New policy ignites CSG debate

FOLLOWING the release of the NSW Government’s controversial Strategic Regional Land Use Policy (SRLUP) that includes codes of practice for the CSG sector, APPEA has warned that more regulations pertaining to the production of CSG in the state would cause project delays and increase costs.
The SRLUP, which has been met with mixed views, outlines 27 new measures designed to better balance growth in the mining and CSG industries with the need to protect important agricultural land and water resources.
However, APPEA chief executive David Byers said in a statement that the regulations would lead to drawn-out assessment processes with increased security deposits and fees.
“We are now, without question, one of the most heavily regulated industries in Australia. There is an enormous obligation placed on energy companies through this policy,” Mr Byers said.
“While industry can now finally start investing in exploration, job creation and investment for NSW regional communities, we need to recognise that these regulations will force up costs and delay projects.”
This view is supported by Santos, the largest holder of CSG reserves in NSW, which released a statement saying that the SRLUP substantially increased the regulatory burden on the CSG industry.
“While the policy recognises the important role that the natural gas industry will play in encouraging investment and jobs growth in regional communities and meeting the state’s energy needs, the new regulatory regime will be both time-consuming and challenging to work within,” the statement said.
Santos vice president of Eastern Australia James Baulderstone said that combined with already extensive state and Commonwealth regulations, the SRLUP made the approvals process in NSW the most rigorous in the country.
“It is essential that the Government now manage its regulatory package to eliminate the significant risk of process duplication and unnecessary, costly delays to otherwise viable and beneficialresources projects,” he said.
In a more favourable response, AGL Energy – Australia’s largest private owner, operator and developer of renewable generation assets – stated that the SRLUP provided a rigorous framework for CSG operations to co-exist alongside the region’s other primary land uses.
“The plan should provide the surrounding communities with confidence about how AGL will undertake its operations across the state and ensure the environment will be protected. AGL will continue to inform and engage our communities about our activities,” AGL Group general manager of upstream gas Mike Moraza said in a statement.
The company currently has two CSG projects in the exploration phase – the Hunter and Gloucester developments – in addition to its already-producing Camden project.
“Natural coal seam gas will play a vital role in meeting future energy demand and AGL’s operations will help ensure energy security for New South Wales families and businesses,” Mr Moraza said.
NSW currently imports about 95 per cent of its gas from Victoria, South Australia and Queensland, however, with contracts due to begin expiring from 2016, the state is at risk of a shortfall in meeting demands.
A report released in March by economic consultancy ACIL Tasman stated that in the absence of a growing CSG industry in NSW, the state may have difficulty obtaining gas supplies at an affordable price.
Mr Byers said that the potential to develop local coal reserves would not only create thousands of jobs but also contribute millions of dollars annually through royalty streams.
“Industry has effectively been stalled in NSW for the best part of two years. Our latest quarterly data shows employment positions in the NSW CSG industry increased by just 39 positions to 332 in the first half of this year and exploration has been brought to a standstill,” he said.
“That’s in stark contrast to Queensland, where 18,500 people are now working on CSG-to-LNG projects worth $50 billion. Almost 7000 jobs have been added to the Queensland gas sector in the first half of 2012.”
In a statement, NSW planning minister Brad Hazzard said that the previous Labor Government had failed to protect the state’s valuable agricultural land or deliver certainty for the resources industry.
“Since last year’s election, we have been working hard to strike the right balance to protect agricultural land, water and the environment, and believe this policy achieves that balance,” Mr Hazzard said.
He said that changes to the SRLUP had been made following an extensive period of consultation during which more than 2000 submissions were received and more than 1100 people attended public forums and information sessions.
The NSW Government had also introduced a ban on using BTEX (benzene, toluene, ethylbenzene and xylene) chemicals in drilling and hydraulic fracturing or ‘fraccing’: a regulation that Queensland passed in October 2010.
Key elements of the SRLUP include: land use plans addressing the Upper Hunter and New England North West regions; strengthening the regulation of exploration activities; establishing the role of a land and water commissioner;
and a state-wide aquifer interference policy.
More than 2 million hectares of strategic agricultural land has already been identified across the Upper Hunter and New England North West regions, with mapping of the Central West and Southern Highlands now under way.
Meanwhile, the implementation of a new ‘gateway process’ will require planned projects to pass through an independent, scientific and upfront assessment of the impacts of mining and CSG production proposals.
“Recognising that mining operations require investment certainty, the gateway process will focus on proposals which extend beyond the boundaries of an existing mining lease or where a new lease is required,” Mr Hazzard said.
“All mining proposals, whether subject to the gateway or not, will still go through a full merit assessment process – including community consultation – when they [mining companies] lodge a development application.”
Despite these measures, the NSW Government has come under fire from anti-CSG groups, with Stop CSG Illawarra labelling the SRLUP “a disaster”. Similarly, Lock the Gate Alliance stated that NSW Premier Barry O’Farrell’s Government had opened the floodgates to CSG mining with its plans to renew 22 exploration licences, “including many of the most controversial and hotly-contested titles in NSW”.
“Barry O’Farrell has let the Energy minister off the leash and in one fell swoop he has opened the door to coal seam gas drilling across vast areas which include some of our most iconic landscapes,” Lock the Gate Alliance president Drew Hutton said.
“This is a dark day for NSW and communities from all around the state have every right to feel they have been deceived by a government that promised the world and has delivered nothing.”
Mr Hutton said that “city and country people alike” had been treated with contempt, and that their concerns about the protection of land and water had been over-ruled with the renewal of drilling licences covering about 5 million
hectares of land.

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