According to a recent article in the Daily Telegraph “THE pressure on the government to unlock the state’s coal seam gas reserves has intensified after a new report revealed the industry could deliver 16,000 jobs by 2035 and drive down the wholesale gas price by up to 12 per cent.”
The Telegraph’s article is based on a report by the Australian business analyst group ACIL Allen, a company that has a track record of producing industry sponsored reports that conclude that the Coal Seam Gas industry needs to be given a clear road ahead to just get on with saving the NSW state economy.
In 2011 ACIL Allen published a report in conjunction with Santos that projected 2900 new full time jobs and over $15B added to the NSW State’s bottom line.
In 2013 ACIL Allen published another report, this time for APPEA (Australian Petroleum Production and Exploration Association) which also concluded that NSW residents would see jobs and cash aplenty, if only all those pesky regulations holding back Coal Seam Gas drilling were removed.
This time round it is AGL, and again the conclusion is that – silly us – we just don’t understand what is good for us and we all ought to get out of AGL’s and indeed the entire CSG Industry’s way and allow them to drill everywhere. The only problem that ACIL Allen finds is that the populist NSW Government has reduced the opportunities for the CSG Industry by unnecessarily imposing things like 2km buffer zones around residential areas.
The pressure is not on the government to unlock the state’s coal seam gas fields, it is really on companies like AGL and Santos to take into consideration the collective will of the communities they target, from Gloucester to the NSW Northern Rivers, and through the Mountain Districts.
ACIL Allen’s executive staff have decades of Gas/Petro company experience. Whilst they are no doubt following a rigid analytical and reporting protocol in the formulation of their reports it is clear that they give only lip service at best to the concerns residents have over CSG’s impact to the environment. On Page 4 of the current report they say this in a footnote: “Analysis of any non-market impacts (such as the loss of biodiversity, changes in air quality, social justice implications, etc.) may also be relevant in assessing the full implications of a project or policy.”
Well…that’s that covered off then…
It’s important to keep sight of what it is we are all trying to protect. So here are some reminders:
Last Sunday a few of the Gasfield Free Mountain Districts Committee took part at the Mangrove Mountain Markets. Those of us there had a great time under sunny skies and really enjoyed the opportunity to engage with interested folk who came up to both find out what was going on as well as give words of thoughtful support.
Last time we were at the markets so many folk wanted to sign a petition or similar that we decided it would be good idea to have a “message tree” that can be a place for folk to hang their words, whilst our volunteers work throughout the community conducting the formal survey. As a result our committee member Poppe got creative and built us a Message Tree out of a couple of Gymea Lillies, which is a great symbol of our local area and indeed one that our parent community group the MDA has chosen to symbolise the Mountain Districts.
Check out the full gallery of Sunday’s messages here:
July 23, 2014 12:00AM
Graham Lloyd Environment Editor Sydney
INCREASED risk has slashed $600 million from the value of Santos’s Narrabri coal-seam gas project in the Pilliga state forest.
A report by financial services group Credit Suisse has found community opposition, uncertain science and unpredictable government regulation have eroded almost two-thirds of the value from the $950m Santos paid junior explorer Eastern Star for the project in 2011. The wealth destruction highlights the huge prices paid to junior explorers by big companies in the early days of Australia’s CSG expansion.
Heavy landowner protests and technical and environmental problems already have weakened the profitability of existing projects and cast a cloud over major investments such as Arrow Energy’s fourth liquefied natural gas export train at Gladstone in Queensland. The suspension of approvals for junior company Metgasco to drill for gas near Lismore in NSW has highlighted the regulatory risk starting to flow through to the valuations of unconventional gas projects.
The report highlights the sensitivity of financial markets to rising risks. Santos’s Pilliga project has been dogged by leaking ponds and ground contamination but is considered the frontline in efforts to secure NSW natural gas supplies as existing production is redirected to exports.
After meeting farm groups and other landholders and visiting the Pilliga site, Credit Suisse says fear and mistrust towards Santos and coal-seam gas in general were widespread. The analyst report says Credit Suisse did not seek to verify the validity of the concerns but “assess the risks to the Narrabri Gas Project due to the complex environmental and social issues”.
Uncertainty over effects on water was the key issue driving opposition, the report says.
Landowner resistance did not pose a direct risk to the project as government approvals were in place but “mass opposition is the key risk in the near term’’.
Protest groups such as the Wilderness Society and Lock the Gate have combined with grassroots organisations to campaign against the project. Credit Suisse says opposition to projects can pose risks to timelines, budgets, regulatory oversight, diversion of management attention, and even project abandonment, regardless of the validity of concerns from economic, scientific, political or broader sustainability perspectives.
A Wilderness Society spokesman said farmers and the northwest NSW community were justifiably concerned about the effects of CSG on groundwater.
