Gas exploration in NSW is in the intensive-care ward and a priest is standing by to administer the last rights. That's the only conclusion to draw from the NSW Energy Minister Anthony Roberts' approach to developing the state's gas resources.
Coal seam gas projects run by Santos in the Pilliga in northern NSW and AGL at Gloucester on the central coast remain on foot, but their future is unclear. It is possible they will proceed, but if that is the case it will be at a snail's pace and against fierce opposition from those opposed to developing the state's gas resources.
Roberts last year issued the "NSW Gas Plan" and billed it as "a clear strategic framework to deliver the world's best practice regulation of the coal seam gas industry while securing gas supplies for the state".
The plan should be renamed the "No Gas Plan" because based on recent experience there is a slim hope that any CSG projects will go ahead. It is a similar story in Victoria.
The pinnacle of Roberts' tenure as minister was his agreement to pay Metgasco $25 million to settle a legal dispute over the company's Northern River gas permits.
Metgasco shareholders approved the settlement at a meeting in Sydney on Wednesday by a majority of 58 per cent.
Chairman Len Gill told the meeting the $25 million settlement was a superior alternative to the likely sum of damages from a court action against the NSW government. It is a pity more companies do not show this sort of pragmatism when it comes to a choice between a settlement and being stuck in court for years paying solicitors and barristers. Out of the debacle better than most
Metgasco has come out of this debacle better than most companies because it will receive some semblance of market value. The company is fortunate it was not trying to exit its gas business under a Labor government. Labor's policy at the last election was to not pay any compensation to companies that have had their mining permits made virtually worthless by a refusal to issue production licences.
The Metgasco case is a warning to all businesses that rely on NSW government approvals and licenses that you could be put out of business without warning.
When it comes to the NSW government's energy policy Roberts measures up relatively well in terms of value destruction compared to former NSW premier Barry O'Farrell.
O'Farrell managed to cause a $343 million write-down at AGL with the introduction of a 2-kilometre exclusion zone around NSW towns in February 2013 without any industry consultation. The move sterilised AGL's gas reserves in northern NSW and no compensation was payable.
While Roberts oversees a shrinking portfolio, Metgasco will take its cash reserves of $30 million and invest outside of NSW in regions that support gas development. It will find government support for job creation in South Australia and the Northern Territory.
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