Todays SMH has a similar article. NSW Labor don't want to frack but want a gas reservation policy imposed on everyone else. Um yeah hello. I'll get moderated if I state my position on political geniuses in this country so lets just run with giddee up NSW, tie one hand behind your back and here we go, here we go, here we go. ;-)
NSW Opposition Leader Luke Foley says a Labor government in NSW would impose a statewide moratorium on coal seam gas activity. Photo: Joosep Martinson
Santos has been left stunned by a pledge by NSW Opposition Leader Luke Foley to ban coal seam gas from the Pilliga region if Labor wins government, a move that has undermined the whole future of its proposed $2 billion Narrabri project.
While a Labor win in the March 28 election is seen as unlikely, the pledge has removed bipartisan support for the Narrabri venture, without which Santos and its partners would be reluctant to commit the capital required to develop the controversial project, which could supply up to half of the state's gas needs.
"It is disappointing that the Labor party has decided to play politics with a very important product for the state long term," said James Baulderstone, Santos's vice-president, eastern Australia.
He accused NSW Labor of "putting out policies on the run" without thinking through the consequences. He said he expected "common sense to prevail" after the election and that the policy would be rethought. Business worried about shortages
But Mr Foley's statement has caused shock waves throughout business in NSW, whch is worried about potential shortages of gas for manufacturing, and more broadly about heightened sovereign risk which will deter investment. Mr Foley said a Labor government in NSW would also impose a statewide moratorium on CSG activity.
NSW Business Chamber chief executive Stephen Cartwright pointed to gas supply shortages that risked the closure of manufacturing businesses, prompting job losses in western Sydney and regional NSW.
"Labor has no plan to ensure that gas users can access the gas they need at competitive prices," Mr Cartwright said, pointing to "concerns about sovereign risk, affecting the overall investment climate in New South Wales".
A NSW Labor government would not cancel any exploration or assessment licences but would not permit exploration licences in the Pilliga forest to convert into production licences, Mr Foley said late on Thursday. Licences would not be renewed when they expire and no compensation would be offered.
Santos's Narrabri project has been repeatedly delayed by changing state regulations amid huge community concern about the impact of the industry on water and land resources. The company has already invested about $1.2 billion in its NSW CSG business, including the takeover of explorer Eastern Star Gas in 2011.
The Pilliga venture and AGL Energy's proposed Gloucester project, which has already secured state environmental approval, were the only two in the state to previously have broad political support across both main parties.
But the Labor stance has removed that.
"This is certainly not a positive development for Santos," said Canaccord energy analyst Johan Hedstrom. "I think it's going to be very hard to make much progress for Santos or anybody else in New South Wales for the next few years. When we get gas prices double what we are paying today, maybe there's going to be a different tune from the electorate."
AGL Energy said it would continue to work with the community and government "so we can secure gas safely to supply to our customers", and didn't comment on Labor's proposed moratorium.
Santos NSW manager Peter Mitchley noted that the NSW Chief Scientist, Mary O'Kane, had reviewed the CSG industry and concluded that the industry carried no more risk than any other extractive industry. He pointed out that the Narrabri project wouldn't affect water recharge in the Great Artesian Basin.
"We are finalising the environmental impact statement and I wish people would wait until they see the EIS and judge the project on that rather than jumping to conclusions before they even know what we are trying to do," Mr Mitchley said. Santos partners
The Labor stance is expected to make it even more difficult for Santos to find another partner for the Pilliga project. It has been in talks with potential investors that might take a 30 per cent stake in the venture, to reduce its own holding to about 50 per cent. Existing 20 per cent partner, EnergyAustralia, has already written down its stake in the venture by $248 million to zero, while Santos last month wrote its stake down by $808 million before tax.
"Partners at the moment globally are looking at investing their money where there is the least risk," Mr Baulderstone said.
"They will expect that Australia and Australian governments will continue to be sensible and continue to be pragmatic about the need to balance economic development with the environment. I am sure that once this election is over common sense will prevail and we'll have the normal type of discussions both with government and with partners."
NSW Labor's opposition to CSG was soundly criticised last week by former federal Labor resources minister Martin Ferguson, who said the party was not acting in the best long-term interests of the very people it was supposed to be serving.
But Australian Workers' Union national secretary Scott McDine said he didn't believe that getting more coal seam gas out of the ground in NSW would help solve the gas problem in the eastern states, and reiterated the AWU's call for a domestic gas reservation scheme.
"CSG is not going to solve the price issue," Mr Mc Dine said on Friday. "I am very keen on there being jobs, absolutely, but if people think that further gas extraction will lead to lower prices they are wrong."
Mr Foley said CSG posed "unacceptable" risks to underground water storages in the Pilliga, a claim rejected by Mr Baulderstone
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