Northern Rivers Likely To Be ‘Gas Field Free’ By Christmas


While the community is vowing to continue its fight for legislative protection, it’s likely that there will be no petroleum exploration licenses covering the Northern Rivers by the end of this year. Thom Mitchell reports.

The Northern Rivers of New South Wales will be ‘gasfield free’ by Christmas if Metgasco shareholders vote to accept a government offer to buy back the coal seam gas company’s controversial exploration licenses across the region at a price of $25 million.

The company was driven out of the Northern Rivers last year when thousands of locals blockaded a test well at Bentley, near Casino. After considering sending 800 police to enforce Metgasco’s right to drill, the government instead suspended its licence claiming there had been inadequate community consultation.

That decision was ruled unlawful by the Supreme Court, and the company has since pursued further legal action in an attempt to secure compensation for lost earnings.

Under the terms of the deal the government has now offered, the company will put its legal action on hold until shareholders vote on whether to accept the buy-back proposal.

Metgasco holds three petroleum exploration licenses across the Northern Rivers, and the state has offered to buy them back for $25 million. The government had attempted to regain the licenses as part of a broader ‘buy-back’ scheme, but if the company had accepted the terms of that statewide offer it would have been paid just $637,500.

According to a statement released by the New South Wales Department of Industry Resources and Energy, “Metgasco has advised that it has invested approximately $140 million in drilling wells and undertaking seismic work over the last 17 years”.

The company had been attempting to recommence test drilling at the gas well near Bentley which was blockaded last year, and had requested police backing in anticipation of further blockade actions.

It was also preparing to carry out seismic testing at a separate site, but the Lismore City Council had announced its intention to stonewall the company by preventing it doing so on council-owned roads.

Now, the Metgasco board has unanimously endorsed the government’s offer, and shareholders will be asked to vote on the proposal most likely before Christmas.

The Chairman of Metgasco, Len Gill said that “this has been a difficult decision for the Board [but] the company needs to look forward and consider the different alternatives available”.

“While the identified gas resources could have a significant value if developed in an efficient and timely manner, the Board has to consider the risks associated with ongoing project approval delays, higher costs and difficulties funding activities over the next few years,” Gill said.

“Similarly, the court action to seek damages from the unlawful drilling suspension could yield significant compensation. However, it is necessary to take into account that the court case could take some years to resolve and that even if the company is successful, the damages awarded might be much lower than we seek.

“On balance, we believe that it is better to accept the settlement and to move forward.”

Under the terms of the agreement, the government will also return around $400,000 which it currently holds in securities and other fees. A further $240,000 would be reimbursed to Metgasco if it can prove it has safely decommissioned its remaining two gas wells in the area.

A spokesperson for Gasfield Free Northern Rivers, the community group which has been fighting Metgasco’s plan to roll out coal seam gas in the area, said “this is a day that people around our region have worked for and wanted for over three years”.

“We’re over the moon that the government and the company have finally seen the light and decided that the community’s rejection of unconventional gas could not be overcome,” the group’s regional coordinator, Elly Bird said.

But she pointed to the community’s demand that the Northern Rives be protected from future gas developments by legislation, as The Greens and Labor have agreed to do.

“There’s nothing to stop the government granting new licences to explore for gas in our region, and until there is protection in law for a gasfield free Northern Rivers, we will continue to work together to achieve that,” Bird said.


Thom Mitchell is New Matilda's Environment Reporter.