Narrabri coal seam gas project finally given the green light, others could follow
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Santos (ASX:STO) can move forward with its long-awaited $3.6bn Narrabri coal seam gas project in NSW after the state’s Independent Planning Commission (IPC) gave it the go-ahead — a move that also potentially opens up more areas in the state to gas exploration.
Santos has approval to drill up to 850 gas wells across a 95,000 hectare area, including the Pilliga State Forest, in the Narrabri region.
“Santos is excited about the prospect of developing the Narrabri gas project, a 100 per cent domestic gas project that can provide the lowest cost source of gas for NSW consumers,” managing director and chief executive Kevin Gallagher said.
The Narrabri gas project still has to clear federal government environmental hurdles.
Santos has appraisal wells feeding the Wilga Park power plant that provides electricity to 32,000 households in northwest NSW.
The IPC’s decision was welcomed by the Australian Resources and Energy Group AMMA that has gas companies among its members.
“Narrabri is a 100 per cent domestic gas project, delivering energy security and affordability at a time when it is most needed,” AMMA chief executive Steve Knott said.
Other gas companies with exploration interests in NSW may benefit from the move to open up the state to gas production after a five-year hiatus.
“If Santos is successful with its development application, that would potentially re-open the Gunnedah acreage for appraisal. Comet Ridge continues to be in a position to watch and follow,” the company said in its 2020 annual report.
The company’s three NSW licences cover 17,000sqkm in the northern Gunnedah basin, immediately north and west of Santos’ Narrabri gas project.
The Narrabri project has the potential to produce 200 terajoules per day of gas for a period of 20 years, equivalent to half of NSW’s gas demand.
The hotly contested Narrabri gas project has encountered strong opposition, with 23,000 objections to it lodged with the IPC during the project’s consultation phase.
“Following its detailed deliberations, the Commission concludes the project is in the public interest and that any negative impacts can be effectively mitigated with strict conditions,” the IPC said in a statement explaining its decision.
NSW’s Parliament in June rejected a Coal Seam Gas Moratorium Bill to permanently halt coal seam gas exploration in the state.
Hydraulic fracture stimulation, more commonly known as fracking, is the extraction technique for coal seam gas and is the subject of much controversy.
The Narrabri project in northwest NSW will bolster the Australian state’s gas supply and dovetails with the Australian government’s plans to lower gas prices in east coast markets.
A new gas pipeline running from Narrabri to Newcastle could fuel one or possibly two new gas-fired power plants en route in the Hunter Valley region, according to reports.
Prime Minister Scott Morrison said in September he wanted to reset the gas market in eastern Australia with measures that included unlocking more gas supply for consumers.
“To help fire our economic recovery, the next plank in our JobMaker plan is to deliver more Australian gas where it is needed at an internationally competitive price,” he said.
The government’s plan includes building 1,000 megawatts of power generation to replace the Liddell coal-fired station that is set to close in 2023.
“Over the last decade, the private sector has not built a single new reliable power plant in NSW,” Energy and Emissions Reduction Minister Angus Taylor said in mid-September.