Santos Delays Narrabri Coal Seam Gas Project

Embattled coal seam gas company Santos has pushed back the development of their controversial Narrabri Gas Project, planned for the Pilliga woodland near Narrabri in north-western NSW.

The project had been fast-tracked by the state government, which signed a Memorandum of Understanding (MOU) with Santos to streamline the approvals process in February last year.

The development, which at a proposed 850 gas wells would be the largest in NSW, had been declared a ‘Strategic Energy Project’ which the government said was necessary to ensure domestic gas supply.

But the date set out for a final decision in the MOU – January last week, 2015 – passed on Friday with Santos not having lodged its Environmental Impact Statement, which, under the terms of the MOU, was supposed to be submitted in June last year.

A spokesperson for the company told New Matilda that Santos was close to finalising its Environmental Impact Statement, and that “at this stage start-up of production looks more likely towards the end of the decade”.

“Santos has to be sensible about how much money it continues to invest until the NSW regulatory regime is finalized. We have a better understanding of projected gas prices, and the support of potential investors in the project,” the spokesperson said.

On Thursday Fairfax reported that the company was seeking to sell down a 30 per cent stake of its $2 billion Narrabri Gas Project.

James Baulderstone, Santos’ vice-president, reportedly told the Sydney Morning Herald that the firm was “in active conversations with a number of parties” over potential sales.

Santos, which currently owns an 80 per cent stake in the development, has floundered over recent months, suffering a 40 per cent dive in its share price over a three-month period as plunging oil prices punish gas producers too.

Tightening regulations for the coal seam gas industry and stiff opposition from farmers and environmentalists have also contributed to the project’s lengthening production schedule.

While market forces have been the key driver of Santos’ spectacular fall to the unenviable position of the worst performing stock in the ASX 100, Greens MP Jeremy Buckingham has said the expiry of the MOU on Friday showed community opposition was winning in the battle against CSG.

“The Greens, farmers and the community have won the campaign against coal seam gas,” Mr Buckingham declared.

“The community are informed and dead set against fracking, and the industry has either packed up and left NSW, or their projects are at standstill,” he said.

Mr Buckingham said Santos’ Narrabri Gas Project “appears dead”.

“The MOU has expired, Santos have slashed their capital expenditure by hundreds of millions, and the project is on hold as they desperately try to sell down their stake,” Mr Buckingham said.

According to Mr Buckingham Santos’ slow-down on the Narrabri Gas Project is part of a wider trend in NSW.

“When the Coalition took office in March 2011, coal seam gas was set to roll out in the suburbs of Sydney and Sydney’s drinking water catchment, across the Hunter Valley, at Gloucester, throughout the Liverpool Plains and up to Moree, as well as in the Northern Rivers, Mid-North Coast, Newcastle, and Southern Highlands.

“After four years campaigning the industry is now banned in urban areas, has been crushed by strident community opposition in the Northern Rivers, and even the giant Narrabri project has fallen over,” Mr Buckingham said.

Sally Hunter, the President of local opposition group People for the Plains, is less optimistic about the chances of Santos abandoning the project.

“I find it hard to believe that they’re going to walk away from this,” she said.

“I’m sure they would keep some kind of presence going. There’s infrastructure that needs to be maintained and kept going, and they’ll always be trying to develop or sell it,” Ms Hunter said.

She told New Matilda that locals and environmentalists opposed the project because of the risk of contamination of the Great Artesian Basin – for which the Pilliga woodland is an important recharge zone.

“Generally speaking, the risks outweigh the benefits; getting firm commitments on the true benefits of the project is very difficult, and there seems to be a lot of risks,” Ms Hunter said.

“That includes risks to our quality of life, agriculture, and to the science community through light pollution at Siding Springs Observatory (located nearby at Coonabarabran).”

“I’ve seen the industrialisation and what’s going on in Queensland – I don’t want to live in an industrial estate,” Ms Hunter said.

Ms Hunter also said that “there hasn’t been a firm commitment to deliver [a proportion of gas supply]to the state”, which was the stated purpose of the MOU.

“I think we should be standing firm on a commitment for it to go to the state and remain at a price that’s not on parity with the world price if we have to have it,” Ms Hunter said.

According to Ms Hunter Opponents of the project are frustrated that there didn’t seem to be any consequences for Santos missing the key deadlines set out in the MOU.

“I think the MOU is not really worth much one way or the other,” she said, adding that Santos had told her that the EIS would be submitted in June this year – a full 12 months after the original deadline.

A spokesperson for the department of planning told New Matilda that “the Memorandum of Understanding does not set deadlines, but rather identifies target timeframes”.

This latest extension of timeframes is welcomed by Ms Hunter, who said it is “good news for us locally because it gives us time to catch up and the community to look into this project and to look into the risks.”