JOHANNESBURG (miningweekly.com) – New South Wales Labor’s election promise to ban coal seam gas (CSG) in part of the state is putting “politics ahead of jobs and cleaner energy”, Australia’s oil and gas industry body said on Friday.

New South Wales opposition leader Luke Foley has pledged to “permanently ban CSG exploration and extraction across the North Coast”, should his party win the March 28 election in the state. “I believe CSG is just too much of a risk,” he stated.

The pledge will undermine the future of oil and gas major Santos’ proposed Narrabri project, in north-west New South Wales, which could produce 200 TJ/d of gas.

Slamming the “plagiarism” of so-called Greens policies, Australian Petroleum Production and Exploration Association (Appea) CEO Paul Fennelly said putting a stop to the Narrabri project would forgo the creation of 1 400 jobs in the state’s north-west, royalties, significant income for farmers and a chance to supply up to half of the state’s gas needs.

“It’s time for political leaders to focus on the looming threats to the New South Wales economy from a transitioning eastern Australian gas market. The ALP [Australian Labor Party] must recognise the fact New South Wales imports 95% of its gas from interstate without the need to do so.”

New South Wales consumes about one-quarter of the gas used in the eastern Australia gas market, yet supplies only about 1% of the gas production for that market.

Appea pointed out that the Narrabri natural gas project would site operations on about 1 000 ha – far less than 1% of the Pilliga – to supply up to 50% of the state’s gas needs.

The industry body stated that the project area was largely dry scrub land in the state forest outside the part of the Pilliga protected under the National Parks and Wildlife Act. The project area did not include strategic agricultural land. “In fact, the part of the Pilliga where the project is located was set aside by the New South Wales government for forestry and extractive industries following a thorough ecological assessment,” Fennelly said.

The NSW Business Chamber CEO Stephen Cartwright also criticised Labor’s stance on CSG, saying a blanket ban would add to uncertainty about when gas supply from current projects would be delivered and raised concerns about sovereign risk, affecting the overall investment climate in the state.

“With the eastern gas market now exporting to Asia, failure to address projected gas supply shortages will risk the closure of manufacturing businesses and see job losses in Western Sydney and regional New South Wales,” Cartwright warned.

“New South Wales could start to see limitations in gas availability as early as next year, and with regulation stating that gas will be ‘turned off’ for large industrial users before households and essential services, the manufacturing sector will carry the disruption in the event of a gas shortage.

“Luke Foley has claimed that the looming gas crisis is a ‘hoax’ because industrial users will reduce their demand due to high prices. However, this ignores the economic impact that comes with decreased demand, which is businesses downsizing or closing down and job losses in traditional manufacturing hubs, such as Western Sydney and regional New South Wales.

“It is critical that New South Wales moves quickly to address the projected gas supply shortages that will drive up gas prices and increase cost pressures on energy-using industries such as manufacturing through the safe development of the state’s own gas reserves.

Last year, the New South Wales chief scientist Mary O’Kane released a report that found that the industry’s technical challenges and risks could be safely managed and noted the high standards of engineering and professionalism in natural gas companies.

“This is a far cry from the alarmist and misinformed claims that have too often characterised debate about natural gas projects in New South Wales,” Fennelly commented.

Cartwright also pointed to the chief scientist report and said that the blueprint had made it “clear that with appropriate regulatory controls, a world-class CSG regime can be established in New South Wales”.

LICENCE BUYBACKS

Meanwhile, New South Wales Resources and Energy Minister Anthony Roberts on Friday announced a re-elected Baird government would extend the petroleum exploration licence (PEL) buyback scheme under the New South Wales Gas Plan.

The buyback scheme had so far seen 12 PELs cancelled, covering more than 2 941 081 ha.

“We inherited a mess from the former Labor government, with half the state covered in PELs or PEL applications with no protections in place for our water, agricultural land, communities and environment,” Roberts said.

“The buyback scheme has reduced the area covered by PELs to 11% of the state.”

A re-elected Baird government would keep the scheme open until June 30, 2015.