By ROSS KELLY
SYDNEY -- Lawmakers in Australia's New South Wales
on Tuesday tightened restrictions on the production of
coal-seam gas, prompting an angry response from energy
companies planning a host of new projects in the state.
Coal-seam-gas drilling will be banned within 2 kilometers of
residential areas in Australia's most populous state, the
conservative Liberal government said, adding that bans would
also apply to land containing vineyards and horse studs.
The moves may constrain the activities of companies
including AGL Energy, which has significant coal-seam-gas
drilling projects planned in the state.
"The New South Wales government has listened to community
concerns about CSG," Premier Barry O'Farrell said in a
statement. "These new measures build on what are already the
toughest controls in the country."
The government's stance is in stark contrast to neighbouring
Queensland state, where companies including ConocoPhillips and
Total are spending more than $60 billion combined to liquefy
coal-seam gas for export to Asia.
The decision illustrates the difficulties facing companies
attempting to replicate the US boom in unconventional gas
production in other parts of the world.
US unconventional gas production has accelerated thanks to
the advent of "fracking technology" that allows access to
gas trapped in dense rock formations using high-powered bursts
of water, sand and chemicals. The product obtained through this
method is known as shale gas.
Some countries, including France and Bulgaria, have banned
fracking, while other EU nations have raised environmental bars high enough to
discourage the practice.
The extraction of coal-seam gas carries in particular the
risk of water contamination, as salt water mixed in with the
gas is sucked up to the surface from the rock in which it is
embedded. Some more experienced coal-seam-gas producers have
claimed their wells are safe because they're cased in concrete
to prevent leakage, while contaminated water is collected at
the surface and treated.
On Tuesday, the chief industry body representing Australia's
oil and gas producers said the New South Wales government's
bans "ignores science". It added that the planned export of
large quantities of coal-seam gas from neighbouring Queensland
would push up domestic energy prices.
"We are concerned that the decision today will have serious
ramifications for households and businesses given that New
South Wales imports 95% of its natural gas from interstate,"
said Rick Wilkinson, an official at the Australian Petroleum
Production & Exploration Association.
The company most likely to be affected by the rules, AGL
Energy, said it was seeking an "urgent meeting" with Premier
AGL has proposed three large coal-seam-gas developments in New
South Wales, including the expansion of its existing Camden project, located in a residential
area about 60 kilometers southwest of Sydney. The company last
week suspended the expansion, estimated to supply
580,000 households, as it attempted to address community
concerns over safety.
AGL also has a proposed project in the Hunter Valley that
has sparked widespread criticism from the area's established
wine and horse-breeding industries. Its third project, Gloucester, is located in a
more remote part of the state.
Santos owns coal-seam-gas properties in the Narrabri region,
in the north of the state. A spokesman for the company said it
was too early to say whether its development plans would be
"We need further details around the proposed measures, to
better understand the potential implications," he said.
Smaller developer Metgasco said the decision could have a
"significant impact" on its Northern Rivers coal-seam-gas
operations, while Dart Energy said the restrictions would put
thousands of jobs at risk and drive the industry out of the
Dow Jones Newswires