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Santos slams Australian CBM-panel plan

Australian government pledges A$150 million ($147 million) to establish an independent scientific panel on environmental issues relating to CBM

Australia’s Santos has hit out at a new federal government move that brings tighter scientific and environmental scrutiny of coal-bed methane (CBM) projects.

Speaking to federal parliament in Canberra, prime minister Julia Gillard said the government will provide A$150 million ($147 million) to establish an independent scientific panel to advise state and federal governments on environmental issues relating to CBM approvals and the affects of CBM operations on aquifers.

Environmental minister Tony Burke said the new Independent Expert Scientific Committee would ensure the science covering the connection between the aquifers in CBM zones and other underground water sources was understood.

The federal government is also pushing all state governments to amend their regulations to take the panel’s opinion into consideration before making environmental decisions. Gillard added that the federal government would take control of the approval process if the states fail to agree on it.

But Santos, the largest CBM operator in New South Wales (NSW) and the developer of the $16 billion Gladstone liquefied natural gas (LNG) project in Queensland – to be fed by CBM resources – was less enthusiastic about the proposal.

While it supports robust science-based regulation, Santos said CBM projects are already subject to rigorous state and federal environmental approval processes. It added that it’s important that any further processes do not cause unnecessarily delays or extra costs for developments.

Exploration and extraction of CBM – known as coal-seam gas in Australia – has long been controversial, with some farmers and green groups claiming it has the potential to damage prime agricultural land and water resources.

Santos’ comments come just days after it dropped plans for the unpopular Mullaley CBM pipeline in NSW on the back of community concerns. This follows the recent suspension of planned CBM testing at its separate Spring Ridge site near Gunnedah in northern NSW, following a public backlash, until the effects of mining on the water supply in the Liverpool Plains is known.

Meanwhile, the Australian Financial Review reported that two of the country’s largest CBM developers, AGL and Origin Energy, had voiced cautious approval of the government’s plans.

AGL chief executive Michael Fraser said the proposal may help to better balance the understanding of the issues in the community. "Regional communities have every right to understand that there is not going to be damage to the productive capacity of their land and, if this is a way of providing that, this is a sensible way forward," said Fraser.

AGL welcomed the science-based approach, while industry lobby group Australian Petroleum Production and Exploration Association (Appea) gave its initial support for the proposal.

It said that the government appears to have adopted a position consistent with Appea’s call for a science-based approach to regulation that minimises regulatory overlap and duplication.

The government said firms would not be required to change the way they operated, although their applications would be subject to rigorous and independent scientific assessment by the panel before approvals are granted.

Tony Windsor, an MP whose vote is crucial to Gillard’s minority government, had made the creation of a scientific panel a condition of his support for the government’s controversial Mineral Resources Rent Tax.

The tax, which narrowly passed  the lower house of parliament this week, will apply to the extraordinary profits of large iron-ore and coal miners. Originally set at 40%, the government has since reduced the tax rate to 30%.

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