More than $1 billion will be spent in the south-west as companies begin the search for new gas reserves in the Otway Basin to help prevent a looming gas shortage.
Beach Energy will soon begin drilling two onshore wells - one near its Nirranda South site and another on a new site near Port Campbell - and up to nine offshore wells off the popular tourist town as part of its $1 billion project.
Cooper Energy's $80 million gas exploration project off Port Campbell is expected to start in mid-July when the Ocean Monarch rig arrives at an offshore location nine kilometres off Peterborough.
During Cooper Energy's two-month-long project, the 107 metre-long, 40 metre-high rig will be visible from shore at its first location - Annie 1 - on clear days and nights.
When the Ocean Monarch, which will house 120 people, moves to its second location at Elanora, which is 30 kilometres offshore, it may just be visible from the coastline.
If successful, the company will push ahead with plans to develop wells in 2021 with the promise of "beneficial flow-on effects for the local community and jobs economy".
The company's onshore Minerva gas plant may have to undergo some modifications to produce gas from any new fields discovered, the company said.
Declining gas production in the Bass Strait is behind the companies' moves to invest in finding and developing new gas reserves to power homes and industry in south-east Australia.
More gas to flow from Otways
The Otway Basin contributes 19 per cent of Victoria's gas production in 2018 and this share is expected to increase.
"The Otway Basin is Victoria's second-largest source of gas supply and we think this significance will grow," a Cooper Energy spokesperson said.
"We are optimistic that our campaign will result in the discovery of gas.
"The Otway Basin is a source of natural gas which has been produced in the region for many years and Cooper Energy believes it is a crucial component in the delivery of cost competitive energy to south-east Australia."
The project is expected to bring a boon to the Portland economy with more than $4 million being spent in the region during the exploration project. It will be using facilities in Portland for storage and transfer of equipment, including cranes.
"This is a significant project for Cooper Energy and we're relying heavily on the local community for logistics and other essential elements to facilitate aspects of the project," a company spokesperson said.
"This project will be a significant boon for the local economy."
Cooper Energy has been supplying gas to the region from sub-sea gas wells Casino, Henry and Netherby fields, which are located about 25km offshore from Peterborough, through the Lochard Energy's Iona gas plant.
A Cooper Energy spokesperson said when the Minerva gas field stops production the wells would then be plugged and abandoned in line with industry practice.
The Casino Henry joint venture - between Cooper Energy and two other companies - has an agreement with BHP to acquire the Minerva Gas Plant when it ceases its current operations processing gas from the Minerva gas field.
Onshore and offshore plans
Drilling will begin in the last quarter of this year on Beach Energy's Black Watch Well at its Nirranda South facility where for the past three years it has been extracting gas via its Halladale 1 and Speculant 1 and 2 wells.
The new well, which will take between nine to 12 months to complete, will connect into existing site infrastructure and pipelines.
The well will tap into offshore natural gas reservoirs located about 5.5 kilometres from the coastline using "extended reach drilling".
This involves drilling up to 2000 metres below the surface while using directional drilling techniques to steer the well offshore.
Beach Energy said the process was not fracking, and the Victorian Government's moratorium on onshore gas developments did not include extended reach drilling from onshore to offshore conventional gas reservoirs.
Beach Energy is also expected to begin drilling an exploration well onshore between Port Campbell and Peterborough using the same extended reach drilling method, and equipment, as those at Nirranda South.
"If the Enterprise exploration well finds commercially successful gas reserves it will be converted to a production well to flow the raw gas for processing at the nearby Otway Gas Plant," the company said.
"A further two wells may be drilled at the same onshore site over the following years if the first exploration well is commercially successful."
The initial exploration well will take about nine months to construct and, if successful, site facilities would be built over the following six months followed by pipework which could take a year to construct. Any future wells would be drilled in the next three to six years.
During the drill phase, the 55 metre-high rig will be visible from the Great Ocean Road at both Nirranda South and site between Peterborough and Port Campbell, and there will be up to 90 staff onsite.
In September, work will begin on drilling up to nine offshore wells between 32km and 80km off Port Campbell as part of its Otway Offshore gas exploration and development project.
The company said the wells would ensure continued production at its Otway Gas Plant, which it bought from Origin in February 2018, to supply the domestic gas market.
The entire project is expected to run for 12 to 18 months.
Beach Energy Community Manager, Amanda Keeley said about $1 billion would be spent on the south-west's onshore and offshore projects over four years.
Beach Energy this week began drilling for conventional gas south of Penola, and once that project is completed, the equipment will be moved to Nirranda South for work to begin.
Gas shortage looms
A shortage of gas has been forecast for the winter of 2024 by the Australian Energy Market Operator.
AEMO said supply from existing and committed gas developments would provide sufficient resources to meet demand in southern and south-eastern Australia until 2023.
However, it said additional sources of gas were required to address a forecast gap in meeting long-term winter demand from 2024.
Victorian producers, which produce most of the gas for southern Australia, continue to forecast declining production as offshore gas fields are depleting.
AEMO said there was a need for further investment in existing reserves or alternative gas supply infrastructure developments to reduce the risk of shortfalls.
AEMO chief system design and engineering officer Dr Alex Wonhas said immediate action taken by industry and government over the past few years had delivered an improved outlook and alleviated concerns of a supply shortfall in the short-term.
"However, southern Australia's overall supply-demand balance for 2021-2023 remains very finely balanced, reflecting the ever-tightening integration of Australia's electricity and gas markets in the context of an evolving and dynamic energy system," Dr Wonhas said.
"This part of Australia needs a secure and reliable source of gas to ensure energy remains affordable both domestically and industrially."
Company in $60m plant upgrade
Lochard Energy has plans to further expand its Port Campbell facility with a $60 million project on the drawing board.
Chief executive officer Anthony Fowler said plans to install a large compressor at the site in the next six years followed the completion at Christmas of a $30 million new well that will provide enough gas to heat 120,000 homes during winter.
Mr Fowler said the Iona 7 well was a significant expansion for the company. He said the facility provided a reliable supply to gas generators in Victoria and South Australia.
"Those gas generators are particularly important in the market environment of today where we have a lot of fantastic renewables," he said.
"Those gas generators support those renewables on those days when the wind doesn't blow and the sun doesn't shine."
At the time, Minister for Energy, Environment and Climate Change Lily D'Ambrosio said gas would continue to be an important part of our energy mix for many years to come.
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