Not surprisingly, Victoria Earth Resources Development division executive director Anthony Hurst said letting Origin drill was justified despite the onshore ban because they were two completely separate issues.

Vertically integrated major Origin Energy will begin work this month near the coastal town of Warrnambool to access what it estimates to be 100 billion cubic feet of gas in the offshore Halladale/Blackwatch field, potentially worth about $800 million at recent contract prices.

This left Lakes Oil chairman Rob Annells, whose company is Australia’s oldest oil and gas explorer, fuming at what he perceives to be “double standards”, especially considering they are both targeting conventional gas and drilling would pass through the same aquifers.

Hurst told Energy News that Lakes and Origin’s wells involve two “distinctly different sets of issues”, being accessing offshore and onshore gas.

“It’s not onshore gas. All sorts of well integrity requirements are put in place,” Hurst said of Origin’s work.

“Offshore work has been happening since the ’60s. This one here just happens to be closer in to the coast in state territorial waters.

“It’s a more effective, safer way to access that resource by having your base onshore.

“All sorts of reasons come into play, but wave dynamics in shallower water is certainly something to be mindful of.

“The government’s policy is very clear for onshore exploration and potential production as against offshore. It’s actually quite a positive sign of the continuation of Victoria being open for business for offshore production, while we go through a process of looking at the onshore issues.”

Meanwhile, Annells insisted he still believed in the hydrocarbon potential of Victoria, but conceded he had to go elsewhere to stay active until the state lifted the onshore drilling ban it initiated in May while community consultation and a water study was completed.

“We haven’t lost our faith in Victoria,” Annells said.

“It’s just that we’re not sure where we are as far as the government is concerned.

“They [the Victorian government] are saying it’ll be mid-next year before they can give the results of the community consultation, so we’re looking at 12 months at the earliest before we can drill a well, all going well. We have an operation here – we’ve got people to pay, people to do jobs, so we’re looking outside of the state in the meantime.

“It’s fantastic that Origin has been given the go-ahead, but what about me? There’s absolutely no difference at all in those two wells, and our well is 500m from Iona processing plant – right next door. So when all those wells were drilled 20 years ago to bring the gas into Iona, we’re not allowed to do another one? It’s crazy.

“We had a rig ready to go in January this year, and we had to let it go.”

Lakes and joint venture partner Armour Energy are chasing onshore conventional gas near Origin’s Iona plant with their vertical exploration well.

Lakes showed its confidence in Victoria eventually giving the go-ahead with three major announcements over the past month: two tentative 10-year supply deals with Dow Chemical (Australia) and major Australian food manufacturer Simplot, and the company also picked up two more petroleum exploration permits in the Otway Basin from Bass Strait Oil.

“We can’t just sit around for the next 12 months doing nothing,” Annells said.

“We found a couple of very interesting blocks [in Queensland's Cooper-Eromanga Basin] that we had the opportunity to pick up so we grabbed them. We’re looking for conventional oil migrating to the edge of the basin – that’s the idea that we’re following.”