A new gas extraction project has been approved in Victoria for the first time in 10 years and the government has not ruled out ticking off new exploration sites in the state.

Beach Energy will pipe gas from an offshore field near Port Campbell, close to the Twelve Apostles, from the end of June.

The gas is intended to be used in Victorian homes and businesses with supply already factored into forecasts, meaning it will not impact shortfalls predicted by the Australian Energy Market Operator.

It is the only new gas extraction plan to have sought approval from the state since 2014.

Victoria aims to have 95 per cent of energy come from renewables by 2035 with the government pushing towards towards all-electric homes, including a ban on gas in new builds since January 2024.

Energy and Resources Minister Lily D’Ambrosio said gas has a role to play in the energy transition but it is a finite resource and supplies are diminishing.

She said the new project would provide a “fraction” of the state’s gas needs, explaining Victoria uses 188 petajoules each year and the new project would give 10.6 petajoules.

A total of 15 gas exploration permits have been granted onshore or offshore and the minister did not rule out further approvals.

However, she said few explorers or gas producers who came forward had actually found new gas supplies and there was a need to shift away from fossil fuels over supply concerns.

“Very little is being found and we can’t just hope on a wish and a prayer that there’s going to be some bonanza found any day now, because it doesn’t happen that way,” Ms D’Ambrosio told reporters in Glenrowan.

In March, the market operator warned there was a need for more gas supply in Victoria over concerns consumption would outstrip availability.

It found total available supply would fall 48 per cent between 2024 and 2028 and there would be a higher chance of outages.

Opposition leader John Pesutto welcomed the approval and called on the government to give the green light to more projects.

“There are going to be significant gas shortfalls unless Premier Jacinta Allan does something beyond the Beach Energy announcement that we’ve heard about today and approves other gas projects,” Mr Pesutto said.

He claimed the government had been “ideological” about energy policy and sent signals to the market that it would not approve more gas projects.

“We want energy that is affordable and reliable and also clean but there’s no point approving a project that will only address gas that’s been factored in already, without addressing shortfalls in the next one to two years.”

The announcement has been welcomed by the gas industry but criticised by environmentalists.

Australian Pipelines and Gas Association chief executive Steve Davies said Victoria required a “major course correction” on gas as homes, businesses and the economy will rely on it as coal generators are wound down.

“It is essential the Victorian government continues to support the investment environment in new supply by not undermining future business cases through prescriptive policy and gas bans,” Mr Davies said.

That was echoed by Australian Energy Producers Victoria and NSW director Peter Kos who said the government needed to encourage further exploration and development.

However, Environment Victoria senior climate and energy advisor Kat Lucas-Healey hit out at the project she claimed would jeopardise one of the state’s biggest tourism attractions.

“Beach Energy’s new drilling site will pipe gas under the iconic Twelve Apostles, risking one of our environmental drawcards for less than a year’s gas supply,” Dr Lucas-Healey said.

“Victoria needs to get off expensive, polluting gas and we don’t do that by drilling new fields.

“Gas will be responsible for more than a third of Victoria’s greenhouse gas emissions by 2035 if we don’t urgently electrify.”

Victoria will also open a new wind farm in Mortlake and a new solar farm at Glenrowan, which the government claims will power 170,000 homes combined per year.

Source: AAP