Santos has entered a heads of agreement with the NSW government for a decision to be made on whether the project can go ahead early next year. But the company missed a June 30 deadline to lodge an environmental report as outlined in the memorandum of understanding with the state. The NSW Planning Assessment Commission has approved nine exploration wells but Santos has to wait six months to complete water modelling before it can drill.
A Santos spokesman said last night: “We are experiencing strong levels of community support in the areas in which we currently operate in the Narrabri region. Ultimately gas projects seeking to operate in NSW will develop increased levels of understanding and support over time, and this is our direct experience in Queensland where we have many hundreds of landowner agreements and communities reaping the rewards of our operations.”
Watch out for us at the Mangrove Mountain Markets this coming Sunday (27th July). CSG Committee members will be there to chat with the community all throughout the day. Stop by, say hello, get your questions answered and show your support for our efforts to keep our communities Gas Field Free.
The report, titled Cooking up a price rise finds that the Coal Seam Gas industry is attempting to paint the blame for gas price increases on green and community groups and our collective efforts to prevent coal seam gas mining taking place across our lands when in fact price increases are a direct result of the mining industry’s expansion and push for exportation of gas for sale in overseas markets.
In the report The Australia Institute says “These (gas) price rises are not driven by a lack of supply but rather by an increase in demand. Once the eastern Australian gas market is connected to the world gas market, domestic gas producers will be able to sell at the world netback price – also known as the export parity price – which is substantially higher than current gas prices.
This link will occur with the completion of the Gladstone liquefied natural gas (LNG) facilities. Gas prices will then rise and gas production will become far more profitable. Because of this it is understandable that gas companies are keen to expand production.
Wholesale gas prices will go up from around $3 to $4 per gigajoule to the world netback price of $9 per gigajoule. This is because Australian gas producers will have the option to sell to the Japanese who are willing to pay $15 per gigajoule. This doubling or tripling of wholesale gas prices is going to increase consumers’ gas bills dramatically.
Ironically it is not a lack of supply that is going to drive up gas prices but, rather, the introduction of CSG as a new form of supply. Without this additional supply it is unlikely that gas production would have been large enough in the eastern market to justify the construction of LNG facilities.
This higher price has made the gas industry eager to increase its supply; gas is about to become far more profitable. In particular it has been attempting to expand coal seam gas (CSG) exploration. Public concern about extracting CSG has meant that, in New South Wales, further restrictions have been placed upon the location of CSG wells. This has upset the gas industry, but its claims that restrictions on CSG production are the cause of price increases are not correct. Increases or decreases in domestic gas supply will have almost no impact on the price of gas. Once the eastern Australian gas market is linked with the world market, domestic gas prices will be subject to movements in the world price and domestic production will have little influence on price.
With gas becoming far more profitable, it is not surprising that gas producers are keen to expand their supply. Their strategy of blaming CSG restrictions for coming price rises is designed to turn public support against those restrictions and increase pressure on the New South Wales state government to remove them. But these claims are little more than posturing and bear no resemblance to what is actually happening in the market.
If business or government are serious about attempting to prevent or substantially reduce the rise in gas prices there are few options available to them. A gas reserve policy similar to the one in Western Australia could work. There would be implementation problems due to the fact that the eastern gas market is made up of five states and one territory that would all have to agree. The Commonwealth government could also introduce restrictions on the export of gas.
Without large scale government intervention, gas prices are going to rise substantially in the next couple of years, and increases or decreases in domestic supply are going to have almost no impact on the price rise.”
The Australia Institute is an independent public policy think tank based in Canberra. It is funded by donations from philanthropic trusts and individuals, memberships and commissioned research. Since its launch in 1994, the Institute has carried out highly influential research on a broad range of economic, social and environmental issues.
As an update to this mention of several of the CSG Committee’s members showing their support to the protests being staged outside the gates of ROCLA; specifically over the proposed changes to the Kulnura Mangrove Mountain Ground Water Sharing Plan, we have been able to source a good summary of what the changes entail and what they mean to the local community. A big shout out to to Ian Sutton, who has been spearheading the protests over the expansion to the ROCLA sand mine, for taking the time to help us understand the water allocation changes.
As previously mentioned, the CSG Subcommittee of the MDA is laser focused on the issue of Coal Seam Gas mining across the Mountain Districts. We do however share with other active community groups a concern over the health and state of the aquifers the current farming and environment across the districts rely upon. Hence we are very proud to have stood with Ian and many others from the community and from groups including Our Land Our Water Our Future, Camp Quoll, and The Greens.
We all recognise that the proposed, draft water allocation rules are a green light to extractive industries (including the CSG industry) to accelerate their destruction of our land and livelihoods. It is important therefore to understand the threat to the aquifers that CSG mining poses in context of the bigger picture.
Over to Ian Sutton:
There are two significant changes being proposed for the Kulnura Mangrove Mountain Ground Water Sharing Plan (KMMGWSP). The first is the removal of the current 8 management zones and amalgamate them into 1 ground water source. As well there will be the removal of the maximum water take limit of 200Ml/year per square km.
