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‘Inhibit the commission’s freedom’: Verdict nears on Narrabri coal seam gasfield

Planning Minister Rob Stokes’ office was approached for comment, but declined to give one.

The IPC was directed by Mr Stokes to decide within 12 weeks after the Department of Planning’s approval. In part because of the volume of submissions – as many as 24,000, mostly opposed – and COVID-19 restrictions, the deadline was later extended to September 30.

“There was no legal basis for them to set such a hard deadline,” Brendan Dobbie, an EDO lawyer, said. “They have a responsibility to consider that [new] information.”

Long, controversial road

Santos originally bought into the Gunnedah Basin gasfields in 2007 and began the environmental approval process seven years later.

Leaks of highly saline groundwater produced from test wells caused localised pollution, killing parts of the Pilliga state forest.

Tony Pickard, a local farmer in the region near the proposed Santos coal seam gasfield near Narrabri in northern NSW.

Tony Pickard, a local farmer in the region near the proposed Santos coal seam gasfield near Narrabri in northern NSW.Credit:Jacky Ghossein

The long-standing concerns include the gasfield sits within a major recharge zone for the Great Artesian Basin, its greenhouse gas emissions include potent methane, and the as-yet unresolved disposal of salt brought to the surface by the 850 proposed wells.

Stuart Khan, a water expert at the University of NSW, noted in his submission that at the low end of estimates the gasfield will produce 430,000 tonnes of salt over its 25-year life – or as much as 850,000 at the high end.

Santos’s case

In late 2016, Santos relegated Narrabri to a “non-core asset”, while partner EnergyAustralia wrote down the value of its 20 per cent stake to zero earlier that year.

Santos CEO Kevin Gallagher has been calling for approval of the Narrabri gas project.

Santos CEO Kevin Gallagher has been calling for approval of the Narrabri gas project.Credit:Janie Barrett

Santos chief executive Kevin Gallagher told the IPC in July his firm has spent $1.5 billion on a gasfield with the potential to meet half of NSW’s gas needs. The state imports 95 per cent of the fuel.

During construction, the venture will employ as many as 1300 people, with up to 200 of the jobs ongoing. Royalties will tip $1.2 billion into state coffers, Mr Gallagher said. A memorandum of understanding with US Natural Soda may find a use for the salt, or there are 11 licensed waste sites within 150 kilometres, he said.

Much riding on it

Pressure on the IPC has come in part from the federal government, which wants the extra gas to help drive an economic rebound. The gas could also fuel a new gas-fired power station the government wants built in the Hunter Valley to replace the Liddell coal plant scheduled to close in 2023.

Should the project gain approval, several issues will remain unresolved. Topping that list is what it will cost Santos to extract the gas, and what if any downward pressure it will have on prices.

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Santos points to a 2020 report by the Australian Energy Market Operator where the production cost is put at $6.40 per gigajoule – excluding transportation costs.

The Australia Institute has pointed out modelling for that figure comes from Santos. Previous AEMO estimates put the cost at $7.28-$9.36 per gigajoule.

By contrast, the Australian Competition & Consumer Commission is predicting gas prices to average $5.63 per gigajoule in 2021.

While most expect the IPC to approve the project, conditions it imposes could further challenge the project’s viability. Approvals will also be needed for a pipeline to bring the gas to Sydney or beyond.

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