update from the north --UPDATE 2.50pm: METGASCO may be going,...

update from the north --

UPDATE 2.50pm: METGASCO may be going, but it wasn't "people power" that forced the company out of the Northern Rivers, chief executive Peter Henderson says.

Speaking at a press conference at Casino, Mr Henderson denied local opposition to the industry had influenced its decision to suspend its operations in the Clarence Moreton basin.

The decision would cost the jobs of most of Metgasco's staff in Casino and Sydney with 21 of 27 positions to go.

Mr Henderson said the decision would cost the Richmond Valley local government area hundreds of millions of dollars and potentially "more than $1 billion" in investment.

Mr Henderson said it was the unstable regulatory environment created by the NSW and Federal Government on the company's decision to suspend its exploration program.

The NSW Government has announced plans to intruduce CSG exclusion zones around built-up areas and the Federal Government yesterday announced it would include ground water among the triggers in the Environmental Conservation and Biodiversity Act, which would mean coal seam gas sites would have to be proven safe to ground water before they could be exploited.

Mr Henderson said the CSG industry was safe and clean, but said Metgasco could not afford to continue exploration in such a politically charged and uncertain environment.

The company would maintain its leases and hoped to return in two or three years when governments might be more supportive of Coal Seam Gas.

Mr Henderson said the primary reason for the suspension was the residential 2km CSG-free buffer zone announced thre weeks ago by the NSW Government three weeks ago, which remained unclear in its definition of a residential area.

However, he also blamed the previous 18-month moratorium on the industry by the NSW Government and what he said were increasingly lengthy delays in approvals for continued exploration.

Mr Henderson said the Clarence-Moreton Basin was the largest gas field on the Australian East Coast without sales contracts in place on it.

Metgascp still needed to spend about $50 millon on exploration to reach the point where they could look at sales arrangements for the gas - a necessary precondition for production.