These recently announced reforms are an outcome of the NSW government trying to balance community concerns with the development of a viable CSG industry in NSW.

Why has CSG regulatory reform been required?

While introducing the recent reforms, the NSW government stated “NSW has the toughest CSG controls in the country”.

All CSG development is subject to an extensive legislative assessment process, which includes multiple assessments during exploration, appraisal and production across numerous jurisdictions that seek to provide a systematic and robust technical evaluation of projects.

This assessment process was developed in response to the perceived risks of CSG development upon environmental and social values and technological change within the industry itself.

Technological evolution of the industry has not only enabled exploration and appraisal techniques to more accurately identify potential resources and optimise gas recovery, but has also contributed to how development may be assessed.

The implementation of the CSG exclusion zones further defines where a potential CSG project may be located within NSW.

The exclusion zones prohibit all new CSG activity within areas of NSW zoned residential, identified equine and viticulture industry areas, and regions identified as future residential growth areas (as defined by planning instruments or Government planning strategies).

The finalisation of the exclusion zones also include identified “village” areas that do not otherwise qualify as exclusion zones.

The exclusion zone areas have been identified by the government to apply to 2.7 million hectares of NSW land that are said to affect an estimated 95% of dwellings covered by current petroleum licences.

CSG activity is also banned within a 2km buffer area around these areas but associated infrastructure such as pipelines are not.

Social licence to operate

In addition to the regulatory assessment process a “social licence to operate” is needed for projects to move forward into successful operation.

A social licence to operate differs from regulatory assessment in that it is agreed to by networks of stakeholders including landholders, technical experts, regulators, community advocacy groups and the general public.

The most robust technical assessment is only as effective as the confidence, trust and acceptance all stakeholders have in the outcomes of the assessment.

This can only be achieved through developing a broad confidence and trust in the processes governing the industry and the technical information available to the community that support regulatory assessment decisions. This key outcome was agreed to by the NSW government at the NSW Gas Supply summit in September 2013.

Through adopting ongoing CSG reforms in NSW over a number of years, successive state governments have imposed considerable regulatory uncertainty upon all stakeholders of the CSG industry.

It remains to be seen if CSG exclusion zones will satisfy stakeholders and enable the CSG industry’s social licence to operate outside of these zones in NSW.

This issue of uncertainty in the assessment process and trust in the regulatory system governing the industry is key to developing the CSG industry’s social licence to operate in NSW.

With the backdrop of a NSW gas supply shortfall in the near future, all CSG industry stakeholders will be keen to ensure the uncertainty of the regulatory system that governs CSG is at an end.

This will allow the development of trust in the approval process, with outcomes based upon informed science-based assessment decisions to ensure a safe gas industry and good planning outcomes in NSW.

• Todd Robinson is a senior environmental planner with Golder Associates.