Cancel the CSG licence over metropolitan Sydney

Friday, August 22, 2014

Stop CSG Sydney has launched a campaign to extinguish the coal seam gas (CSG) exploration licence (PEL 463) covering most of metropolitan Sydney, home to about 4 million people.

The group formed in 2011 when residents discovered that Arrow Energy was about to drill at a waste site in the inner-west suburb of St Peters.

After more than two years of community campaigning, including mass petitions, marches and film screenings, the CSG company now known as Dart Energy claimed that it had never intended to drill at St Peters.

In the case of PEL 463, no one believes that drilling will be allowed in most of the area covered by this licence. But it could occur on Sydney’s fringe, which is still covered by this PEL.

PEL 463 extends over 2400 square kilometres from Gosford in the north to Blacktown in the west and Sutherland in the south. It was issued by the ALP state government in 2008 and subsequently renewed. The licence is up for renewal again in March next year.

Research by Stop CSG Sydney has found that over the past year Dart has written off the value of its assets by $93.5 million. This devaluation is, in large part, due to the build-up of community pressure against CSG over the past two years which forced the government's hand.

New, although still inadequate, CSG regulations have led to some gas companies deciding to “suspend” operations — while hoping and waiting for, as Dart put it in its annual report, “the political and regulatory environment to change”.

After the NSW government's regulation on CSG urban “exclusion” zones in February last year, Dart's Australian exploration and evaluation assets recorded a loss of $73.2 million.

From a peak of more than $1.10 in 2010, Dart's share price fell to just 4 cents by June last year. Around the same time, Dart reported to the ASX a pre-tax loss of $136 million.

Dart began to look for a way out.

In March, Dart announced it was going to list on the London Stock Exchange — while also stating it wanted to divest all of its non-Britain exploration assets.

By May, it had become clear that Dart was being bought by IGas Energy, one of Britain’s largest oil and gas companies, soon to become the country's largest unconventional gas company.

The intention behind the IGas-Dart merger is to salvage the 24 profitable Britain-based assets of the otherwise struggling company, and to take advantage of the rapid expansion of Britain's unconventional gas industry.

When Stop CSG Sydney heard of this merger, it decided to launch a campaign to get the NSW government to extinguish PEL 463.

Stop CSG Sydney’s Sandra Thompson told Green Left Weekly: “We want Minister [for Resources and Energy Anthony] Roberts to cancel the licence so that it cannot be sold on — either to IGas or anyone else.

“The licence was issued without consultation, and we know that Arrow/Dart has already breached at least one of the licence conditions to do a test drill.

“The NSW government has an opportunity to align the status of the licence with its current policy on CSG exclusion zones — namely that CSG drilling is now prohibited two kilometres from residential areas.”

Stop CSG Sydney sent a letter to the minister for resources and energy on July 16 outlining its concerns and asking him for a meeting.

The group is concerned that IGas will try to sell PEL 463 to another gas company as soon as it can.

A May 9 announcement to shareholders said IGas wants to divest of all non-British assets “with a view to maximising cash return and enabling all resources and opportunities to be applied to the UK unconventional gas opportunity”.

AGL — which has just been issued a licence to drill in Gloucester in north-west NSW — also has several licences in Camden, one of which borders PEL 463. It has been drilling there since 2001.

AGL suspended operations in its “northern expansion” project in Camden in February last year, in large part due to public opposition, but remains hopeful that this is temporary.

For its part, IGas’s quest to divest itself of all non-British assets could feasibly lead to it striking a deal with AGL to take PEL 463 off its hands.

Stop CSG Sydney knows that while there is very little chance a gas company could, or would, get away with trying to test drill in the centre of Sydney, it may well try in a semi-rural or light industrial setting on the outer fringe of this expansive PEL.

Adrienne Shilling, another activist from Stop CSG Sydney, said: “This uncertainty is worrying communities across Sydney, and it’s another reason we want the licence completely extinguished.

“We know the minister can cancel the licence for good under the Petroleum (Onshore) Act 1991. This is the only responsible decision to make. No one wants fracking near their homes or in our water catchments.”

Stop CSG Sydney is yet to hear back from Roberts – more than a month after the letter was sent.

[Stop CSG Sydney is organising a Cancel the Licence protest at the corner of Campbell and Euston roada, St Peters, on Monday September 1 at 9am, to coincide with the Dart AGM in Brisbane. Pip Hinman is an activist in Stop CSG Sydney.]

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