NSW reviews CSG activity

gloucester webA NSW Parliamentary inquiry into the supply and cost of gas has recommended that CSG exploration cease until the practice is made safer.

The Supply and cost of gas and liquid fuels in New South Wales report, released by an upper house select committee, stated that the inquiry’s recommendations should be fully implemented “before any expansion of the CSG industry in NSW is contemplated”.

“In the committee’s view, the report of the chief scientist and engineer is hardly a ringing endorsement of CSG or even a real claim that it can be pursued safely and without harm to our precious water resources, environment and farming lands,” the report said.

The committee also said CSG would not push down the state’s rising gas prices.

“With domestic gas prices linked to world prices, increased local supply will only lower domestic prices if it also lowers world prices,” the report said.

“The relatively small amount of additional supply that New South Wales could produce will not have a material impact on the world price and so it will not lower domestic prices.”

The committee called for a ban on CSG activity until the recommendations were put in place.

NSW Resources and Energy minister Anthony Roberts said the best way to ensure the state had a solid future for resources was to develop its own gas resources and, according to the report, indigenous gas resources were largely CSG.

NSW currently imports about 95 per cent of its gas; two projects in Gloucester and Narrabri would supply gas exclusively to NSW, which could see that number fall by 70 percentage points, according to Mr Roberts.

Major Australian energy company AGL Energy recently revealed it would review its CSG operations after a string of setbacks, including an environmental incident at a NSW site.

The company ceased operations at the Gloucester site indefinitely, following the discovery of toxic chemical BTEX in flowback water from two wells and an aboveground water tank.

The review will focus on the management structure and operational and management practices needed to ensure successful gas exploration.

AGL managing director and chief executive Andy Vesey said the company was preparing for a new phase in the development of its gas projects.

“The gas business has the potential to provide vital gas resources for our NSW customers and is set to contribute significantly to our balance sheet and deliver solid returns for our shareholders,” he said.

“It is important that we get the structure right.”

AGL has produced CSG in Camden for 12 years, which is the only CSG currently produced in NSW.