Thursday 18 August 2011

Court invokes coals to Newcastle rule

Age
11 August 2011, Page: 5

A VISTA of gas rigs dotted along the coast from Sydney to Newcastle was never going to be a winner with New South Wales coastal councils. And in a rebuff to energy explorers keen to push new techniques and test mining legislation it has not been a winner with government. Federal Resources and Energy Minister Martin Ferguson and his former Labor state counterpart, Steve Whan, have refused to grant offshore exploration licences to underground coal gasification proponent Energie Future.

The ministerial rejection came to light in documents before the Federal Court, where Energie Future is seeking judicial review of the decision by the ministers, who were acting as the joint authority under the Offshore Minerals Act. In 2008, Energie Future applied for four lease exploration areas, covering 6000 km². The boundary comes as close as five kilometres to the coast.

NSW refused the application last October and in November Mr Ferguson agreed. One of the grounds cited by the joint authority was concern about the effect on flora and fauna on the ocean floor and the "fragile beach environments". As recently as June, Gosford, Wyong, Lake Macquarie, Newcastle and Port Stephens councils wrote to the state government, opposing offshore mining in the permit area. They asked what contingency plans the companies had to deal with an oil spill or gas leak, and also queried the effect on the annual whale migrations.

Underground coal gasification (UCG) is a new technology in which coal is burnt and converted to a synthesised (or non-natural) gas underground. The method is used to access coal resources that are either uneconomic or inaccessible to work by conventional means. It is a different process to coal seam gas (CSG) extraction, which is experiencing strong community and some political opposition. It involves drawing water from the coal seam gass to release primarily naturally occurring methane gas.

The joint authority concluded: "The work program was inadequate, the application area is in conflict with [the existing] petroleum exploration permit 11, and the understanding that synthetic manufacture of syngas using underground coal gasification methods is not encompassed by the Offshore Minerals Act nor the Offshore Petroleum and Greenhouse Gas Storage Act 2006".

Its key point of refusal was that the "in situ production of a synthetic gas was not classified as a naturally occurring substance", and the extraction method proposed was not covered under the legislation. "It would be irresponsible to grant an exploration licence that would be unable to proceed to a mining licence under the legislative framework", it said. Energie Future has argued the joint authority made an error in law, and also denied the company natural justice. It says it is not a precondition to the granting of a mining licence that the licence holder recover a "mineral". It also says the authority did not consider its proposed alternative method of mining coal through boreholes.

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