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How is Gas Exploration and Production Regulated?

Natural gas is used by hundreds of thousands of households and businesses in Victoria every day and it is a safe and reliable energy source.

As consumer demand for natural gas grows, so does the need to explore for new supplies, to help keep gas affordable.

This fact sheet provides information on how natural gas exploration and production is regulated.

Onshore gas exploration and production is regulated differently depending on its type. This fact sheet explains regulations concerning coal seam gas, which is regulated by the Mineral Resources (Sustainable Development) Act (MRSDA) 1990.

Since 2000, a number of mineral exploration licences have been issued in Victoria for exploration for coal seam gas. To date, no production of coal seam gas has occurred. A number of companies currently have been granted exploration licences for coal seam gas in Gippsland, the Otways and Bacchus Marsh.

How is coal seam gas exploration and production regulated?

Coal seam gas exploration and production in Victoria is regulated under the MRSDA. The regulations stipulate that the community must be kept informed. Legislation provides strict requirements for licensing and approval, along with regulations for other issues such as compensation, rehabilitation and royalties.

Other legislation and policies may affect coal seam gas exploration and production where the following issues arise:

  • catchment and land protection
  • cultural heritage
  • environmental protection and management
  • land rehabilitation
  • native vegetation management
  • Native Title
  • public safety
  • water use and management.

Licencees are subject to regulator monitoring, and all companies must adhere to the regulations or their licence may be revoked.

What is a company required to do before it can explore for coal seam gas?

In order to undertake exploration activities, a company must apply for an exploration licence. Exploration licences do not allow for commercial extraction or production of gas.  The low impact activities permitted on an exploration licence are directed at searching for, or evaluating, a resource. However, even these activities are regulated by strict requirements for approval of work by the Department of Economic Development, Jobs, Transport and Resources (DEDJTR) and, where relevant, by the Environment Protection Authority (EPA). The exploration licence application process requires the opportunity for landholder and community input.

What is a company required to do before it can start producing (extracting) coal seam gas?

Although a number of exploration licences covering coal seam gas have been issued since 2000, there is currently no production in Victoria. In the event that a company believes the production of coal seam gas is feasible and that a proposal to extract the gas meets all regulatory requirements, it is estimated that it would take around five or more years for such a project to commence commercial production.

A proposal to produce coal seam gas requires a lengthy period of testing and evaluation of feasibility and would then be subject to an Environment Effects Statement process under the Environment Effects Act 1978. If mining is proposed, both the mining licence application process and the planning process provide further opportunities for public input and comment.  

How are landholder’s interests protected?

The MRSDA requires licensees to consult with landholders and other identified members of the community before any exploration or mining activity can commence, including providing the community with a reasonable opportunity to express their views about those activities.

Further, prior to work commencing, the MRSDA requires that landowner consent must be obtained for all exploration and mining activity on their land. This consent may also involve a level of compensation for access to their land. If a landholder does not provide consent, then in accordance with the MRSDA, the issue may be referred to the Victorian Civil and Administrative Tribunal (VCAT). VCAT does not determine the right to access land, only the amount of compensation to be paid to the landholder.

For further information on the regulation of exploration and production of coal seam gas visit: Minerals