It told the market this morning that it would put a pause on its exploration program in the region due to the regulatory uncertainty created by the NSW government’s decision to ban all CSG activities within 2km of a town of more than 1000 people.
The measures in the NSW decision announced last month included the environmental protection agency becoming the lead regulator of the environmental impacts of CSG, and the NSW chief scientist conducting a six-month review in current CSG practices.
“This is a carefully considered decision by the Metgasco board in light of the uncertain operating environment created by the New South Wales government’s decision on February 19 that it intends to change the regulations for coal seam gas operations in the state,” it said.
The company has also been plagued by anti-CSG protestors blockading rig access to sites, but with protestors claiming victory this morning, the company has denied they had anything to do with its decision.
“No, it didn’t. We’ve successfully drilled two wells this year, and we’re the first company to drill wells this year and we’ve successfully drilled the wells,” a spokesman told EnergyNewsPremium
“This issue relates to the changing regulatory environment and the uncertainty with the regulatory environment.”
The spokesman also denied that the protest action led to a delay in drilling, and that shareholders did not express any particular concern about the protestors.
“There weren’t actually any delays in the drilling,” the spokesperson said.
“There were protestors there, but with the help of police we went through the protestors and the actual protestors didn’t cause significant delays at all.”
Metgasco said it would leave a skeleton presence in the region, as it had secured long-term tenure over the permits in question with a minimal work program required.
While it puts a pause on development in the basin, it said it would now actively pursue operations in other areas.
The Metgasco spokesman said there has been no decision taken in regards to where this opportunity might lie, but said investors could “read between the lines” on whether that investment would be in NSW.
They also said that it was unlikely that it would need to raise fresh capital.
“We’ve still got significant cash reserves and the decision today to reduce our operating costs will assist us in using the existing capital to explore further opportunities,” they said.
Meanwhile, the Australian Petroleum Production and Exploration Association has weighed in on the decision by Metgasco to withdraw, saying that it was a "sad day".
“It’s a sad day for an Australian company, its employees and their families," APPEA's eastern chief Rick Wilkinson said.
“The decision to suspend exploration is a direct result of obstructionist NSW Government policies that have left industry in limbo for the last two years.
“In addition, the Federal Government’s extraordinary decision yesterday to duplicate existing environmental regulations has created even more uncertainty for an industry trying to address the serious gas supply shortage that is looming for NSW households and businesses."
