The top association representing the Australian coalseam gas industry Tuesday slammed the recommendations of a report released by a parliamentary committee in the eastern state of New South Wales which it said would have dire consequences for households and industry relying on gas supplies at competitive prices.
The report on the environmental, economic and social impacts of coalseam gas production in New South Wales contains 35 recommendations for government action. It called for a moratorium on the issue of production licenses, but said exploration needed to be allowed to proceed.
"The report's final recommendation is that before issuing any further production approvals, the [New South Wales state] government should ensure that the deficiencies in the regulatory framework are addressed and a comprehensive, effective and transparent regulatory regime is put in place," Committee Chair Robert Brown said in a statement.
The Australian Petroleum Production & Exploration Association's chief operation officer in eastern Australia, Rick Wilkinson, said the report advocated constraining gas production at a time when New South Wales is set to face acute supply shortages.
"It aims to do little more than stifle the state's extraordinary opportunity to diversify energy supplies and revitalize rural and regional communities," Wilkinson said.
Wilkinson added that the report was "astonishingly" inconsistent. "It on one hand wants to constrain gas production, yet on the other argues for higher royalty payments from the very industry it is seeking to stall. They want to argue about how to divide a pie that they won't let anyone bake," he added.
One of the recommendations of the report is that coalseam gas companies should pay the full royalty rate to the state government from the first date of production. It also called for a domestic gas reservation policy in New South Wales, under which a proportion of the coalseam gas produced in the state would be reserved for domestic use, similar to the 15% reservation in place in Western Australia.
"A key theme throughout the report is the level of uncertainty surrounding the potential impacts of the coalseam gas industry," Brown said. "More data needs to be gathered to assess potential impacts, and in order to do this, we need to allow the exploration phase to proceed. While exploration and drilling are of great concern to many community members, they are unavoidable if we are to assess whether it is safe for the industry to proceed to production."
The report's recommendations also included calls for the government's current ban on fracture stimulation of wells to remain in place until the National Industrial Chemicals Notification and Assessment Scheme has assessed fracking chemicals for their intended use and toxicity according to international standards; and the strengthening of landholder rights, including compensation payments of A$5,000 ($5,232) per well per annum.
Local exploration and production company Santos has earmarked A$500 million for exploration of coalseam gas in New South Wales' Gunnedah Basin over the next few years. Santos is looking mainly at domestic markets for the gas but has not ruled out LNG export options.
Local utility AGL also has small coalseam gas operations close to the state capital Sydney.
