Gas grants and new exploration area to boost local supply

22 March 2017

South Australian Government: The recipients of the first round of PACE Gas Grants have been announced today, with five exploration and development projects to share in $24 million in State Government funding.

The grants will generate up to $174 million in new investment by oil and gas companies in local production projects.

Gas extracted through the grant scheme will be offered to South Australian electricity generators first, increasing the affordability of supply and putting downward pressure on power prices. On Tuesday the State Government announced it will run a second $24 million round of PACE Gas grants.

The State Government will also offer a new exploration licence for five blocks in the Otway Basin in the South East, through a competitive bidding process to be finalised by the end of the year. The exploration area will not include the Coonawarra wine region.

The State Government’s royalty sharing program, announced on Tuesday, will first apply to this new exploration area.

The five PACE Gas Grant projects comprise:


Supply of gas is currently tight across the nation due to large amounts of LNG being exported overseas and gas bans and moratoria in Victoria, New South Wales and the NT. AEMO has forecast that this supply shortfall will result in an electricity supply shortfall in SA, NSW and Victoria in 2018-19 unless gas supply is boosted and bans and moratoria lifted.

Steven Marshall has promised to impose a 10-year unconventional gas moratorium in the South East, an area of vast gas reserves, if he wins the next election.

PACE Gas Results

Following a thorough assessment of the applications received for PACE Gas grants, a panel of experts, including independent advisers, recommended five successful recipients.

Under the conditions of the grants the gas produced must first be offered to electricity generators operating in South Australia. The State Government will now run a second $24 million round of PACE Gas grants.

New Exploration Tenement

The new exploration licence for the South East will be auctioned as one tenement of five exploration blocks. It will not include the Coonawarra wine region.

The Otway Basin consists of deep shale gas, located far underground. This type of gas can be extracted with far fewer well heads compared to coal seam gas, which is located much closer to the surface.

Royalty Sharing

On Tuesday the State Government announced a new royalty sharing program for landowners.  The PACE Royalty Return program will first apply to a new exploration licence in the South East, with a competitive bidding process to be finalised by year-end.

Federal Liberal Energy Minister Josh Frydenberg has publicly welcomed South Australia’s new royalty sharing scheme.

Quotes attributable to Minister for Mineral Resources Tom Koutsantonis

Gas is key to lowering power prices in South Australia.

Today South Australians are presented with a clear choice between a State Government driving more gas production and Steven Marshall, who wants to ban gas.

We are taking charge of our energy future and in South Australia that means making the most of our abundant wind, solar and gas resources.

Steven Marshall’s policy, which has been repeatedly criticised by his Federal Liberal colleagues, will restrict gas supply and drive up power prices.

There is enough gas in the ground in South Australia to power our grid for centuries, and this package of measures will help us extract more of that gas, boost local electricity generation and put downward pressure on prices.

Given Mr Marshall has said he is not opposed to conventional gas development in the South East, I hope he publicly welcomes the announcement of Beach Energy’s conventional exploration project in the region.




Source:  South Australian Government -

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