Santos management is disappointed with the recommendations of a parliamentary inquiry into the development of coal seam gas in NSW.
The committee which compiled the report “Supply and cost of liquid fuels in NSW” consisted of representatives from the ALP, Liberal Party, Nationals, Shooters and Fishers Party and the Greens.
Robert Borsak of the Shooters and Fishers party chaired the committee, while Greens NSW Mining spokesperson Jeremy Buckingham was the deputy chair.
The inquiry heard evidence from stakeholders including mining, energy and manufacturing companies, as well as politicians and economists.
Submissions were also made by business and farming representatives.
The committee concluded that no further development of CSG projects should occur until all the Chief Scientist’s recommendations had been implemented in full.
“In the committee’s view, the report of the Chief Scientist is hardly a ringing endorsement of CSG or even a real claim it can be pursued safely and without harm to our precious water resources, environment and farming lands,” the report reads.
The recommendation has been applauded by anti-mining groups such as Lock The Gate Alliance, which is now calling on the NSW Premier Mike Baird to stop CSG developments in NSW.
“The Government must take these recommendations to heart and act now to put the Narrabri project on hold before any more damage is done,” said Lock the Gate National Coordinator, Phil Laird.
Santos’s Energy NSW Public Affairs Manager, Armon Hicks, told The Courier the Chief Scientist’s recommendations are in the process of being implemented.
“The government has been busily implementing many of the recommendations, you don’t need to stop development,” he said.
“The industry has changed considerably since the Chief Scientist started her investigations, the fly by night projects have fallen by the wayside, and it’s disappointing that the committee looked backwards not forwards.
“They didn’t think about the economy, the jobs, the households and the future.
“Those who made submissions to the report who actually use gas were in favour of a gas industry, CSR, the brickworks, but their input was ignored by the committee, and that was disappointing.”
Santos and the selective committee did agree on one point; that the development of a coal seam gas industry would not bring down the price of gas.
“We haven’t said that the price will come down, but that the price will be capped,” Mr Hicks said.
“Gas will be at a competitive price compared to the rest of the world, the days of cheap gas probably are finished.”
The committee’s second key recommendation was to implement an Australia-wide gas reservation policy to contain gas prices, arguing that “the development of the state’s CSG reserves will not, on its own, address the challenges facing the gas market in NSW.”
Santos argued that domestic gas reservation policies are unnecessary due to the limitations on exports imposed by infrastructure.
“Our capacity for export is actually already capped, if you want to export more than the capacity of the Gladstone LNG Plant then you’ll have to build another one, and that will cost several billion dollars,” Mr Hicks said.
“The total amount of gas that can be exported from the eastern Australian gas market is limited by infrastructure, and anything beyond that point has to be available domestically.”
He also pointed out that exporting gas was more expensive, adding about 3 to 4 dollars per gigajoule.
“It makes more sense to sell it into the domestic market, there’s never been any suggestion that the molecules would be exported, it’s about meeting the market in NSW.”
A number of inquiry participants argued that the New South Wales gas market would benefit from greater transparency.
The Minister for Energy and Resources, Anthony Roberts, expressed frustration regarding the tendency of gas companies to not be “overly forthcoming [with requested information], claiming commercial in confidence”.