A six month moratorium on new CSG exploration in NSW has been extended.
The announcement comes only days after the Federal Government releases its new Energy Whitepaper, which discusses the need to increase NSW gas production ahead of a looming gas shortage.
In the whitepaper existing restrictions on onshore gas drilling in NSW and Victoria.
The states were “creating potential near-term supply shortages on the east coast, and also increasing prices,” the green paper claimed.
“We welcome initiatives outlined in the Paper to increase gas production and reform gas markets so that they are more productive, competitive and transparent, said Innes Willox from the Australian Industry Group.
The problem is particularly severe in NSW, which produces only five per cent of the gas it uses.
This new exploration moratorium on coal seam gas has been slammed by the Australian Petroleum Production & Exploration Association (APPEA).
“The oil and gas industry finds extraordinary both the timing and the content of reports that the NSW Government plans to extend its freeze on natural gas exploration,” it said in a statement.
“It also appears the announcement is set to be made just days ahead of the NSW Chief Scientist’s report into the science of gas development in NSW – sending a message to industry and third parties that such policy announcements are made independent of scientific consideration.
“New production depends upon successful exploration activity. And without new exploration and production in NSW, it will be very difficult to put downward pressure on NSW gas prices”
The ban come as more time is needed to examine the application process for CSG tenements NSW resources and energy minister Anthony Roberts is reported as saying, according to The Land.
Roberts called the previous NSW state government approval of CSG exploration “careless and clumsy”, and since bringing in the ban has refused 10 exploration applications, and at one point suspending Metgasco’s drilling permit and referring the company to ICAC.
At the time Roberts slammed the industry, stating that it was "too easy for speculators and cowboys to be granted”.
However since that initial suspension Metgasco has taken legal action against Roberts, claiming his suspension over its tenements was unlawful.
Metgasco said the decision was not authorised by legislation, and was made without affording it procedural fairness.
It said it was also looking into whether it could sue the government for damages and financial losses sustained as a result of the suspension, expected to amount to $3 million.
According to the company, the review carried out by the OCSG "provided no justifiable basis for its claim that community consultation was inadequate or that Metgasco had failed to honour its approval obligations".
Roberts also came under fire.
The new ban will run for 12 months after which it will be re-examined.
Existing exploration approvals, which include those awarded to Santos and AGL, have not been affected by the ban.