AFR article

Metgasco chief Peter Henderson slams NSW 'policy of appeasement' for mining

May 31 2015 at 11:46 AM

• Updated May 31 2015 at 6:55 PM

by Will Glasgow
The Baird government is under internal pressure to fix its approach to coal seam gas with a Liberal bankbencher warning the growing protest movement is preventing NSW from being seen as a more favourable mining investment destination than Tasmania.
And the businessman at the centre of the storm over the state's coal seam gas industry, Metgasco chief executive Peter Henderson, told The Australian Financial Review that the Baird government was in danger of making the situation worse.
"Here's the problem – if they continue with the policy of appeasement, they will lose. The other side will get stronger," Mr Henderson said.
Outspoken NSW Liberal Peter Phelps criticised the state's ongoing failure to catch up to Tasmania as a favoured mining investment destination, according to rankings by Canadian think tank the Fraser Institute.

"You've got a situation where it's more advantageous to invest in Tasmania or South Australia than NSW," Mr Phelps said.
"The [Baird] government has given up on rationality. It's very disappointing to me," he added.
Coalition of protesters

NSW politics have been rocked over the past four years by a coalition of protesters that includes environmentalists, farmers, the Greens and influential radio broadcaster Alan Jones.


The state Labor party joined the fray in the lead up to March 28 election, as its leader Luke Foley campaigned on a promise of a permanent ban on the gas industry in the Northern Rivers region at the top of the state.
This political rhetoric has been embraced by many of the state's Nationals.
Recently elected National Ben Franklin, who as state director ran the party's campaign at the election, said in his maiden speech that issues other than science were at the heart of the debate.
"I am a democrat. It is very clear to me that the Northern Rivers are resolute in their determination that CSG is not appropriate to their area," he said.

Breakaway mindset

Mr Henderson said that this rhetoric has created a mindset amongst the region's residents that they live in a breakway state.
"They think it's a micro state," he said. "People in Nimbin and Byron Bay think they can tell the farmers in Casino what they can do on their backyard."
The Northern Rivers includes the seats of Lismore, Tweed Heads and Ballina. The Nationals lost Ballina to the Greens at the state election and just held onto the other two after a fierce campaign by the Greens and Labor.

National Lismore member Thomas George said that so long as there are adequate protections for the environment, water and prime agriculture land, the gas industry should be allowed to operate in the north of the state.
"I'm sure that the industry can co-exist. There's got to be give and take on both sides," he said.
An 18-month long review of the industry released last October by NSW chief scientist Mary O'Kane found that coal seam gas carries risks no greater than any other of the extractive industries and that those risks are manageable.
Failure of consultation

On May 14, 2014, five days before Metgasco was to begin drilling at its Rosella site, the government suspended its license, citing a failure of consultation.
The conventional gas site became the site of a 1000 person coal seam gas protest, just a month after Mr Baird was suddenly elevated into the Premiership.
The Supreme Court in April ruled in that the suspension was invalid. Metgasco and the government are now negotiating over compensation.
It is not clear if the Baird government will also seek to buy out Metgasco's northern gas licenses entirely. The company has invested $120 million on the project over the past decade.
The Metgasco board could only agree to a deal if at least 50 per cent of Metgasco's diverse share registry supported it. A pocket of its 5000 shareholders have threatened to roll the board if it agreed to fold the business.
Mr Henderson said that the industry has not adequately stood up for itself.
"The fossil fuel industry has not done that well," he said.
But he said the Baird government had confused consultation with persuasion, which would leave business and government vulnerable to unreasonable opposition.
Media impact

Mr Phelps said that elements of the Sydney-based media had had an oversized impact on the government's gas policy.
"The sad fact of the matter is all they need is one, noisy protester – and that's Alan Jones," he said.
Mr Phelps said that a ban on gas production in the north of the state will see protesters move to other targets.  
He said AGL's Gloucester CSG project, 100 kilometres north of Newcastle, and Santos's more remote Pillaga project, in the north west of the state, could be next in line.
Anglo American and Rio Tinto's proposals for new open cut coal mines in the Upper Hunter could also be targeted.