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Coalbed methane industry welcomes NSW gas plan

World Coal,

The New South Wales (NSW) government has announced plans to pause, reset and restart coalbed methane (CBM) exploration in the Australian state.

The government is set to implement a strategic framework to deliver a well-regulated CBM industry.

Resources and Energy Minister, Anthony Roberts, has said the current freeze on new CBM exploration applications would remain in place until the new framework is established.

The new ‘gas plan’ will be framed around the recommendations made in a key independent scientific report from the chief scientist and engineer, Mary O’Kane.

Key players within the CBM industry have welcomed the new plan

AGL Energy Ltd released a statement in which the firm welcomed the NSW government’s gas plan. The company said the plan recognises the need to secure local gas supplies for the people of NSW. The proposed plan supports further CBM development

With only 5% of the state’s gas needs being produced locally at AGL’s gas plant in Camden, the company said there is an urgent need to tap into indigenous supplies of gas for households, businesses and in particular the NSW manufacturing sector.

AGL is currently undertaking a natural gas exploration pilot in Gloucester to test the gas flow from coal seams for a project that could potentially supply an additional 15% of NSW’s gas needs. 

“AGL has made it clear that the gas from our NSW projects will be for NSW and not exported overseas,” said managing director and CEO Michael Fraser.

“We support the NSW Government’s Gas Plan as it is a sensible approach to securing much-needed local supplies of gas for our customers,” Fraser continued. “The Australian Energy Market Operator has predicted NSW users could face gas shortages in the next few years. Likewise AGL’s own economists demonstrated in a research paper recently that the state is facing a gas supply cliff as soon as 2017 unless we find new supplies. And the impact on manufacturing if we don’t could be devastating.”

“We have the answer and it’s under our feet ready to be produced safely with strict adherence to NSW regulations, which are among the toughest in the world,” Fraser added.

Fraser said, while the plan has a renewed focus on regulatory oversight and safety, AGL often went “above and beyond” what is required, including thorough and comprehensive water monitoring, double lined ponds and air emissions testing.

“We will continue to work closely with the regulatory oversight bodies in meeting any new environmental and safety standards,” he said. 

AGL has been closely working with the local communities in the company’s project areas for many years and supports the Government’s proposed establishment of a Community Benefits Fund, which will allow voluntary contributions.

“It’s only fair that local people and businesses share in the benefits the resources bring to the state and the fund is another way AGL can positively contribute to the communities where we work,” Fraser said.

Other players in the Australian oil & gas industry have also welcomed the news. The Australian Petroleum production & Exploration Association said the policy changed recognised NSW was facing an avoidable energy security problem and that policy must change to encourage supply.

Meanwhile, Australian Pipeline Industry Association CEO, Cheryl Cartwright, said that while the new plan was welcome, investors needed firm timelines and a reversal of the current negative sentiments toward new investment in CBM exploration, development and production in NSW.

Government adopts recommendations

Roberts said that, because the government would adopt all of O’Kane’s recommendations, it showed it was listening to concerns of community, industry and independent experts in the field.

“The final report concluded that, in general, the risks of gas development can be effectively managed with the right regulation, engineering solutions and ongoing management. The government’s gas plan sets out how we will deliver best practice regulation while increasing gas supplied and putting downward pressure on gas prices for the state’s households and businesses,” Roberts said.

Written by Sam Dodson

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