Reasons given by the NSW Office of Coal Seam Gas for the suspension of Metgasco Limited's drilling activities at Bentley

Excerpt from the NSW Office of Coal Seam Gas Executive Summary: Reasons for Metgasco Review Decision 26 June 2014:

The Director decided to confirm the suspension of Metgasco's activities because, in her opinion:

● Metgasco had not developed a community consultation plan in accordance with the Guideline. This was not to say that Metgasco was not undertaking community consultation, but there was no evidence of a plan as required by the Guideline and by condition 8 of Schedule 2 of PEL 16.

● Metgasco had not adequately identified relevant stakeholders. Metgasco's consultation efforts had been limited to landholders within 2km of the proposed Rosella Exploration Well, the Richmond River Council, local indigenous groups, and the general community. However, the Director considered that Lismore and Kyogle Councils also had a significant interest in the activities being undertaken by Metgasco and should have been engaged as proactively as Richmond Valley Council. Further, the Director was not satisfied that Metgasco had undertaken an appropriately detailed analysis of the stakeholders given the circumstances of the case such as local environment groups, chambers of commerce or other interested community groups. Although the consultation undertaken by Metgasco was active, it was too narrow and the identification of stakeholders was inadequate. Metgasco limited its focus to an area and people that it thought it could positively influence. This was considered to be contrary to the Guideline and accordingly condition 8 of Schedule 2 of PEL 16.

● the consultation undertaken by Metgasco had not been effective. The Director considered that Metgasco could take a significantly more sophisticated approach to community engagement than it had done.

● Metgasco's decision to defer a broader consultation program until after the Rosella Exploration Well had been drilled was not reasonable given the escalation of opposition to the activity in the Northern Rivers area from the beginning of the year.

The Director considered that Metgasco needs to develop a clear and sophisticated community consultation plan to deal with community consultation in the complex community operating environment of PEL 16.

In her reasons, the Director reiterated the offer of support which the Division of Resources and Energy, the OCSG and the Land and Water Commissioner is able to provide in this respect.

Coal seam and tight gas miner Metgasco Limited sets out on a deliberate collision course with Northern Rivers communities yet again

Coal seam and tight gas miner Metgasco Limited sets out on a deliberate collision course with Northern Rivers communities yet again and, just as before, it intends to drag the NSW Government and police along for the ride.

The Sydney Morning Herald 24 April 2015:

Energy company Metgasco says it will need police to escort gas drilling equipment onto its site on the NSW north coast following a court victory overturning a suspension imposed on it by the state government.

Chief executive Peter Henderson said protesters would return to the site at Bentley once the company seeks to start drilling in about three months' time.

"When we drill now we know there are going to be protesters and we will need police in there to uphold our rights," he said.

"Otherwise NSW will be the state of anarchy."….. [my red bolding]

The Northern Star 24 April 2015:

PROTESTERS will continue to fight Metgasco at Bentley even if the State Government passes legislation banning protests at drilling sites, Ian Gaillard says.

Mr Gaillard, of Gasfield Free Northern Rivers, said locals would not allow Metgasco to start drilling at Bentley and called on the State Government to revoke all gas licences…..

Clarence MP Chris Gulaptis has also expressed his unhappiness with the decision.

"I am extremely disappointed with the decision of the NSW Supreme Court to quash the decision of the NSW Government to suspend Metgasco's drilling licence at Bentley," Mr Gulaptis said.

"I will be urging the Minister to seek every opportunity to appeal this decision because I believe it is wrong."….

Federal Member for Page Kevin Hogan says it would be "foolish" for Metgasco to consider returning to the region, adding the legal avenues over their licence suspension are far from exhausted.
Mr Hogan said he had been in touch with state colleagues who were already in talks with Resources and Energy Minister Anthony Roberts about grounds for an appeal. He said he was "extremely disappointed" by the news.
"We do not want CSG in the Northern Rivers and we need to do everything we can to make sure that is what happens.
"This isn't over, while they may be feel happy with the decision today, I don't think it's over legally and it's certainly not over as far as them coming back into our community to do what they want to do."
Mr Hogan added it would be "quite foolish" for Metgasco to consider returning to Bentley in the near future.
"I think this community has shown very strongly that they do not want coal-seam gas in this region," he said.
"While they have won this court case, there are still legal options for the state government to take, and the first one would be an appeal.
"I think the suspension should remain until that appeal is heard."

