Santos exploits loophole to secure more free gas without production permit

Published: August 01, 2018

Lock the Gate Alliance says Santos is exploiting a loophole to obtain gas from the Pilliga forest, near Narrabri, and burn it in its nearby gas-fired power station without having to pay royalties to the NSW Government.

Santos does not currently hold a CSG production permit and has instead been using gas drilled in exploration and assessment areas to produce gas and pipe it to the nearby Wilga Park power station which it owns.

Using gas obtained by exploration is allowable under a “beneficial use” loophole in NSW regulation, which means that little or no royalties are payable.

Santos obtained approval last week to expand the number of exploratory gas wells that feed the power station, thus increasing its access to royalty free gas.

Georgina Woods from Lock the Gate Alliance said, "The NSW Government is basically giving Santos free gas worth millions of dollars as it pursues gas production by stealth in the Pilliga forest.

“Under standard NSW planning law, any production of gas should be subject to extensive environmental assessments and royalties should be paid on that gas.

“Santos is circumventing royalty payments and full environmental assessment by using a regulatory loophole and lax laws that allow it to produce gas for its power station without holding a gas production permit” she said.

Santos claimed its expansion in CSG wells would be environmentally beneficial, because it would mean methane gas would be burnt in its power station rather than being flared at the gas wells. However, Lock the Gate said the company has not provided an environmental assessment that quantifies this claim.

"It's disappointing to see the government rubber-stamping this expansion without querying Santos' claim that it will be environmentally beneficial.

“There are fundamental questions that need to be asked. How much gas is Santos intending to produce this way? Would it all have been flared, or does having this loophole actually encourage the company to bring up more gas than they might otherwise?

“One thing is clear: NSW taxpayers are being ripped off, missing out on royalties while Santos drill for more CSG, all without a production permit” she said.

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