Australian state sets wheels in motion to amp up energy security by enabling offshore gas storage

Two ministers from the government of Australia’s state of Victoria, led by Premier Jacinta Marie Allan, have proposed a pair of bills aiming to reduce gas demand and boost supply security in the state.

The Building Legislation Amendment and Other Matters Bill 2024 and the Offshore Petroleum and Greenhouse Gas Storage Amendment Bill 2024 were introduced in the Victorian Parliament on September 11 by Minister for Energy and Resources Lily D’Ambrosio and Minister for Planning Sonya Kilkenny.

While the former bill focuses on switching to electric appliances, the latter aims to enhance the security of energy supply by allowing gas to be stored in empty gas reservoirs offshore. Both are set to be released for consultation in December 2024, followed by an extended public consultation period.

Victoria’s Minister for Energy and Resources, Lily D’Ambrosio, noted: “Our new legislation paves the way for the development of offshore gas storage projects, to help secure gas supply while we cut gas demand by helping Victorian households electrify and save from day one.”

The Building Legislation Amendment and Other Matters Bill is expected to electrify Victorian homes once existing gas appliances reach the end of life, while all new homes that need a planning permit are already required to be built all-electric. The consultation will consider expanding this requirement to all new homes and many commercial buildings.

Victoria’s Minister for Planning Sonya Kilkenny, said: “We’re listening to Victorians on how we want to transition as a state while we help households to switch to electric appliances, so they can save money.”

Victoria is said to be the largest user of residential gas in Australia, with two million households and businesses connected to the gas network. The state has previously used onshore gas storage to meet demand throughout winter.

The Offshore Petroleum and Greenhouse Gas Storage Amendment Bill proposes supplementing onshore facilities with offshore underground reservoirs deep in rock layers, where gas forms naturally before being extracted. In addition to providing funding flexibility for these projects, this is meant to strengthen accountability and regulatory oversight of storage site operators.

Increasing gas storage capacity is anticipated to boost reliability and security during peak demand periods, as well as support gas-powered electricity generators, with gas currently accounting for an average of 2–5% of Victoria’s total electricity generation.

Another state from Down Under – Western Australia (WA) – recently had its domestic gas policy examined by a parliamentary committee, which found that “substantial new sources of gas” in coming years would be needed to meet the rising demand and an expected shortfall in the next year and a half. Thus, Australian Energy Producers (AEP) joined forces with the WA government to find the best way forward.

Australia recently expanded its energy cooperation with Germany by signing a joint declaration of intent under which each country will contribute funds to a joint initiative aiming to establish global supply chains for renewable hydrogen products. Described as groundbreaking, this strategic partnership will enable Australia to establish renewable hydrogen shipping corridors to Europe and beyond, while providing Australian companies access to European markets for hydrogen and ammonia.