 Lismore City Mayor Jenny Dowell on Twitter:

Excerpt from NSW Greens media release 24 April 2015:

Greens Member for Ballina Tamara Smith said, “Despite the court victory, Metgasco should heed the clear message from the community that they want a gas field free Northern Rivers.  Metgasco should pack up and leave. “If Metgasco try to drill again, the community will resist and I will be standing with them.

The Knitting Nannas Against Gas (KNAG) on Facebook, 25 April 2015:

Excerpt from an editorial in The Northern Star, 25 April 2015:

If past history is anything to go by, protesters will likely be setting up camp at Bentley in the very near future.

So are we back to square one on this issue? Or has the government's election results on the Northern Rivers taught them any lessons?

Considering the government trumpeted its buy back of CSG licences during the last election campaign, perhaps they should extend it to the licence that covers Bentley.

Otherwise we are in for more of the same.

Another blockade at Bentley and the government forced to make the difficult decision of sending hundreds of police officers north, at taxpayers' expense, to remove thousands of protesters.

The NSW Supreme Court has delivered a sharp rebuke to the government which is going to cost them a lot of money.

But the circumstances that led them to the suspension still remain.

Comments published in The Northern Star on 25 April 2015:

Lynne Stebbing: There is going to be trouble!

Hugh Nicholson: This decision only relates to the way the government went about suspending Metgasco's license.

It has nothing to do with the reason for the suspension - namely Metgasco's failure to consult with the community. Go away Metgasco.

From Land Water Future tweet on 24 April 2015:

UPDATE

The Northern Star 27 April 2015:

Bentley landowners Meg and Peter Nielsen believe that if energy company Metgasco returns to the region public resistance will be even stronger than it was at last year's blockade.

"It will be on for young and old," Mr Nielsen declared.

"Our resolve will never turn. Metgasco would be absolutely foolish to try it again."

But the couple believes the NSW Government will "see common sense" before it comes to that.

Metgasco's worries increase about its future in an increasingly hostile environment

 

It is not only Sydney’s outer west, the Mid-North Coast, Northern Rivers communities, local government, the Federal Environment Minister, some state and federal sitting MPs and certain candidates at the 2013 federal election which are lining up in opposition to the coal seam gas industry and mining companies such as Metgasco Limited – now the O’Farrell Government is beginning to feel the political and social backlash flowing from its unwise decision to force this socially disruptive, water-hungry and potentially environmentally destructive industry on the people of New South Wales and has announced a review all coal seam gas activity in NSW.

Metgasco has been quick to react as its commercial worries mount.

 

It is noted that Metgasco's External Relations Manager Richard Shields was Deputy State Director and Director of Party Affairs at the Liberal Party of Australia (NSW Division) until August 2011.

 

The O'Farrell Government and Minister Hartcher in particular would do well to remember that any sense that meetings with Metgasco are conducted under old mates network rules should be avoided at all costs. 

 

 

NSW New regulations and administration

 

19 February 2013

 

The NSW Government has announced a range of new CSG policies and administrative processes. The details of these changes are not yet clear but they could have a significant impact on Metgasco’s Northern Rivers CSG operations. Metgasco understands that there will be a one month consultation process before the changes are finalised.

 

Metgasco has requested an urgent meeting with the NSW Government to better understand the changes and express our concern about the potential impact on Metgasco and NSW’s natural gas supply and business environment, including its manufacturing industry.

 

About Metgasco

The Natural Gas Company - Metgasco Limited

Our business is about finding, producing, marketing and delivering gas from natural gas reserves.  We are a natural gas company that is focused on developing the coal seam gas and conventionally trapped gas resources of the New South Wales Clarence Moreton basin. 

 

We have established a large natural gas reserve base and are in the process of converting our gas reserves into gas supplies delivered to customers.  Metgasco has grown its reserve base at a very low cost relative to other companies.  Our finding cost per gigajoule of 2P reserves is amongst the lowest in Australia.  This provides the basis for shareholder value creation in the future.

 

Richard Shields

Metgasco Limited

 

Mobile: 0418 418 877

A desperate Metgasco Limited can not put a corporate foot right

Metgasco Limited/ASX Media Release

Monday 16 March 2015

Metgasco today announces that it has terminated its merger with Elk Petroleum.

The proposed merger was subject to a number of conditions precedent, including Metgasco's ability to raise funds to support the merger and a Material Adverse Condition (MAC) associated with oil prices.

