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House of Assembly - Fifty-Third Parliament, Second Session (53-2)
2015-03-18 Daily Xml
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Oil and Gas Sector

Mr ODENWALDER (Little Para) (14:13): My question is to the Minister for Mineral Resources and Energy. Can the minister update the house on the latest results of spending on oil and gas exploration in this state and any threats to the continued performance of this economy-supporting sector?

The SPEAKER: Well, this will pour oil on troubled waters!

The Hon. A. KOUTSANTONIS (West Torrens—Treasurer, Minister for Finance, Minister for State Development, Minister for Mineral Resources and Energy, Minister for Small Business) (14:13): Blessed are the peacemakers, sir, because they will be called sons of God. I thank the member for his question and his enthusiastic support for the oil and gas sector. Recently, the ABS published exploration expenditure data for the calendar year 2014. They showed very good continuous outcomes for South Australia. In South Australia, petroleum exploration rose to $510.7 million, resulting in a 38.9 per cent increase compared to 2013. It was a good result but we have to acknowledge that 2015 is going to be a challenging year for our oil and gas industry, especially with significant falls in global oil prices in the first quarter of this year. Spending on exploration ensures that South Australia is able to maintain a pipeline of discoveries that has helped the Cooper Basin reach record production levels as the largest onshore producer of oil in the country, but there are threats to this continued success.

In New South Wales, a parliamentary inquiry spearheaded by the Greens and the Shooters and Fishers Party, this month called for the creation of a national domestic gas reservation policy. There have been calls for moratoriums, of course, in fracture stimulation. If South Australia were to embrace these policies, there would be devastating consequences for the energy revolution taking place in this state, but do either of these policies have any merit?

Recent research shows that the arguments in favour of these policies just simply do not stack up. Recently, the Northern Territory government commissioned an independent inquiry into hydraulic fracturing. The substantive weight of agreed expert opinion demonstrates that there is no justification whatsoever for the imposition of a moratorium on hydraulic fracturing. They were pretty conclusive about that.

This inquiry was undertaken by Dr Allan Hawke, a highly respected former senior commonwealth public servant, high commissioner to New Zealand, then chancellor of the Australian National University. Several times throughout the report Dr Hawke endorses the South Australian regulatory regime for oil and gas exploration and production. Dr Hawke's report says, and I quote, 'The South Australian regulatory system is often cited as the benchmark for other jurisdictions,' and often refers to this throughout his consultations as the strongest in Australia. Dr Hawke also points out that fracture stimulation has been used successfully for many years in the Cooper Basin to enhance oil and gas production.

The review backs the findings of the Victorian government Gas Market Taskforce chaired by former Howard government minister Mr Peter Reith, which found that, and I quote, 'Clearly, there is a lot of exaggeration' about hydraulic fracturing. The task force was convinced by what it described as compelling evidence that fracture stimulation should be allowed.

As for the merits of setting aside a proportion of our gas production for domestic users, a review conducted by Professor Ian Harper shows that there is no case to be made for such a policy and, in fact, every sign would be that it would hold back South Australia from reaching its full economic potential. His report, prepared for Deloitte Access Economics in 2013, found that the introduction of the domestic gas reserve on the east coast of Australia would cost $6 billion in forgone gross domestic product in 2025.

Mr Tarzia: What did Queensland Labor do?

The Hon. A. KOUTSANTONIS: The report warned the longer term consequences of domestic gas reservation, like the Victorian government's moratorium on fracture stimulation by the former Liberal government—

The SPEAKER: The minister's time has expired, and the member for Hartley is warned for the second and the final time.

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