Pressure to approve the project had been mounting for weeks, particularly from the Morrison government.
Federal Energy and Emissions Reduction Minister Angus Taylor welcomed the IPC decision, saying “gas will play an essential role” in the economic recovery from the COVID pandemic. The Narrabri project would create as many as 1200 jobs in construction, spur billions of dollars in capital expenditure, with locals among the winners.
Resources Minister Keith Pitt said there are “a lot of opportunities” for Commonwealth funding to support further investments in gas, some of which may be needed to build a pipeline connecting Narrabri to the Hunter Valley. He urged state and territory governments “to act in the interests of people they represent”.
Mr Pitt was among senior federal Nationals MPs welcoming the approval despite vocal opposition from the NSW Farmers Association about fears of potential effects on groundwater from the drilling.
Member for Parkes Mark Coulton, who represents the electorate where the project is located, said the project would benefit farmers and the regional economy if it proceeds.
“I understand the concerns of landholders, water is very important to them,” Mr Coulton said. “But from all the evidence I’ve seen I believe all their fears are unfounded.”
Deputy Prime Minister and Nationals leader Michael McCormack said NSW’s approval was “fantastic”.
“The Pilliga [where many of the proposed gas wells would be located], some of it is scrub country at best, [it’s] a resource to be tapped, to be used to bring gas prices down, to bring energy prices down and to get that area realising its full potential,” Mr McCormack said.
Santos has pledged not to force access onto the land of farmers who don’t want wells sunk on their property. The company signs lease agreements with farmers, or compensates them by building infrastructure.
New England MP Barnaby Joyce, whose electorate borders the Narrabri project area, said Santos should share with landholders the profits of gas extracted from their land – as is common practice in the US.
“If you don’t get a proportional benefit back to the landholder, I would say two per cent at the wellhead, you will have an ongoing fight,” Mr Joyce said.
The Santos approval, though, may play differently at a state level. While NSW Planning Minister Rob Stokes welcomed the IPC’s determination after “extensive and expert analysis”, the Shooters, Fishers and Farmers Party see the opportunity to make further inroads into the Nationals’ dwindling hold on regional NSW.
“We couldn’t see any guarantee that groundwater wouldn’t be impacted,” said Roy Butler, the SFF MP whose state seat takes in the gasfield. “It’s pretty clear there are so many risks that haven’t been adequately answered.”
The IPC’s conditions also offer the prospect of further checks, meaning it could be years before gas flows.
The IPC said it was not satisfied with the groundwater modelling Santos presented, and it would need to redo part of it to achieve so-called Class 3 confidence levels before the project can move to the production phase.
As the extracted water – some 37.5 billion litres over the project’s two-decade life – will bring salts and other minerals to the surface, Santos will also have to get approval from the Environment Protection Authority on its disposal plan.
The IPC said the project would generate 840,000 tonnes of waste salt, and required Santos to provide evidence of so-called beneficial reuse of landfill disposal before it can even move to phase 1.
Stuart Khan, an engineering professor at the University of NSW, said the IPC had “called Santos’s bluff by requiring them to seriously pursue the beneficial reuse of the waste salt”.
“If that pursuit is successful, that will be very good outcome, but there are certainly some major challenges ahead,” Professor Khan said, noting that even Narrabri Council is opposed to taking salt in its landfill.
The IPC will also require Santos to fully offset any exceedances of its greenhouse gas emissions predictions. Santos said the production emissions would be the equivalent of 15.5 million tonnes of carbon dioxide, with 18 million tonnes for gas transportation and 94.3 million tonnes from downstream combustion.
Helen Strang, a farmer from Tambar Springs on the Liverpool Plains opposed to the project, said the approval “would definitely not stop us fighting”.
She said the likely high production cost of the gas – put at $6.40 per gigajoule by Santos and several dollars higher by some analysts – meant the project was “just not going to be viable”. Average prices next year are in the order of $5.50 for east-coast customers, the ACCC said in September.
Another concern is that the IPC approval could open the way for other gasfields in northern NSW, with 11 petroleum exploration licences waiting to be revived, Ms Strang said.
Peter Hannam writes on environment issues for The Sydney Morning Herald and The Age.
Mike is the climate and energy correspondent for The Age and The Sydney Morning Herald.