The oil price MAC has been triggered.  Based on discussions with numerous financial organisations, Metgasco has concluded that the chance of securing acceptable finance is now very low.  This is due to a number of factors, including current oil prices, which are significantly lower than anticipated when the original merger terms were negotiated.  As such, Metgasco's Board of Directors, has decided to exercise Metgasco's rights and terminate the Merger Implementation Deed.

Under the terms of the Convertible Loan Facility, which was put in place to support Elk Petroleum through the merger implementation period, no further payments to Elk Petroleum will be made and Elk Petroleum has 30 days in which to repay the loan plus interest incurred.  Of the overall A$2.5 million loan facility, A$1.69m has currently been drawn down.  The loan is secured against Elk and all its assets.

Metgasco is disappointed that this opportunity has not been successful and will continue seeking means to realise value from its Clarence Moreton Basin exploration acreage and identifying opportunities outside of NSW.

About Metgasco

The Natural Gas Company - Metgasco Limited Our business is about finding, producing, marketing and delivering gas from natural gas reserves.  We are a natural gas company that is focused on developing the coal seam gas and conventionally trapped gas resources of the New South Wales Clarence Moreton basin. 

BACKGROUND

ABC News 25 February 2015:

Metgasco has now accumulated losses totalling almost $120 million.

The gas company's latest financial report was released yesterday.

It shows Metgasco lost more than $2 million in the six months to the end of last year.

Company directors say it incurred significant legal expenses in its Supreme Court action against the New South Wales Government.

It is still waiting on a decision regarding the suspension of drilling approval at Bentley.

Metgasco lost a similar amount over the last half of 2013, and its accumulated losses now total more than $119 million.

Total equity is listed at almost $10 million.           

NSW Office of Coal Seam Gas rejects Metgasco Limited's 'evidence' that it has conducted community consultation with regard to its plan to drill for tight gas at Bentley

NSW Government Coal Seam Gas Statement on Metgasco

Metgasco - petroleum exploration licence 16

Status of Rosella exploration well activity approval

On 14 May 2014 the Office of Coal Seam Gas OCSG put a hold on Metgasco's approval to drill an exploration well at Bentley, near Casino in the Northern Rivers, on the basis that the company was not in compliance with its community consultation obligations under Petroleum Exploration Licence 16 (PEL 16).

Metgasco Ltd wrote to the OCSG on 15 May 2014 requesting that the OCSG review its decision of 14 May 2014.

Metgasco provided the OCSG with additional material about its community consultation activities for the proposed drilling of the Rosella Exploration Well to consider as part of the review.

OCSG met with Metgasco on 16 May 2014 to discuss the regulator's decision of 14 May 2014 and the company's submission.

The OCSG has reviewed this additional material. At this stage, the decision of 14 May 2014 still stands, given the company has not effectively and genuinely engaged with the community or put in place an appropriate community consultation plan in accordance with the Guideline for community consultation requirements for exploration ("the Guideline").

OCSG has informed Metgasco of this and given the company a further 7 days to make any further submissions. A final decision on review will be made following full consideration of any further submissions.

The OCSG has maintained an ongoing dialogue with Metgasco in relation to this matter.

Compliance with Community Consultation Condition

Community consultation and engagement is a key element of the regulatory framework for petroleum exploration projects in NSW.

This is reflected in the imposition of a specific condition on petroleum exploration licences (PELs) issued under the Petroleum (Onshore) Act 1991 (the Act). The conditions make it mandatory for petroleum exploration licence holders to "engage with the community in relation to the planning for and conduct of prospecting operations". This condition is supported by a guideline: Guideline for community consultation requirements for exploration (the Guideline).

In addition, licence holders must report on compliance with the above condition annually.

The OCSG acknowledges that some sections of the community are opposed to the development of a gas industry for a variety reasons. We do not expect licence holders such as Metgasco to be able to change their view points.

We do however expect that licence holders such as Metgasco will develop a detailed consultation plan in compliance with the Guideline and demonstrate an ability to effectively and genuinely engage with the community.

The plan should be appropriate to the circumstances of the case and include a detailed analysis of stakeholder groups in the Richmond Valley, Kyogle Shire and Lismore City Council areas.

The OCSG has advised Metgasco that works could be recommenced under the activity approval once an acceptable community consultation plan is in place and the company demonstrates an ability to appropriately engage with the community, in compliance with relevant obligations under PEL 16.

