Planning department backs controversial Santos project

Elouise FowlerReporter

Jun 12, 2020 – 5.30pm

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Santos is one step closer to developing a $3.6 billion coal seam gas project over 95,000 hectares of the Pilliga State Forest and nearby grazing land in north-west NSW.

The NSW Department of Planning, Industry and Environment backed the oil and gas company's project on Friday and has now referred it to the Independent Planning Commission for a final assessment.

Santos chief executive Kevin Gallagher. Illustration: David Rowe

The controversial Narrabri project involves drilling 850 gas wells over 20 years, and Santos says it has the potential to produce up to half of NSW's natural gas demand – about 200 terajoules a day.

After three years of deliberation, the department concluded the gasfield would provide "essential" supplies by helping to meet a forecast shortfall from 2024 and "put downward pressure on gas prices".

But the assessment notes that the project comes with financial risks, and finds that Santos would lose about $85 million if gas prices fell 30 per cent from the modelled amount.

The International Energy Agency Gas 2020 report this week showed global gas demand was at record lows because of the coronavirus pandemic and the warmer northern winter.

During the assessment process, the Berejiklian government received nearly 23,000 submissions, and 98 per cent of them opposed the coal seam gas plan.

Environmental objections

Environmental groups including the Nature Conservation Council, farmers and some MPs argued that it would contaminate groundwater, pose risks to threatened species and generate substantial greenhouse gas emissions.

But the planning department found the project was "unlikely" to adversely affect the region's groundwater resources in the Great Artesian Basin and could be designed to minimise any impact.

"The department has concluded the project is in the public interest and is approvable subject to strict conditions," the DPIE said in its report.

The conditions include a cap on total extraction of water at 37.5 billion litres over the project's life.

Santos chief executive Kevin Gallagher rejected concerns about groundwater, welcoming the "sensible, independent planning process".

“We are confident that we have relied upon the best science to confirm that the Narrabri Gas Project can be developed safely and sustainably, without harm to water resources or the environment," he said.

Minister Rob Stokes has requested a determination from the Independent Planning Commission within 12 weeks.

Elouise Fowler is a journalist for The Australian Financial Review based in the Melbourne office. Connect with Elouise on Twitter. Email Elouise at elouise.fowler@afr.com.au