By Paul Hemsley and Julian Bajkowski

Victorian local governments have warned that new bans on the controversial practice of coal seam gas (CSG) extraction through hydraulic fracturing (fraccing) in the state still don’t go far enough.

The peak body for councils in the state has vowed it will continue to push for a parliamentary probe into the highly divisive industry.

Municipal Association of Victoria (MAV) president, Bill McArthur, told Government News that while the state-wide moratorium represented an opportunity to improve consultation with local government and constituents, it was still unknown how many councils will be affected by the latest regulations.

The Baillieu government late last week caved-in to a rising backlash from farming, environmental and community groups and imposed a temporary moratorium on approvals for fraccing projects in the state.

The bans come ahead of an attempt to thrash out national set of standards to regulate the how CSG can be extracted.

Victoria’s decision follows a similar temporary fraccing ban imposed in New South Wales and makes it the second state with a recently elected Coalition government to put the handbrake on what the petroleum and gas industry sector claims could be a $50 billion industry.

The issue of CSG extraction through fraccing, which critics including farmers maintain is highly toxic and environmentally disastrous, has ignited a groundswell of opposition that now traverses traditional party-political boundaries from the Nationals to the Greens.

Caught in middle are local governments, which are now demanding a bigger say in the debate.

“Councils want to see a working party set up with the MAV and the [Victorian Department of Primary Industries] and a parliamentary inquiry to fix inadequate disclosure and consultation processes in current regulatory regimes,” MAV president, Bill McArthur told Government News.

He said the latest Victorian regulations could be better. Communities needed confidence in government policy dealing with the CSG licencing process, the engagement of land owners and the consideration of exploration impacts.

“We’re hoping that the latest government reforms provide an opportunity to provide consultation processes as part of the push for a national framework,” Mr McArthur said.

The new Victorian CSG regulations, which are effective immediately, have put existing approvals on hydraulic fracturing on hold until at least December 2012 when the state and Commonwealth resources ministers will meet to consider National Harmonised Framework for the coal seam gas industry.

They also prohibit the use of BTEX (benzene, toluene, ethylbenzene and xylene) chemicals.

Victorian Minister for Energy and Resources, Michael O'Brien, last week talked-up the ban on fraccing approvals as a way to avoid a situation where applications for works might be approved now, only to be inconsistent with new standards to be set in the near future.

"It will ensure that Victorians can have confidence the strongest protections will apply to the regulation of onshore gas exploration while giving industry regulatory certainty," Mr O'Brien said.

At the same time, the bans will buy Victorian Premier Ted Baillieu valuable time to quell a growing backlash from within the Coalition in the form of angry rural voters and the agribusiness sector which have traditionally supported to the National Party but are increasingly being wooed by the Greens.

Key environmental groups are backing the local government stand. Friends of the Earth – which coordinates with rural activists through the Lock The Gate campaign – believes the state’s interim fraccing ban still doesn’t go far enough.

Friends of the Earth campaigns coordinator, Cam Walker, said while the ban was a very good start, it only covered one third of the problem.

“It doesn’t cover existing exploration and it certainly doesn’t cover coal exploration, which is really sharpening up as an issue in South Gippsland,” Mr Walker said.

Mr Walker said contracts have already been handed out to engage in fraccing, but the government regulation which has followed only exists to make themselves “look good”.

Said one example was exploration company Lakes Oil, which has been conducting tests in Victoria, which is he claimed was “most upset” because it can’t proceed.

“Most of the other companies with the 24 exploration licences have been approved, but none of them to our knowledge have been getting close to being about to start fraccing,” Mr Walker said.

Mr Walker said that the state government had allowed these companies to engage in fraccing, but the new regulations now disallow the activity.

“It’s like they’ve got a problem and now they’re trying to resolve it and they’ve done that by moving a few things around, ultimately that won’t make industry happy” he said.

Mr Walker said he was not convinced by the state government’s statement that there are currently no fraccing works approved in Victoria is true.

“Lakes Oil has said that they have approval to re-frac at least two fields in Gippsland and they were planning to do that last December,” Mr Walker said.

He said the company had approval until yesterday, thus it was not strictly correct for the government to claim that were no current projects approved.

Despite this, he said Friends of the Earth welcomed the fraccing regulations as a valuable first step and appreciated that the government was now trying to engage with the community on the issue.

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