Metgasco Limited has responded to this stance by the Office of Coal Seam Gas by requesting it to temporarily suspend its review and advising the Office that the mining exploration company considers its actions to be unlawful.

Concerned residents - not anti-CSG activists

CSG Free Northern Rivers

MEDIA RELEASE: 22 JANUARY 2013

Claims made by Richard Shields from Metgasco on ABC Radio (Country Hour) today have been rejected by CSG Free Northern Rivers. Mr Shields claimed that CSG is safe and that Metgasco wanted to speak with local communities but were prevented from doing so because meetings were “hijacked by anti-CSG activists”.

“Metgasco has a very poor history of communicating with local communities and Glenugie is a case in point,” said CSG Free Northern Rivers spokesperson, Boudicca Cerese.

“Close neighbours to the Glenugie site have personally informed me that they have never been advised by the company of their drilling plans and there has been no attempt by Metgasco to provide any public information sessions to residents in the general Glenugie area.”

“The fact that Metgasco has found time to meet with the Grafton Chamber of Commerce yet has failed to inform local residents clearly shows where their priorities are.”

“I have visited the locals who are blockading at Glenugie and have listened to their concerns. These are genuine people whose views are being systematically ignored and trivialized by the state government and Metgasco,” said Ms. Cerese.

“It is local community members, not some anonymous and nebulous ‘activists’ who are at the centre of the blockade against Metgasco at Glenugie.”

“If Mr Shields does not understand this simple fact – that it is local communities who are standing up against their plans to turn the area into a gasfield – then it is he who is ‘not prepared to listen’.”

“This is also the case at Doubtful Creek, between Casino and Kyogle, where Metgasco plan to drill another core hole in the near future,” MS Cerese said.

“Locals at Kyogle tried for more than a year without any success to get Metgasco to hold a public meeting to address community concerns about coal seam gas- they even offered to book a venue for the company.”

“Small private meetings between Metgasco and a few invited guests chosen by the company certainly does not constitute community consultation.”

“Until the CSG companies and the state government genuinely start listening to community views and concerns about CSG then the blockades and other actions are likely to continue as each community takes a stand to defend local community, environmental and social values.”

“As for Mr Shields’ claims that the work Metgasco are doing at Glenugie is safe, this ignores the fact that these drilling activities are part of a cycle of work focused directly on producing CSG for market which will involve hundreds if not thousands of wells.”

“You can’t say that just because one step in the process is less dangerous or risky than the entire process, that the overall coal seam gas operations are therefore ‘safe’.”

“The community is not stupid and are not deceived by Metgasco’s repetitive cycle of spin and misinformation,” she said.

 

Coal seam & tight gas miner Metgasco makes a fool of itself by crying 'We wuz hacked!'

Metgasco Limited has come under greater government scrutiny of late, resulting in media reports like this in the Echo NetDaily on 18 May 2014:

The enormous shit-storm that Nationals Party member Peter Graham ignited after signing his property over to gas mining in Bentley near Lismore continues to escalate….

Almost all of Mr Graham’s 40 immediate neighbours stormed out in disgust from a meeting with government departments on Tuesday (May 13) after they tried to convince the landowners that gas mining was safe.

It appeared the bureaucrats, who represented the Office of Coal Seam Gas (CSG) and NSW Land and Water, were unable to provide satisfactory answers by the residents. In fact, the residents appeared better informed and educated than the government reps themselves.

Held at the Goonellabah Sports and Aquatic Centre, the invitation-only event was promoted as a workshop for concerned residents, focussing on ‘providing a better understanding around groundwater and well-integrity issues, fracture stimulation, and will provide an overview of existing benchmark northern rivers catchment water data.’…

The meeting began with NSW Land and Water commissioner, Jock Laurie, describing his job as, ‘going to rural areas, listening to their concerns and taking them back to the government’.

But the audience soon became angered as it became clear that they were going to be talked at, rather than listened to. Mutters of ‘We know that already’ soon turned to direct questioning of the presenters, who seemed unprepared for the farmers’ high level of education.

The cracks began to appear after Rachel Connell, director of the Office of CSG, admitted of approving Metgasco’s Bentley operation as ‘conventional gas exploration’, despite its own assessment that it was a tight sands project that carried greater environmental risks.

‘We are not responsible for how the company chooses to promote itself,’ she said. And temperatures rose further when she was grilled as to why her office continued to approve Metgasco operations despite the company having  been responsible for well blow-outs and contaminated-water spills. ‘We acknowledge that’s an issue,’ she replied….

