Petroleum and Geothermal Energy (Ban on Hydraulic Fracturing) Amendment Bill

Mr PEDERICK (Hammond) (10:35): I rise to speak to the Petroleum and Geothermal Energy (Ban on Hydraulic Fracturing) Amendment Bill introduced by the member for Mount Gambier. I note that the state Liberal team went to the election in March with a policy to ban unconventional fracking in the Limestone Coast region of the South-East for 10 years. We did deliver on this commitment immediately after the election and we imposed the 10-year moratorium, which will expire in 2028. No petroleum exploration or production project proposal for the South-East that includes unconventional fracking will be evaluated by our government for 10 years. That is an important position, and we stand by that position, as the minister has indicated.

I have mentioned my history in fracking and mining many times in this place. I worked for Gearhart Australia from March 1983 to March 1984; it was only 12 months, but it is the desert. I had previously worked in earthmoving in the Cooper Basin and Alice Springs region for 12 months. I also operated fracking several wells in East Mereenie. As to vertical fracking and conventional fracking, I have plenty of experience in loading chargers, monitoring the load and making sure I did what I could to assist the engineers.

Minerals and mining are of huge benefit to this state and add billions of dollars to the economy. I note that in the budget delivered yesterday our Regional Roads and Infrastructure Fund provides 30 per cent of mining royalties and at least $76 million per year to go into the regions, yet we see a region that obviously does not want that money.

I also want to talk about mining, drilling and water bores. I think we need to be careful where we go to. There would be thousands of water bores, including many hundreds in the South-East, where the well integrity would be terrible, and there would be leakage between saline aquafers and freshwater aquafers. I just want to make that point. In the speech by the Hon. Mark Parnell in the other place regarding his bill to amend the Petroleum and Geothermal Energy Act 2000, he stated:

…the bill does not affect the activities of geothermal energy, a form of renewable energy, with very different impacts to that of exploring for and extracting hydrocarbons.

Yes, the different impacts are that you have to fracture a lot heavier than oil and gas wells, and it has not been able to be managed, but it is interesting how even the Greens leave that bit out. I do not believe this needs to be legislated, but I do acknowledge the party's position.

I toured the United States with the member for Mount Gambier and several other members from 19 to 29 June 2015, trying to get my head around unconventional fracking. According to FracTracker, and based on data from 2014-15, 34 states in the US saw drilling activity amounting to approximately 1.2 million facilities across the United States, from active production wells to natural gas compressor stations and processing plans. Basically, they had made themselves almost exclusively reliant upon their own supplies.

Farm owner Darlene Barni has a farm in typical farm country—like the country at Mount Barker—in Pennsylvania. She explained the positive aspect that hydraulic fracturing has had on her life and on the community she lives in. Drilling operations have taken place on her property, and she has no issue with this, with six wells operating at the back of her property. She had not been subject to or known of any issues or adverse effects on people's lives as a result of close proximity drilling.

Frank Puskarich is a business owner of Hog Fathers. Our discussion with Frank was relevant to the oil and gas industry on the basis of his business's economic growth since the development of an oil and gas industry in the area. Mr Puskarich went from having one restaurant to now having six. It was also noted that the community is very pleased with the implementation of hydraulic fracturing and unconventional gas. Frank is also a farmer and, along with many other farmers in the region, he is satisfied to coexist with fracturing on his property. Mr Puskarich is 100 per cent convinced that there are no problems with the hydraulic fracturing industry.

One of the recommendations of the Natural Resource Committee's report into fracking states:

While the specific process of hydraulic fracturing or 'fracking' in deep shale, properly managed and regulated, is unlikely to pose significant risks to groundwater, other processes associated with unconventional gas extraction, including mid to long-term well integrity and surface spills, present risks that need to be properly considered and managed.

I arranged for Jeff Heller, President of Steuben County Landowners Association, to present to the Natural Resources Committee. Myself and some present met with Jeff while in New York state. Jeff represents over 1,700 farmers, equating to over 225,000 acres of land. At the time we were meeting with Jeff in New York there was a moratorium in place, which turned into a ban.

Jeff, on behalf of the farmers he represents, negotiated a 150 per cent increase for those allowing oil and gas pipelines on their properties. Mr Heller is also concerned for the other farmers he represents as they can cannot access up to 25 per cent royalties, in comparison with their neighbours in Pennsylvania. Jeff advised that many of the farmers coexisting with fracking on their properties would not have the financial capability they now have. It was noted to have saved many people's farms and also that most of those farms are reliant on groundwater underneath their properties.

When reporting to the Natural Resources Committee, Jeff reflected on several terms of reference, and I quote:

The issue in Dimock is really shallow methane migration, if it's valid. That is an issue that has been here in the Northern Tier, Pennsylvania, the Southern Tier, New York. We have shallow methane gas that the water well drillers have had to put up with. It has just always been here; it has been here for hundreds of years, the Indians write about it.

So if that was an issue, between the state and the industry—and here we get into legislation and regulations—they came up with a system for casing the wells. That was the big issue. Originally there were no regulations on that whatsoever, so that standard practice was one annulus: that is, one layer of steel [one casing], one layer of cement. Today, in Pennsylvania, the DEP requires three annuluses, and most of the industry drillers have gone to five or six annuluses.

All have cement in between. He continued:

They have improved the cementing, they have improved the methods of monitoring the cementing, so even shallow methane migration in any form has not been an issue, in Dimock specifically, but in the whole area since about 2008 or 2009 at the latest.

Jeff also highlighted the economic benefits of fracking:

The number of jobs created, according to the Pennsylvania Department of Labor, is over 200,000. That includes the ancillary jobs, not just the guys on the pads or the pipelines. Here in New York we have a tax regulation—it's called Title 5 of the New York tax code—that awards a percentage of the production of the well. It's an advalorem tax on the gas production of a well, and lots of states would kill to have this.

That was his quote. All that revenue stays local. A percentage goes to the county, to the town—which you would call a township, or at least most of our states would call a township—and then to the schools. The schools get the lion's share of it, I am sure. This is his quote:

It is just a guaranteed revenue source for the local people. Pennsylvania has an impact tax, which is a form of severance tax, and the severance tax would be a way for your state and your federal regulators. Again, you could study what some of these other states have done.

They have some states where the landowners do not have the mineral rights. Obviously, landowners do not have mineral rights in this state, but they do like to use fuel, minerals and gas right throughout the state. I certainly do not believe that we need to put the legislation in place. We fully support the moratorium that we instigated. The moratorium is in place and will have that effect without the legislative impost.