CSG imbroglio intensifies

While much of the opposition is engendered by environmental groups who question the touted benefits of CSG as a means to reduce greenhouse gas emissions, farmers and other stakeholders are banding together to get more equity on the niggling issues of land access and compensation.

"There has been lack of equity in the early days and now there is an element of jealousy," Surat Basin Corporation chief executive officer David Breese told Energy News Premium.

"There are some genuine concerns over land access and water issues but this has been whipped into a frenzy by very smart environmentalists.”

Since late last year, criticism of the CSG industry has been widespread, with environmentalists and farmers complaining about the threat posed by CSG exploration to underground aquifers and prime agricultural land.

The constant barrage has picked up in recent times as one by one, three projects within the spate of nine months got off the drawing board and into the construction phase.

Drew Hutton, spokesperson for lobby group Lock the Gate Alliance, told ENP the ramp-up of the CSG sector caught the community by surprise.

“Its [the CSG sector] has been operating below the radar in a very small way for some time over a decade but it’s only in the last three or four years that its really ramped up,” he said.

“Consequentially it caught us by surprise and the governments have given their approvals by late 2010, really before the community had the time to understand what was going on.

“It did slip under the radar ... so really as a matter of desperation we started the lock the gate campaign just to say ‘hang on, you’re giving these approvals and throwing the precautionary principle out the window’.”

While the three projects, Queensland Curtis LNG, Gladstone LNG and Australia Pacific LNG, push ahead towards reality, Hutton said the alliance would continue its fight against the sector.

“It’s an abusive process really and we’re going to be exploring our legal options to see how they’ve [the government] been able to ditch the precautionary principle without actually breaching their legal obligations.

Hutton contends that the government has allowed the coal seam gas sector to proceed without investigating the potential negative fall outs and in the absence of such investigation, there should be a moratorium on project development.

But Breese and others counter that the regulatory framework is indeed extraordinarily tight, with regulations for health and safety very strict.

"None of the companies will want a BP-type of incident," Breese said.

McCullough Robertson partner Tim Hanmore agreed the regulatory framework was extensive, adding that federal Environment Minister Tony Burke had imposed “rigorous conditions” for each of the LNG projects in addition to the state-based conditions.

“[I]t is important that landowner interests are carefully balanced against the benefits to the state and economy that the projects and other development will produce,” he said.

“The Queensland and Commonwealth governments impose extensive checks and balances on the development process in terms of groundwater, landowner consultation and environmental impacts.”

He said Australia and Queensland needed to be very careful about imposing any new speed bumps or road blocks to project development.

“In my experience, particularly recently, Australia is already becoming regarded as a high sovereign risk environment when compared with other resource rich provinces,” he said.

“New regulatory restrictions and requirements need to be scrutinised for their environmental or community value to ensure they are necessary additions to the existing regulatory framework.”

Compensation, land access terms controversial

Some industry sources say the heart of the controversy is the grandstanding by some companies to enforce their rights to gain access to the land in the face of continued opposition by land holders.

Many agree that in the early days of CSG development, engagement with landholders was scant, with the result that there was a lack of equity in compensation. At a recent Senate hearing Santos vice president James Baulderstone disclosed that the company had paid $17 million in compensation to land holders, a figure that was questioned as not generous.

"Out of the $9 billion revenue that actually represents 0.074 per cent. Is it fair that I get 74 cents from the person that is coming onto my property to earn $1000?" Nationals Senator Brigid McKenzie asked.

Equally, there has also been a lack of willingness to disclose compensation details, as seen during the Senate hearing where QGC's Catherine Tanna was less forthcoming on providing details of its compensation to land holders.

But others in the industry point out that the issue of compensation is misrepresented.

"Nobody knew what the benchmark was in early stages," Surat Basin Engagement Group chairman John Cotter said, adding that it was largely "free market type attitudes" where compensation depended upon whether one was a good negotiator.

"But let me assure you there are some questionable stories out there, about who got what,” he said.

“There are some people out there that are very loud in saying that they didn't get this, but if you dig deeper, they got other things, if not just compensation.”

But he said that the recent undertakings by companies that the confidentiality will be at the landowners option was “a step in the right direction" but pointed out that "there are a lot of landowners that want to keep it confidential”.

Cotter added that one of the issues with making compensation arrangements public was that, to assess compensation fair value, books of farmers will be open to scrutiny, which they will be opposed to.

Industry, government step up engagement

But industry and government sources acknowledge that groups like Lock the Gate Alliance have been moderately successful in throwing a wrench in companies' plans to acquire land for drilling, as around 1500 landowners have already locked their gates to CSG companies.

Meanwhile, even as the alliance continues its efforts to persuade landowners to refuse to negotiate, sources argue that the current standoff is more a result of communication breakdown.

It is a situation that is being recognised by the government and other stakeholders. The Queensland government earlier this year facilitated the setting up the Surat Basin Engagement Group, chaired by Cotter, who has previously headed AgForce and is also a grazier.

He told ENP that increasingly there was a realisation that companies should spend more time in the public arena and champion their cause to the community, which could in some measure, help understand the gas industry.

"[T]here is a whole community out there that does not understand [the gas industry] just as much as the gas industry does not understand agriculture. So that is a key bridge I am building," he said.

While key stakeholder engagement initiatives are planned, the government has also set up the LNG Enforcement Unit, a one-stop shop to deal with compliance issues and provide mediation on ground water impacts and land access issues.

Andrew Brier, the head of the enforcement unit told ENP that as part of the proactive steps being taken by the government it had reinstated groundwater reinjection as the preferred option for the use of CSG-related water and the enforcement unit was "over-invested in groundwater staff at this stage" to get more experience in that area.

He said a lot of the monitoring was required of the companies and the unit's compliance framework was aimed at ensuring monitoring was correct “and that we are satisfied with the integrity of the data”.

But Surat Basin Corporation's Breese said there were serious misperceptions about the impartiality of the data being put out by the industry and government. He stressed the need for more independent research, such as that underway at the University of Queensland to reinforce that what is happening is safe.

While the anti-CSG voice is dominating and many farmers have locked their gates, more than 1400 land agreements have already been signed.

Around 80km from Roma, the Thompson family, which has been running a mixed grazing and cattle farm for over 60 years, has decided to negotiate with a gas company planning to drill wells on their land.

“We’ve made the decision because we’ve known this was coming for years ... that we can’t fight it so we’re going to have to try and work together,” farmer Nikki Thompson told ENP.

Thompson said that while the negotiations were a “painful” process there was good intent on the company’s behalf for a balanced outcome.

“When they first came here it was very much ‘we’re coming on your place and this is what we’re going to do’,” she said.

“They [had] proposed wells in the middle of cultivation; they actually had a well in the middle of a dry dam and infrastructure near our home.

“In these negotiations, this is a typical indicator of the level of ignorance that we are dealing with regarding the complexity of modern agriculture and the impact that CSG will have on our business and culture.”

Even though the negotiations have been painful, sources from both sides acknowledge that the companies haven't been trying to pull a wool over the farmers eyes as companies are required to pay reasonable legal costs incurred by farmers in negotiating land access.

However, there needs to be better understanding of the each other's industry, with industry-farmer engagement taking the shape of a business arrangement rather than that of compensation.

"If there is true collaboration and people work together, governments, primary producers, local government and the gas companies, I think this one can work," Thompson said.

Friday, 26 August 2011
energynewspremium.net
http://www.energynewspremium.net/StoryView.asp?StoryID=2422176