As the meeting boiled over, Green Mountain premium beef producer David Scarrabelotti, stood up to say it was now time for the government to listen to the community.

A group statement declared, ‘We have done the research, we know the facts, we have seen Metgasco in action and we are resolute … we declare our absolute determination to stop them.’

Twenty minutes into the workshop it was all over, and only a few residents stayed on to rake over the ashes with the shaken delegation.

‘We insist that this clear message from our community is taken, by you, back to your minister and the premier of NSW,’ concluded the letters handed to Mr Laurie….

And in The Sydney Morning Herald on 15 May 2014:

Resources company Metgasco misled the public over its drilling operation in northern NSW by saying it was seeking a less controversial type of gas. It was for this reason the government suspended its licence on Thursday.

Statements such as those on Metgasco’s website that it was drilling for conventional gas were now considered by officials to be incorrect. The company was in fact exploring for “tight sands” gas, an unconventional gas extracted using the contentious fracking technique.

Resources Minister Anthony Roberts said Metgasco had not undertaken genuine community consultation and concerns had been raised “about the way in which Metgasco has characterised its activities”.

He later told ABC Radio that companies that failed to gain a "social licence" to operate were "probably better off going somewhere else"…..

With ABC News also reporting on 15 May 2014:

Petroleum company Metgasco has had its licence to drill for gas at Bentley in northern NSW suspended and Resources Minister Anthony Roberts has referred the project to the Independent Commission Against Corruption (ICAC).

ICAC has previously investigated links between resource companies and prominent NSW political figures, including disgraced former Labor MP Eddie Obeid.

Citing allegations over Metgasco's shareholdings and interests, Mr Roberts today said: "I referred this to the commissioner to ensure that any decisions made pertaining to Pell 16 have been made entirely properly, without any undue influence or interest. As this is a matter for the ICAC, I will not be making any further comment or statement on this."…

One of the tactics Metgasco appears to use when it receives this sort of media attention is to attempt to recast itself as a ‘victim’. Suddenly there is talk about bomb threats, menacing of its workers or theft of property.

When it donned the victim mantle in the Echo NetDaily on 23 May 2014 the company quickly became a laughing stock, because the problem was not those nasty people opposing its commercial interests but more likely a classic website glitch:

On Thursday (May 22) the ‘Community Consultative’ page on Metgasco’s website did some rounds on social media, primarily because the body of the document was written entirely in Latin.

A company spokesperson [said the] website had been hacked, while members of the Lock the Gate Alliance Facebook page who used the  website’s internal search engine to find the page, claimed that the page was indexed in the search results as being uploaded 13 February 2013.

The page was taken offline a few hours later and replaced with a splash page reading, ‘Access denied. You are not authorised to access this page’

Other commenters were convinced that it was what publishers refer to as Lorem Ipsum, place-holding text that is written in Latin and is still used occasionally to demonstrate how a publication will appear once it has been filled with actual information.

Certainly one would assume that had Metgasco been hacked then they would be able to simply and quickly retrieve the original webpage from a backup.

As such, this was taken by some as proof of Metgasco’s lack of genuine and effective community consultation…..

www.lipsum.com on why web designers use Latin as placeholder text on web pages:

Lorem Ipsum is simply dummy text of the printing and typesetting industry. Lorem Ipsum has been the industry's standard dummy text ever since the 1500s, when an unknown printer took a galley of type and scrambled it to make a type specimen book. It has survived not only five centuries, but also the leap into electronic typesetting, remaining essentially unchanged. It was popularised in the 1960s with the release of Letraset sheets containing Lorem Ipsum passages, and more recently with desktop publishing software like Aldus PageMaker including versions of Lorem Ipsum….

Many desktop publishing packages and web page editors now use Lorem Ipsum as their default model text, and a search for 'lorem ipsum' will uncover many web sites still in their infancy. Various versions have evolved over the years, sometimes by accident, sometimes on purpose (injected humour and the like).

There are many variations of passages of Lorem Ipsum available, but the majority have suffered alteration in some form, by injected humour, or randomised words which don't look even slightly believable.

In which Greens MLC Jeremy Buckingham informs the NSW Parliament and Metgasco Limited's CEO Peter Henderson writes yet another letter

The political duel continues in ‘The people of the Northern Rivers and political allies versus Coal seam and tight gas exploration company Metgasco Limited and political allies’.

