mel

Apr 24 2015 at 11:44 AM

• Updated Apr 24 2015 at 4:06 PM

NSW Supreme Court overturns drilling moratorium on Metgasco in Northern Rivers

by Marianna Papadakis and Geoff Winestock
Coal seam gas explorer Metgasco will press for a multi-million dollar compensation payment from the NSW government after the Supreme Court overturned a ministerial decision to ban it from drilling in the politically sensitive Northern Rivers region.
The NSW Supreme Court on Friday struck down a decision last May by NSW Energy Minister Anthony Roberts to suspend Metgasco's drilling permit for the Rosella well near Lismore. The well was opposed by strong local protests and a campaign by radio presenter Alan Jones.
Metgasco managing director Peter Henderson said he was relieved at the court's decision and the company's next step was to have a mature discussion with the government. "It's an important decision for the resources industry. Had it gone against us it would have scared investors off from coming to NSW," Mr Henderson said.
He said Metgasco plnned to restart drilling in three months but the company would seek compensation  from the government not only for the $3 million cost of abandoning drilling last May but also for the 40 per cent drop in share price Metgasco after Mr Robert's announcement. "The government's decision did us a lot of damage," he said.

Mr Henderson said the government needed to take control of the energy debate, which had been hijacked by the Greens. Mr Henderson said the court ruling showed that while companies were obligated to conduct community consultation this did not mean waiting until all the locals agreed.
The judgment puts the NSW government in a difficult position. If Metgasco restarts drilling it could rekindle the protests that caused the minister to step in last year. Local opposition has likely hardened: Coal seam gas was a big issue at the state election last month. Premier Mike Baird's government lost the seat of Ballina and suffered huge swings in neighbouring seats after the ALP promised to ban all drilling in the region.
But the only alternative to allowing drilling for the government is to buy back Metgasco's exploration licences, which could be very expensive. The government on Friday issued a statement saying it would take time to study the judgement.
NSW Supreme Court Judge Richard Button said he could not adjudicate the the rights and wrongs of drilling the Rosella well which was "not free from contraversy" but he could rule on whether Metgasco had complied with the law.


He said that in his judgment  the suspension of Matgasco's drilling license was a denial of procedural fairness because  it came as a "bolt from the blue" to Metgasco whereas the government should have offered Metgasco the chance to respond.
Justice Button also questioned the grounds on which  the government suspended the license. The energy ministry told Metgasco it had failed to undertake "effective consultation" because its consultation program "failed adequately to address the existence of a protest camp on the property adjoining the Rosella well" and "Metgasco's primary spokespeople lacked the necessary skills to engage with an "often hostile" audience."
Justice Button said the government could prescribe a program of consultation but could not impose conditions on whether it actually convinced people. ""Effective consultation" to my mind focuses on the quality of the process of consultation, rather than on any outcome whereby the persons who are the focus of the consultation are persuaded by it," Justice Button said.
At the height of the battle over the well last year Mr Roberts announced he had received allegations of corruption relating to Metgasco which he had referred to the Independent Commission Against Corruption. But within days ICAC said the allegations were baseless.