Otway Basin

The Hon. T.R. KENYON (Newland) (14:43): My question is to the Minister for Mineral Resources and Energy. Can the minister outline to the house the importance of the Otway Basin to the South Australian economy?

The Hon. A. KOUTSANTONIS (West Torrens—Treasurer, Minister for Finance, Minister for State Development, Minister for Mineral Resources and Energy) (14:44): I thank the honourable member for his question and for his support for the economic benefits generated by the state's oil and gas industry. The Otway Basin has been a critically important source of gas for this state since the first commercial discovery in 1987. Gas production from 1991 to 2011 at the Katnook field generated $420 million in natural gas sales and $32.2 million in condensate sales in current dollar terms. Total royalties paid to the state are estimated to amount to $30.5 million. Sales and royalties are just the beginning of the economic benefits.

Commercial discoveries of gas and condensate led to substantial investments in valuable infrastructure such as the gas pipeline network and the construction of the Ladbroke Grove and Snuggery power plants. Infrastructure and access to locally sourced gas have helped support the SAFRIES chip factory, the Kimberly Clark Australia paper mill and local jobs supported by those companies. Locally sourced energy offered a competitive price as a critical factor supporting the South-East economy. The shorter distance gas has to travel through a pipeline means lower cost to consumers.

We are still to determine the full potential of the Otway Basin, but what will be crucial to unlocking future production will be the ability to explore and employ the most up-to-date technology to extract discoveries. One of those technologies is the ability to fracture stimulate to extract gas from unconventional reservoirs. Fracture stimulation is a technique that we have been safely managing in this state for 60 years. South Australia has a long history of well-managed, well-regulated fracture stimulation with a focus on well integrity, safeguards of our aquifers and, of course most importantly, the protection of our natural environment.

Modern fracture stimulation techniques developed in the United States have sparked an energy revolution. In 2012 alone, the shale gas revolution in the United States added $74 billion to the federal and state governments' revenue and is expected to generate 3.3 million new jobs by 2020. The scale of the revenue and jobs growth in South Australian terms is not as likely to be of that magnitude, but there is no reason—

Members interjecting:

The Hon. A. KOUTSANTONIS: I see members opposite laughing at investment. There is no reason to doubt that the development of our unconventional gas reservoirs anywhere in this state would lead to increased production, investment and employment. Those jobs aren't confined to the drill pad. The potential for jobs extends well beyond the wellhead to all the equipment, technology and service suppliers along the value chain that stand to benefit from the energy revolution.

More gas supplies help keep downward pressure on energy prices for consumers, including industry. Why would we want to deal ourselves out of that potential? Conventional gas exploration, development, production, processing and transport have been conducted for decades in the Otway Basin. Despite more than 100 petroleum wells drilled in the region, the Coonawarra winegrowing industry and agribusiness have continued to grow without putting at risk our state's clean green image.

Do we have to work harder to convince landowners? Absolutely, we do. Industry accepts that, I accept that and the Department of State Development accepts that. There is much more we can do to engage with landowners and dispel their fears and address their concerns. Of course, it takes leadership but, most importantly, what this state needs most of all is a bipartisan approach on the science and experience, not a weak leader who flinches in the face of a Green-led scare campaign.