I am very pleased to write my first introduction in this Victorian Supplement dedicated to the 2007 APPEA Conference and Exhibition in Adelaide as the Victorian Minister for Energy and Resources.

My previous portfolio as the Minister for Transport and Major Projects for a number of years has exposed me to large and complex projects across Victoria and I look forward to further advancing the great achievements made in the energy and resources sector.

Since it came into office in 1999, the Bracks Government increased the diversity and security of sources of gas. The need for this was clearly demonstrated by the Longford plant tragedy in 1998. Victoria is now connected to three states by comprehensive pipeline networks, a multi-facility gas hub near Port Campbell, the interstate connection to the Cooper Basin and coal seam methane basins. This network provides Victorians and the rest of eastern Australia with a much more secure gas supply.

I am pleased to provide readers with an update on the progress that has taken place in the state’s petroleum and energy sectors since it was last reported in the May 2006 APPEA Conference issue of this publication.

Last October, Victoria’s gas supply received a massive boost when Premier Steve Bracks officially launched the $750 million BassGas project at Lang Lang. The plant will process an estimated 23 petajoules (PJ) of gas, around 1 million barrels of condensate and 65 thousand tonnes of LPG per annum - accounting for 10% of the state’s gas supply over the next 15 years.

The South Gippsland Natural Gas Program, which will be connected to the BassGas project, is funded under the Victorian Government’s $70 million Natural Gas Extension Program. In January 2007, construction commenced on extending the South Gippsland gas network to draw natural gas from the plant at Lang Lang to supply mains in the towns of Inverloch, Korumburra, Lang Lang, Leongatha and Wonthaggi. The project will be completed in stages between 2007 and 2010, and it has special significance for the 10,000 households that will have access to reticulated natural gas for the first time.

In the offshore Gippsland Basin, the development of the Longtom gas field will see Nexus become a new producer in Bass Strait. With development to occur in 2007, the first Longtom gas production is expected to start in the second half of 2008. Gas from this field will be produced via subsea wells linked by pipeline to the Santos-owned and operated Patricia-Baleen gas facility near Orbost in south-eastern Victoria. A gas sales agreement signed with Santos a year ago will see up to 450 PJ of Longtom gas processed at this facility.

Additional gas fields in the offshore Gippsland Basin expected to come on stream, subject to project approvals, between 2008 and 2009 are the Golden Beach, Basker-Manta-Gummy, Sole and Kipper fields.

In the offshore Otway Basin, the major $1.1 billion Woodside Otway gas project is expected to come into operation in 2007. Gas from the offshore Thylacine field (administered by Tasmania) will be brought onshore where it will be processed at Iona and distributed. The Geographe field will tie-in to this project at a later stage.

The commercial Henry and Martha gas discoveries made by Santos Ltd and partner Australian Worldwide Exploration Ltd (AWE) in permit VIC/P44, adjacent to the producing Casino field, have dramatically changed the petroleum industry’s understanding of the prospectivity of the Otway Basin. AWE has revealed that a study for developing the field, at a cost of around $140 million, is to be completed by September 2007, with first gas production from the Henry field currently forecast for the first quarter of 2009.

The Government has also been working hard to harness the resources boom in Victoria to create new jobs and investment across the state, particularly to rural and regional communities.

Victoria holds an impressive record in petroleum exploration and development. A number of petroleum field development projects have moved into operation resulting in almost $2 billion in investment, some 1,700 construction and 180 permanent jobs since 2000. In addition, there has been almost $1.5 billion in investment, 1,500 construction and 85 permanent jobs resulting from gas pipeline projects over a similar period. The industry is booming, with another $2 billion worth of future petroleum and pipelines projects planned, which will result in a further 1,400 construction and 40 permanent jobs.

This is in addition to the Mortlake power station and Heywood pulp mill projects, which together are expected to result in some $1.5 billion investment, 1,000 construction and 80 permanent jobs. Both projects have gas pipelines associated with them and have completed their public environmental assessment.

Recently, I visited a number of energy project sites in south-west Victoria, including the Woodside Otway gas plant, proposed Mortlake power plant site and pipeline route. This was a great opportunity for me to see the booming gas industry in the Otway Basin area, which is following in the footsteps of the successful Gippsland Basin.

I would also like to note that the Energy Division of the Victorian Government has joined the Minerals and Petroleum Division in an expanded Department of Primary Industries, having moved from the Department of Infrastructure. Including both energy and resources in the one department will give us many opportunities to create synergies between energy and resources issues, including gas supply and demand, clean coal technology and development of new energy resources, including geothermal energy.

In closing, I would like to thank the former Minister for Energy, Industries and Resources, Theo Theophanous, for his contribution to the energy and resources portfolio. I also thank those in the industry who contributed to this supplement and I look forward to meeting with as many of you as I can in the near future.

Yours sincerely,

Peter Batchelor
March 2007

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