The hopes of a prospective coalbed methane (CBM) company, CEEMAC, have been dashed by the Office of Coal Seam Gas (OCSG).
The OCSG rejected an exploration application from CEEMAC, which had applied for three licenses to drill between Dubbo, Narromine and Gulgong, as well as around Binnaway and Coolah and in the Blue Mountains.
According to The Land, minister for natural resources, Anthony Roberts, said the OCSG refused the applications because CEEMAC had not provided satisfactory evidence of its credentials under Section 15 of the Petroleum (Onshore) Act.
Energy consultantm Chris McPhersonm had been the driving force behind CEEMAC's application. The application was motivated by requests from "many" large gas users, including regional manufacturers, which were seeking access to cheaper supplies, he said.
McPherson planned to form a gas user co-operative, which could produce gas and provide supply outside of expensive contracts offered by large retailers, where prices are linked to more costly export markets.
The Petroleum (Onshore) Act requires exploration applicants to provide evidence of their financial standing, technical capabilities and ability to comply with regulation.
Exploration proponents are required to provide a six year work programme.
McPherson argued that CEEMAC’s application had been rejected because of the company’s size, more than any other matter. “The government rejected the application on the grounds I wasn't a big energy company and I couldn't prove I could develop the program for the whole six years into the future,” he said.
McPherson said “the solution for lower cost gas lies in lots of new supply from lots of new people with new ideas”, and that licenses should only be granted if proponents can demonstrate they can operate safely.
However, CEEMAC’s application was a victim of a “chicken and egg” scenario.
The government would not grant a licence to a small operator, but the large gas users would not add their weight to the proposal until the government had approved the exploration plan, he said.
This paradoxical, ‘Catch-22’, situation has the propensity to effectively freeze CBM projects in New South Wales (NSW), as potentially lucrative projects are left unexplored and undeveloped.
In March, Roberts again canned a smaller industry player from developing a CBM project, as he rejected Grainger Resources’ application to explore in the Reverina.
Increasingly, NSW government policy has been to restrict CBM development. The government previously froze applications for CBM development for six months and raised application fees from AU$ 1000 to AU$ 50 000.
The government has also begun an audit of existing applications for CBM projects in the Australian state.
Edited from various sources by Sam Dodson
Read the article online at: https://www.worldcoal.com/cbm/21082014/nsw-government-treads-on-toes-of-smaller-cbm-industry-players-cbm99/