Resources company Metgasco's plans to drill for gas at Bentley on the NSW north coast are in disarray after state energy minister Anthony Roberts referred the project to the Independent Commission Against Corruption and announced its licence would be suspended due to insufficient community consultation.
Mr Roberts announced the decision on Thursday morning, just days before police were due to be called in to break up a long-standing protest on the site at Bentley, near Lismore.
Up to 800 police were due to enter the protest camp as early as Monday to disperse thousands of people who have been blockading the site for several weeks.
Mr Roberts said the Office of Coal Seam Gas (OCSG) had told Metgasco the licence would be suspended because the company "did not fulfil a condition of its exploration licence, namely to undertake genuine and effective consultation with the community as required."
“OCSG is conducting an ongoing audit of all Petroleum Exploration Licences across NSW and is focused on ensuring company compliance with title conditions,” Mr Roberts said.
“I have been advised by OCSG that fundamental concerns have been expressed by members of the affected community about the way in which Metgasco has characterised its activities."
He said he has written to the ICAC Commissioner "following receipt of information concerning shareholdings and interests in Metgasco Limited."
“In accordance with Section 11 of the Independent Commission Against Corruption Act, I have referred this to the Commissioner to ensure that any decisions pertaining to PEL 16 have been made entirely properly and without any undue interest or influence.”
Metgasco has drilled about 50 exploration wells, mostly in coal seam gas deposits about 800 metres below the surface. The suspension, however, applies to a so-called unconventional gas well to tap reserves trapped in sandstone about 2.3 kms below the surface.
The community's protest against Metgasco also extends to its CSG drilling, including the company's proposed plans for wells at Doubtful Creek near Kyogle.
The suspension of the Rosella E-01 exploration well "comes at a very critical time", with the company in the process of "mobilising a drilling rig", Metgasco said in a statement to the stock exchange on Thursday.
The company's shares will be suspended from trading for at least 48 hours "pending the opportunity to meet and discuss the matter with government", Metgasco said.
Metgasco said it is "confident" the company can to demonstrate it has complied with its exploration licence conditions regarding community consultation.
"I'm overjoyed and impressed," said Rob Watson, a retired hydrographer from Myocum near Mullumbimby who has attended the protest site with his wife and had been planning to visit again on Saturday.
The intervention by the government headed off an expected confrontation. "I was really worried about what might happen out there," Mr Watson said. The move "has released a lot of anxiety in the area. Everyone is pleased."
Jennifer Grey, Mr Watson's partner who also joined the protest, said the community was particularly opposed to Metgasco's plans to drill near Bentley for so-called unconventional gas in tight sands.
“The main problem with the well was that it was for unconventional gas, even though they said it was conventional,” said Jennifer Gray. “That would require fracking, which would poison the water supplies of the neighbours...and create an industrial wasteland across the landscape.”
Fracking, or hydraulic fracturing, involves miners pumping a mix usually of sand and chemicals at high pressure into the well to create cracks in the rock that allows the gas to be extracted.
'Not going to stop'
Aidan Ricketts, a social activist and lecturer at Southern Cross University who helped advise the Bentley blockade, said he was “stunned and emotional” about the government’s decision.
About 1000 protesters are on the site on Thursday morning. Mr Ricketts said as many as 5000-8000 were expected to arrive over the weekend ahead of police efforts to end the protest.
“It wouldn’t have mattered what the police did. It wouldn’t have worked,” he said. “This community wasn’t going to stop.”
Mr Ricketts said he was amazed that the government admitted the lack of community consultation and local opposition was the reason to suspend the licence.
“Mostly when governments and corporations back down, they find some backdoor technicality to sneak out,” Mr Ricketts said. “What’s really powerful about this outcome they are admitting absolutely openly that it is community...that is the real reason.”
Mr Ricketts said congratulations were arriving from CSG protest groups as far away as the UK, and he expects opposition to drilling in other parts of NSW to be bolstered by the Bentley decision.
He said the 90-percent local opposition to turning farmland into gasfields in the Northern Rivers area was echoed in other parts of the state, such as in Gloucester where AGL has a CSG project and the Pilliga in the north of NSW where Santos has plans for a major gasfield.
“I don’t think there’s any difference in the community in not wanting agricultural lands industrialised in those areas, it’s just that it’s perhaps more challenging for them because they don’t have the density of population to mount community protests” of this scale, Mr Ricketts said.
Community anger also centred on the NSW government granting approval for the Rosella tight-gas drilling even before the final report on an explosion at Metgasco's first well - known as Kingfisher - in July last year was complete.
The interim report by the NSW Mine Safety Investigation Unit had failed to find the cause of the blast, which sent bore pipe 200 metres into the air, according to Wayne Somerville, a local landowner opposed to Metgasco's CSG plans at Doubtful Creek,
The well had "failed from day one", and the blast during decommissioning caused workers "to run for their lives", Dr Somerville said.
"We don’t yet know whether that incident was due to faulty material, faulty technique, bad management, or worker error," he said. “I could not believe that Minister Roberts would give permission then for the Bentley well to go ahead before it was known why the only other tight-gas sands well had failed.”
Dr Somerville said the Bentley community will likely unite with Kyogle residents to block Metgasco's CSG wells in his region: “I’d say Metgasco hasn’t got a chance of developing the Doubtful-Eden Creek area."
With Peter Hannam