Can you explain the importance of natural gas transportation in Victoria? How do you see pipelines as playing a vital role in its economic development?

Gas has traditionally been a significant fuel in Victoria. Natural gas is more widely used for residential space heating and commercial energy in Victoria than in other Australian states. Victoria’s offshore gas resources have contributed substantially to this state’s historically low energy costs.

The 2011 Fraser Institute Global Petroleum Survey ranked the commercial environment in Victoria for the petroleum industry as the best in Australia and the fourth-best in the world. Victoria also scored strongly in the key index of the survey measuring how attractive jurisdictions are for investment in the upstream oil and gas industry, ranking 19th out of 136 global jurisdictions for its lack of barriers to investment.

Victoria has a great reputation as a place for oil and gas companies to do business, and pipeline development is part of the world-class infrastructure that helps mark Victoria as a top destination for companies looking to carry out oil and gas exploration.

What policies does the Victorian Government have in place to encourage pipeline development?

The Victorian Government supports the regulatory arrangements that are delivering an efficient and competitive gas industry for Victorians. This is important for facilitating appropriate investment while keeping prices to end users as low as possible. Cost of living pressures are a key concern for the Victorian Government.

The Baillieu Government has provided $100 million over four years in the 2011–12 Budget for the Energy to the Regions Program to extend access to gas to communities across regional and rural Victoria.

More generally, the wholesale gas market on the principal gas transmission system supplying Melbourne and surrounding areas promotes efficient and competitive gas trading. The transmission system links multiple producers, major users and retailers. The gas pipeline hub (VicHub) also enables more competitive trading and sale of gas to interstate demand centres.

The Victorian Government will also continue to support national arrangements, which promote the development of an increasingly-integrated eastern Australian gas market.

Does the Government have any plans to expand Victoria’s regional natural gas pipeline network?

As noted above, the Government has allocated $100 million to developing Victoria’s gas network over four years in the 2011–12 Budget. Regional and rural councils will be able to nominate local communities to be part of the program. The funding will be available to leverage gas extensions so that more communities are able to connect to this cheaper, cleaner and more reliable energy.

Households in regional and rural Victoria can save in the vicinity of between $600– 1,200 per annum in energy costs if reticulated natural gas is available at a reasonable and competitive price.

Subject to applications from the relevant councils, work is expected to commence on delivering natural gas to an initial twelve towns, including: Avoca, Lakes Entrance, Invermay, Winchelsea, Heathcote, Orbost, Warburton, Marong, Bannockburn, Terang, Maldon and Huntly.

The Energy for the Regions Program will be funded through the Baillieu Government’s $1 billion Regional Growth Fund.

Which projects and recent developments in Australia’s petroleum sector do you see as particularly exciting? Why?

Recent figures from the Australian Bureau of Agricultural and Resource Economics and Sciences showed that there is $4.6 billion worth of oil and gas projects either confirmed or under construction across Victoria. It is terrific to see the sector have a continuing strong presence in Victoria.

How do you think Victoria’s research into carbon capture and storage will impact the pipeline sector?

Pipelines capable of transporting carbon dioxide require different standards to petroleum pipelines. An Australian Standard applicable to carbon dioxide pipelines will need to be developed. While there are models for this in the United States, these need to be adapted to Australian conditions.

In terms of construction, the companies constructing petroleum pipelines in Victoria now would be well-placed to be involved in carbon dioxide pipeline construction in the future.

What is the biggest challenge the Victorian pipeline industry will have to overcome in this term of government?

The Victorian pipeline industry, like many in the energy sector, will be affected by uncertainty surrounding the carbon tax. If, for instance, there is substantial construction of gas-fired power over the next five to ten years, then gas demand will significantly increase. The impact will depend on whether gas is sourced from conventional or unconventional sources, or piped to/from interstate.

The Australian Energy Market Operator provides annual updates to its gas planning review to ensure that sufficient gas pipeline capacity is available to deliver gas to consumers. The Victorian Government, through the Department of Primary Industries, is also preparing for the development of these possibilities.