8 May 2012

NSW inquiry plugs CSG

Last week the NSW Upper House tabled its inquiry into the environmental, economic and social impacts of mining coal seam gas (CSG), highlighting that this pipeline of regulation for CSG will be a prevalent issue.

As with any future regulation law makers must consider the trade off between clearing the fog of uncertainty vis-à-vis stifling future energy supply.

The expansion of CSG is filtering down the east coast, as energy sources are no longer limited to desolate rural land.

While making 35 recommendations, the report resinates a level of uncertainty surrounding the potential impacts of the CSG industry.

The main recommendations include:

  • a moratorium on production licences but not on exploration as more data needs to be gathered to assess potential impacts;
  • a tightening of the Draft Code of Practice for CSG Exploration so that the suggested measures around water testing and monitoring are compulsory rather than optional;
  • a ban on open storage of produced water; 
  • continuation of the current ban on fraccing until more is known about the side effects of the controversial process;
  • development of a model to ensure that CSG companies are held responsible for covering the full costs of remediating any environmental impacts;
  • review of the Petroleum (Onshore) Act 1991 to rectify any imbalance between landholders and mining companies over land access;
  • amendments to  the Petroleum (Onshore) Act 1991 to require a licence holder to enter into an access agreement with a landholder for CSG production; and 
  • establishment of a position for a Petroleum Ombudsman.

It is not just gas supply that is at risk, the delay connected to any moratorium is in the fore front of CSG investors. Following the release of the report share prices of companies with NSW CSG exposure closed down.

Not only is CSG coming under increased scrutiny in NSW, in Victoria another shire has sought to ban the controversial practise.

Ultimately the recommendations are a step in the right direction, unfortunately the risk of closing the pipe on CSG remains.

For a full copy of the tabled inquiry click here.