The proposed legislative changes will facilitate a free water market on the mountain and allow trading of Water Access Licences (WALs) across current management zones, permitting increased water allocations in any part of the Kulnura Mangrove Mountain Ground Water Source (KMMGWS). This will allow zones that are already fully allocated to become over allocated, while other zones may remain under utilized due to those WALs being exported elsewhere. As well, the proposal to abolish the maximum water take limit will allow corporations, in particular, to come into the KMMGWS and dominate the market.
Recently, in 2013, there were amendments made to the KMMGWSP that saw 6 of the 8 zones decrease their Long-term average annual extraction limit (LTAAEL) due to the need to protect base flows, particularly along Ourimbah Creek. Of the 2 remaining zones, zone 1 had no change due to it being National park, state forest and drinking water catchment that does not allow the extraction of water, and zone 4 which was the only ground water source that increased its LTAAEL.
Of the 7 zones that allow water extraction 5 are shown as fully allocated, this means there are no new Water Access Licences (WALs) being issued within these zones. To prevent over allocation of water from any one water source, trading of WALs must occur within a zone, currently importing WALs from other zones is prohibited. To ensure water sharing is fair and equitable, water allocations are limited to the 200Ml/year per square km.
Of course the winners in this new free market will be the wealthy extractive and mining corporations who can afford to buy up all the WALs at inflated prices, while the losers will be the farmers and local small businesses that rely on an affordable and reliable water source. The extractive and mining industries all provide short term economic gain and if their activities diminish our water resources then the entire Central Coast community will suffer in the long term as water availability decreases and costs increase.
It is estimated that the KMMGWS provides up to 50% of the Central Coast water supply and any mismanagement of this precious resource will impact massively on our local economy. These proposed legislative changes are not being implemented to allow better management of our water resources, but simply to allow free trading of water and the inevitable mismanagement and unsustainable use of this resource.
Since the KMMGWSP commenced in 2004, a University of Technology Sydney study1 has been completed in the plan area. The study indicated that capping entitlements at existing extraction levels in these groundwater sources would protect hydraulic gradients around existing bores that impact on base flows to streams.
These base flows sustain our local environment as well as our local economy and the reduction in environmental flows will impact massively on our regions biodiversity. Wet plant communities will disappear and dry plant communities will dominate and expand their territories. With more gum trees forests and woodlands comes more bush fires and the drying of the landscape will only increase catastrophic fire conditions. With our waterfalls, rain forests and wetlands disappearing, so too will our eco-tourism industry.
The long-term sustainability of our local economy and local ecology both rely on best practices for managing water resources. To date the water resources on the mountain have been grossly mismanaged and much damage has already been done. The community not only need to oppose the proposed changes to the KMMGWSP but also need to demand better policies than currently exist to ensure the future security of our most precious natural resource.
To view water as an economic commodity is a disaster waiting to happen!
Deloitte’s “Gas Market Transformations – Manufacturing Impacts Report” (July 14 2014) concludes that the price increases for gas that will result from CSG being exported for sale in Asia will have a net negative impact on the Australian economy, and specifically businesses in NSW.
While the gas industry will enjoy an $11B boost, manufacturing, agriculture, construction and other industries will suffer a cumulative $32B drag. NSW is forecast to therefore see a negative economic impact of $21B, along with a share of the 12,000-14,000 projected job losses that the manufacturing sector will suffer Australia wide. The Coal Seam Gas mining industry is an insignificant employer and will go nowhere near making up for the employment losses felt elsewhere, throughout the country.
At a time when the Australian manufacturing industry is already suffering from the withdrawal of major players including Ford and Holden such hits are very unwelcome news.
NSW Greens Spokesperson Jeremy Buckingham summed it up very nicely; “It is unfair that businesses and workers in the manufacturing industry and agriculture should have to suffer so companies such as PetroChina, Petronas (Malaysia), Kogas (Korea), British Gas, Shell (Netherlands), Total (France), ConocoPhillips (USA), Sinopec (China), Santos, and Origin can make large profits through their export LNG consortiums.”
As reported in The Land the NSW Farmers Association has taken on a stronger stance on mining and gas, adopting a new resources policy to ban extractive industries in areas covered by Water Sharing Plans until nil negative impact can be demonstrated.
The new policy, voted in at the Association’s annual conference at Luna Park in Sydney will cover NSW’s mining heartland in the Hunter Valley. Gas and coal fuelled a debate which dominated the best part of the conference’s first afternoon. Currently, NSW Farmers is “not opposed to mining or coal seam gas” but advocates that “these resources must be developed strategically and not at the expense of our agricultural land and water”.
While we welcome the newly strengthened resolve of the NSW Farmers Association we also recognise the many real-world examples of farming and coal seam gas mining being incompatible sharers and neighbours of land and it would be great to see the Association recognise the reality many farmers are facing and call for a complete stop to coal seam gas mining in agricultural areas,