you get into the tighter, more un-weathered stuff where that would require fracking at some stage in the future, if it is ever permitted again,” he said.

“We’re confident we can get over 250 billion cubic feet of gas out of the top weathered section without requiring any fracture stimulation.”

Mr O’Brien explained that one billion cubic feet is about one petajoule; a billion cubic feet is a volumetric measurement, whereas a petajoule is a calorific, energy content measure.

“Depending on the quality of your gas, a petajoule is actually slightly less than a billion cubic feet, but if you just use ‘one-for-one’ that makes it easier. If you are not overstating, you’ll always get more energy,” he said.

Daily production of about 50 million cubic feet per day over the year is close to 20 petajoules, about 10 per cent of Victoria’s annual use of 200-210 petajoules a year.

Mr O’Brien said that Gaffney Cline and Associates, a global consultancy in the energy sector that provides techno-commercial advice, estimated in 2008 a contingent resource (2C) of 293 billion cubic feet in the Wombat Field – “a recoverable resource”. This figure was revised up to 329 billion cubic feet in 2010 after the successful drilling of Wombat-4.

However, this became a problem as the state government took a semantic attitude, stating there were ‘no proven reserves’ in Victoria.

“To have a proven reserve, you need to have effectively a contract in place, a development plan; you need to be ready to sell the gas effectively. We have contingent resources, which means we have defined a volume of gas, but haven’t proven it to the commercial stage yet but the gas is there,” he said.

“Wombat 5 is designed to prove we can get a commercial gas rate out of this formation.”

Mr O’Brien said the Wombat 1, 2 and 3 wells were not optimised enough for the ‘magic number’, but are completed and suspended gas wells which would likely be incorporated into any field development plan.

“The gas was recoverable”, he said but the ‘no proven reserves’ argument kicked in.

“This does not acknowledge we have lots of prospective resources and contingent resources. There is gas there. The public does not understand that due to the mixed messages being put out there by the government,” he said.

The Wombat 4 well was effectively approved to be drilled at the end of 2013.

“I had done revisions with the department. I had the earthworks contractor ready to go, I had a rig ready to come to the state,” he said.

Then in April 2014, the Coalition government decided to have a year-long consultation process, but subsequently lost government. The arrival of the Andrews government led to subsequent moratoriums on onshore exploration, coal seam gas and fracking, and more studies.

“Twelve years later, I’m still waiting to be drilling,” he said.

The company had now done more studies, such as environmental, stakeholder and planning.

“I hope to submit that in early October; that gives them three months to assess. Hopefully we will get approved early next year – there will be some revisions and – we can get the site built. A rig is going to be in the state doing work in Otway Basin in April-May,” he said.

Mr O’Brien said their gas was very clean, much cleaner than offshore gas, which is higher in CO2, mercury and hydrogen sulphide (rotten egg gas).

“Strzelecki is below the source of the impurities; a little bit of water and condensate is removed. We don’t need to go through Longford, we can process ourselves and put it straight into the pipeline,” he said.