By Peter Hannam
31 July 2018 — 5:08
The Berejiklian government has granted Santos an extension of royalty-free gas for a power station fed by its controversial Pilliga coal seam gasfield, a move that went against their own department's advice and could cost the state's coffers millions of dollars.
The company's Wilga Park power station has recently been granted a further 1000 days free of royalties for gas supplied from its Tintsfield and Dewhurst wells near Narrabri.
A Santos operator looks on at the company's Wilga Park power station near Narrabri in northern NSW.
Photo: Bloomberg
The Planning Department said gas extracted during exploration did not attract royalties. The NSW legislation also allows exemptions for the use of gas in power plants rather than being vented or flared.
"This is to ensure sustainable use of resources during exploration only," a department spokesman said. "The regulation recognises that it is in the broader public interested to allow gas that would otherwise be 'wasted' to be used for other beneficial purposes, such as electricity generation."
However, the Greens energy spokesman, Jeremy Buckingham, said it was an "outrageous fiction" that the gas was being sourced from genuine gas exploration.
"Santos have been operating these wells for up to eight years," Mr Buckingham said, adding the royalty exemption could balloon in size.
"They have submitted a detailed application for a commercial 850-well gasfield, and they have dodged the key question about how much more gas will be sent to the power station than would otherwise have been flared," he said.
In 2009 and 2013, when the Tintsfield and Dewhurst wells gained approval, the company had only sought the nod for operations lasting between one and three years.
Santos had since enjoyed "a long-running loophole" that allowed the company to avoid $3.68 million in royalites on the 4,250,938 gigajoules of gas supplied to Wilga Park in the four years to last month, the Greens said.
Not to be 'open-ended'
The extended nature of the exemptions for Wilga Park come despite concerns
raised in 2014 by the Planning Department itself, after the issue was raised by the Wilderness Society.
“The department is concerned to ensure that the resource appraisal period for carriage of gas from [Production Assessment Lease] 2 and its use at Wilga Park is not open-ended," it said.
"It considers that a reasonable time period should be included in the modified approval to provide an upper limit for the use of gas gathered from wells within the PAL, before a modified approval for ‘petroleum production’ and a consequent PPL, is required for continued use.”
It then said:
“Santos considered that an appropriate period for future resource appraisal was three years, from the date of any modification approval.”
“This whole process stinks," Mr Buckingham said. "It is coal seam gas production by stealth and a multimillion-dollar taxpayer subsidy to Santos."
'Environment sense'
A spokeswoman for Santos said: "It makes environmental sense for the gas to be used to generate power reducing waste and emissions.
"Royalties are payable on the gas from the appraisal wells in accordance with the NSW royalty regime which, in the usual way, allows deductibility of certain capital and operating expenditure from revenues.''
Georgina Woods, a spokeswoman for the Lock The Gate Alliance, said the company's push to expand its access to royalty-free CSG in the Pilliga "shows the company doesn’t take environmental transparency or public accountability seriously".
"It's disappointing to see the government rubber-stamping this without querying Santos' claim that it will be environmentally beneficial," Ms Woods said.
“How much gas is Santos intending to produce this way? Does having this loophole actually encourage the company to bring up more gas than it might otherwise?"
So looks like gas is being produced in the Piliga, any harm done ? any damage done? NO!!! so whats the bloody hold up with APPROVAL???
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