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    New South Wales restricts gas exploration

Summary

Australia’s peak oil and gas body Appea said the decision effectively locks up most of NSW from gas development.

by: Shardul Sharma

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New South Wales restricts gas exploration

The government of New South Wales (NSW) on July 21 said it is restricting gas exploration in the state.

“The NSW government is significantly scaling back the area where gas exploration and production will be permitted in NSW, to provide certainty to local communities and regional industry,” the government said it is Future of Gas Statement.

This will result in a 77% reduction in the total area currently covered by petroleum exploration licences (PELs), it said. The government said that to support the development of the Narrabri gas project, it will renew a limited number of PELs, based on factors including resource potential and feedback from the community.

The government will also not release further areas for gas exploration in parts of Far West NSW near Wilcannia and Broken Hill that were recently assessed under the Strategic Release Framework.

Australia’s peak oil and gas body Appea said the decision effectively locks up most of NSW from gas development and “is a body blow for local consumers, thousands of jobs, the environment and businesses”.

Appea NSW director Ashley Wells said after nearly a decade of uncertainty on gas development, this decision to effectively limit future gas development to a single project – the Narrabri gas project – will mean NSW customers face higher gas prices for the long term.

“It is pretty simple; the cheapest gas is the gas closest to market. This shortsighted decision will mean higher gas prices in NSW are the norm, not the exception,” Wells said. “For the NSW government to effectively ban a proven, safe and highly regulated industry doesn’t make sense.”

Santos, which is developing the Narrabri gas project, said it is disappointed that the NSW government sought to extinguish further areas with no regard to the investment that has already been made.

The statement means that NSW customers will still have limited access to new gas supply sources, consigning the state’s businesses and manufacturers to reliance on higher-priced gas imports from other states or overseas, Santos said.

The Narrabri project got the state government approval in June last year and the federal government greenlight in November. It has been mired in controversy as many activists say it poses a risk to the local environment. Santos has always denied these claims.