Excerpts from NSW Legislative Council Hansard 15 May 2014:

1838.  Mr Buckingham to move—

1.             That this House notes that:

(a)        the Driller Logs and Well Completion Reports from Metgasco detail numerous alarming failures and environmental damage due to routine poor practice and the inherently risky nature of gas drilling operations,

(b)        at Bowerbird E02 well Metgasco drilled into a river bed with high water flows and the well caved in. It was subsequently abandoned,

(c)        at Corella E01 well the casing stuck and explosive cutters were required to remove the casing, the well was then abandoned,

(d)        at Corella E03 the well caved in due to water inflow at 220 metres,

(e)        following the drilling of Corella P11 Metgasco said: “We were not aware of this shale at 3m from the base, nothing was reported by the geologists from their samples, or from the experts”,

(f)        at Corella P13 380m of drilling string and the 33m borehole assembly were abandoned in the well,

(g)        Corella E17 while flaring at 18psi they noticed the annular was leaking and had to abandon the test,

(h)        at Corella P18 a drill pipe became stuck in the hole and they were unable to clear the blockage,

(i)         at Riflebird E03 the hole collapsed from 16m, there were breakdowns, pipes got stuck and a 6m HQ barrel was left in the hole,

(j)         at Riflebird E5 Metgasco said: “This site is a terrible bloody mess. The pits are still a mess” before the well collapsed at 96m,

(k)        at Riflebird E14 Metgasco’s mud log states that “gas detector not functioning but hydrocarbons can be smelled in the shaker area”,

(l)         at Wayan 01 the top bonnet seals leaked oil in the annular,

(m)      at Cedar Point 1 and NCASI-1R methane was found in the mud and there were well integrity issues,

(n)        the Kingfisher Well  has not been cleaned up properly following 19 drill pipes being ejected into the air due to rising well pressure and loss of casing integrity,

(o)        NSW Trade and Investment have said that Metgasco fracked this well despite knowing it lacked integrity,

(p)        at SCASI-1 gas bubbling was observed in the hole and they had water losses, and

(q)        at SCASI 09 the driller had a seizure.

2.         That this House calls on the Government to immediately cancel all Petroleum Exploration and Production activity in New South Wales pending a thorough investigation of these routine and alarming failures during drilling.

(Notice given 15 May 2014—expires Notice Paper No. 218)

1728. Mr Buckingham to move—

1. That this House notes that:

(a) a recent report by the Australia Institute has discredited coal seam gas industry claims that it is a significant employer,

(b) the report states that: “While the gas industry is relentless in its claims about job creation, the simple fact is that it is a relatively small employer”,

(c) despite inflated industry claims that they created 100,000 jobs in 2012, the actual number reported by the Australian Bureau of Statistics is that 9,372 jobs were created in the entire oil and gas industry in that year,

(d) in August 2013, the entire oil and gas industry only employed 0.2 per cent of the Australian workforce, and

(e) this is less than two-thirds of the workforce of hardware retail company Bunnings Warehouse.

2. That this House calls on the Department of Planning to ensure that the economic modelling associated with planning applications is accurate.

(Notice given 18 March 2014—expires Notice Paper No. 207)

Excerpts from coal seam and tight gas exploration company Metgasco Limited’s media release/statement to the Australian Stock Exchange of 29 May 2014:

Metgasco is aware of a number of statements, including some made in the NSW Parliament, that are incorrect and misleading.   Metgasco has written to all Members of the NSW State Parliament refuting these claims and setting out our views relating to the suspension of approval to drill the Rosella E01 exploration well at Bentley…..

Metgasco is aware of a recent letter which seeks to accuse us of unacceptable drilling practices on a number of our wells. The information source for these accusations appears to be well completion reports which can be obtained through the government. We note that these reports are reviewed by government inspectors who have expressed no concern about them. In our opinion, the accusations show that the author has little understanding of the drilling industry or geology. He has misconstrued comments in the well completion reports, taken them out of context and at other times selectively quoted comments. His analysis, which we believe is incorrect and uninformed, could be used in an attempt to damn all oil and gas drilling, the routine drilling required to support coal and mining industries and even the hundreds of thousands of water bores drilled throughout Australia to support agriculture, industry and domestic needs…..  

Metgasco Limited intends to stay put on the NSW North Coast despite widespread community opposition to gasfields being established in the region

ABC NEWS 13 November 2014:

Metgasco is unlikely to take up any offer from the State Government to buy back its licence to operate in the Northern Rivers.

