PERTH (miningweekly.com) – The New South Wales government on Thursday announced plans to pause, reset and restart gas exploration in the state, implementing a strategic framework to deliver a well-regulated coal seam gas (CSG) industry.

Resources and Energy Minister Anthony Roberts noted that the freeze on assessing new exploration applications would remain in place until the new framework was established, and legislation would extinguish the 16 previous applications.

In addition, the entire system for petroleum exploration licences would be reset, with the New South Wales government now deciding which areas would be released for exploration, and to whom.

Roberts noted that the government would adopt all of the recommendations made in a recent report by the chief scientist and engineer Mary O’Kane, which include designating areas for CSG extraction, ensuring high standards of engineering and professionalism in CSG companies, creating a state environment data repository, comprehensive monitoring of CSG operations with ongoing scrutiny of collected data, a well-trained and certified workforce and applying new technologies as measures to corral the CSG industry.

Roberts said by adopting all of the recommendations, the New South Wales government was listening to the concerns of the community, industry and independent experts in the field.

“The final report concluded that, in general, the risks of gas development can be effectively managed with the right regulation, engineering solutions and ongoing management. The New South Wales government’s gas plan spells out how we will deliver best practice regulation while increasing gas supplies and putting downward pressure on gas prices for the state’s households and businesses.”

Meanwhile, the Environmental Protection Authority had been assigned as the lead agency for CSG, and would take over all environmental compliance and enforcement.

“We will commission an independent review of royalties to ensure we have the right settings to develop a competitive gas industry in the state to meet our supply needs,” Roberts said.

The Australian oil and gas industry has welcomed the state government’s announcement, with the Australian Petroleum Production & Exploration Association (Appea) saying that the policy change recognised that the state was facing an avoidable energy security problem and that policy must change to encourage supply.

Appea noted that while the government’s firm commitment to the further development of indigenous gas resources contained several measures aimed at addressing looming supply problems, this was the third plan in three years.

“The industry is concerned that unnecessary restrictions and red tape placed on producers and explorers will continue to impede resource development and hamper further investment,” the industry body said.

Appea has called on the government to further clarify the new policy stance, saying that current plans appeared to shut down opportunities for new investment in the state and did not allow for new exploration.  Furthermore, there were suggestions that gas production would be reserved for use in New South Wales, a move that was at odds with the fact that the state has relied on the willingness of other states to supply gas into New South Wales for many decades. 

The industry body has also requested clarity on benchmark farmer compensation agreements, saying they must not reduce the scope for flexible negotiation between the parties, as well as the extension of exclusion zones, which Appea said was a clear case of arbitrary and politically driven regulation.

“Additional legislated costs to investors – whether related to compensation agreements, community contributions or compliance – must be balanced with the need to ensure costs are not so high as to jeopardise development.”

Meanwhile, Australian Pipeline Industry Association (Apia) CEO Cheryl Cartwright said that while the new plan was welcome, investors needed firm timelines and a reversal of the current negative sentiment towards new investment in gas exploration, development and production in New South Wales.

Cartwright also warned against any moves to reserve gas for that state.

“Reserving gas for any particular state does not solve supply issues. Australia has abundant supplies of gas so it makes sense to encourage more gas development and increase the number of gas suppliers in the market. The Apia would also welcome policies that encourage increased competition through greater participation in gas supply.”