Energy company Santos believes it will win community support for coal seam gas in NSW with a plan to supply a quarter of the state’s gas needs from new wells in the remote Pilliga state forest.
Santos vice president for eastern Australia James Baulderstone says his company wants to bring on a substantial amount of gas from its holdings in northern NSW by 2016-17, but would only do so with the support of landholders.
NSW Energy Minister Chris Hartcher has expressed support for the proposal, just two months after the NSW government threw the CSG industry into disarray with new regulations banning gas mining within two kilometres of residential areas and in key horse stud and vineyard regions.
With NSW facing a potential gas shortfall from 2016 as interstate supply contracts end and large gas export plants come on line in Queensland, this is the first time Santos has said it will use NSW gas reserves to supply local demand.
Mr Baulderstone said the limited development would be used to win community support for CSG.
“Our message here is we will go in an area as isolated as possible, not because we are running away but we will prove ourselves there first,” he told AAP.
CSG projects on the state’s north coast and on Sydney’s outskirts have been abandoned, either due to community opposition or in response to the new state government regulations.
The NSW government introduced the new rules in response to growing community concern over CSG impacts on farmland and groundwater.
CSG industry leaders have criticised the rules as having no scientific basis and being introduced because of pressure from “shock jock” radio announcers and anti-mining groups.
Mr Baulderstone, who announced his proposal at the Australian Domestic Gas Outlook conference in Sydney, said Santos was deliberately limiting its investment and the proposal was only a partial solution for NSW supply.
“We will not be forcing our way into places where we are not welcomed,” he said.
“We are trying to have as little impact as possible.”
Mr Hartcher told AAP the Santos proposal was not unexpected but had not yet been formally presented to the government.
“We were hopeful of it and we welcome it,” he said.
Mr Baulderstone said Santos had initial exploration approvals but still had to satisfy state and federal regulations, and an independent review of CSG industry impacts.
Under the proposal, gas extracted in the Pilliga forest would be sent into NSW markets via a new pipeline connected into the existing Moomba Sydney pipeline, which runs from South Australia to Sydney.
Mr Baulderstone said the gas would be priced in the same $6-$9 a petajoule range as charged for gas from the Cooper Basin in South Australia.
Santos acquired the Pilliga Forest gas reserves from Eastern Star Gas in 2011 and has since had to carry out extensive remediation of drill sites after numerous environmental condition breaches by the previous operator were revealed.