Today's CSG policy announcement included provisions for a one-off buy back scheme of previously approved licences.

But Metgasco managing director, Peter Henderson, said the company has spent too much time and money in the region to walk away now.

Metgasco media release 14 November 2014:

Response to NSW Government Gas Plan

Metgasco Limited welcomes the NSW Government’s recognition that gas supplies are essential to the future of NSW and that the gas industry can be managed safely.

Metgasco is, however, concerned about the repeated changes in regulation and policy since the current Government came to office and the uncertainty the latest announcement has created.

In March 2011 the NSW Government effectively put a hold on the industry while it created new regulations, which included a Strategic Land Use Policy and a myriad of other regulations.  In September 2012 it announced that the industry had the toughest standards in the world and gave the green light for exploration and development to proceed.  It correspondingly renewed exploration licences and announced the approval of Metgasco’s first production licence (just south of Casino). 

Since then it has taken a number of actions which have had the effect of stifling  the industry.

The new policy announcement does not sufficiently clarify the business and regulatory environment for the gas industry in NSW.  Business needs a degree of certainty to justify expenditure.   We now have new rules and regulatory responsibilities, many of which will not be defined until well into 2015, uncertainty about the rules for land holder compensation and some indication that the royalty regime might change to encourage exploration. 

Metgasco has invested approximately $120 million over the past ten years exploring for natural gas in NSW and has established the second largest gas resource in the state.  It did so with the expectation that its exploration rights would be respected.

Metgasco is seeking a meeting with the Minister for Resources and Energy to clarify the impact of the new policy on the potential of the significant gas resource in the Northern Rivers region. 

It is important that the NSW Government sends a message to all investors that NSW is a place in which investment can be made with confidence.

Metgasco Limited's ordinary share price is languishing at five cents.

Australian Stock Exchange:

Is Metgasco being entirely honest with the Northern Rivers?

No-one can deny that Metgasco Limited is a listed public company incorporated in New South Wales, Australia or that it is considered a ‘junior’ coal seam gas mining business.

Also on the public record is the fact that it is the ultimate holding company for Clarence Moreton No.1 Pty Ltd and The Lions Way Pipeline Pty Ltd, as well as being a shareholder in Richmond Valley Power Pty Ltd.

Like many other mining corporations its directors and senior staff have worked for many players in the industry, including Exxon Mobil, and some like Steven Joseph Koroknay hold multiple directorships.

Even Metgasco’s largest shareholder CSG Nominees Pty Ltd is registered in this country – in Perth WA.

All in all it would appear that Metgasco is a true blue Australian company with its eye set firmly on the domestic market as it stated on 24 January this year:

we are seeking approvals to allow us to sell gas locally… by year’s end… to local businesses…

Then there is this.................

Metgasco’s largest shareholder is a wholly owned subsidiary of Liquified Natural Gas Limited (LNG).

LNG’s major shareholder as of 5 February 2013 is China Huanqiu Contracting And Engineering Corporation (HQC) which in turn is owned by the Chinese Government.

This is a flow chart of the relationship between Metgasco, LNG and China.

It would seem that any local gas sales are a minor consideration and that Metgasco sees its future in the export market once Fisherman’s Landing is completed.

Supplying LNG with between 90-260 tj of gas per day for a minimum of 15 years, which appears to be almost all of the total projected daily production at Casino under its current license.

A sustained supply volume which is problematic given that in 2013:

A Bell Potter energy analyst, Johan Hedstrom, said the quality of the coals in the Clarence Moreton Basin was "not as good as it is in the Surat Basin" in Queensland, where much of the CSG development is based. Mr Hedstrom said the coals were lower-permeability which made it difficult to get commercial rates of flow, as Metgasco had found.

"There's a question mark, really, on whether these coals are going to be productive in a commercial sense.  

 

So where is Metgasco heading with its business plan? Is it being honest with North Coast local governments about its prospects? Will it able to meet either the domestic or export aims?

The impediments are obvious; the low rate of proven commercial flow, its present inability to fund construction of the proposed Lions Way pipeline between Casino and the Ipswich gas hub, the fact that in 2012 its major investor had to declare a $6.5 million impairment to its own shareholders due to Metgasco’s sustained low share value, its 17th largest shareholder just publicly abandoning it on ethical investment grounds and, a closing share price on the Australian Stock Exchange yesterday of less than 10 cents.