“The department has assured me it will not recommend anything for approval which has the potential to damage Sydney’s drinking water supplies” … Planning Minister Brad Hazzard. Photo: Jon Reid

THE NSW government is considering a bold plan that would lead to hundreds of coal seam gas wells being drilled across Sydney’s drinking water catchment, supplying a fifth of the city’s gas.

Apex Energy has a vision that amounts to industrialisation of near-pristine bushland – more than 150 commercial gas wells sprinkled across the catchment area between Sydney and Wollongong.

It is asking the Department of Planning to modify its permission to drill an initial 16 wells to test for coal seam gas, because its current licence expires on September 22.

The company would have to apply for further consent for a full-scale commercial development. Stiff opposition is likely from residents and the Greens, who say intensive drilling over the proposed 25-year period could contaminate Sydney’s clean water.

”Ultimately the project is likely to be somewhere in the 150 to 200-well range,” said Apex Energy’s corporate development manager, Chris Lawrence.

”Once we’ve got the data from the next two test wells, we can start working on a production plan, but that might take one to five years to get through – you tell me.”

In its plan, Apex Energy blames the Part 3A planning process and a lack of investment cash for the project’s slow progress up until now. It also says ”the rapid emergence of the anti-gas movement and sway of public opinion against the industry, and a new state government eager to allay those concerns by regulation, have all conspired to bring the CSG industry in NSW to a standstill”.

Apex has entered a joint venture with Ormil Energy, which has agreed to pay for the drilling of the test wells, should the government approve them.

The Planning Minister, Brad Hazzard, said the original approval to drill in the drinking water catchment was granted by the previous government in 2009.

”The department has assured me it will not recommend anything for approval which has the potential to damage Sydney’s drinking water supplies,” he said. If necessary, a decision on the Apex plan would be made by the independent Planning Assessment Commission.

The jury is out on the potential damage that coal seam gas drilling and hydraulic fracturing, or fracking, can cause to underground water supplies.

The coal seam gas industry body, the Australian Petroleum Production and Exploration Association, was forced to defend a TV advertising campaign this week after the CSIRO said it was incorrect.

The ads claim the CSIRO had declared gas drilling to be safe but the national science organisation said it had never stated that gas drilling would not contaminate water. The association agreed to take the CSIRO point of view ”on board”.

The Greens urged the government to stop any further drilling approvals in the catchment area.

”Barry O’Farrell has a critical decision to make: approve the development of poisonous coal seam gas wells in our drinking water catchments and suburbs, or reject Apex’s extension and protect these areas,” said Greens MP Jeremy Buckingham.

The Department of Planning is calling for public submissions on the Apex Energy plans, to be lodged by September 14.

AAP

Environment groups say if owners of Australia’s dirtiest coal-fired power stations don’t accept payments to close down generation they shouldn’t receive any other carbon tax compensation.

Energy Minister Martin Ferguson will make an announcement about the so-called contract for closure negotiations in Melbourne on Wednesday morning.

The program seeks to support the closure of around 2000 megawatts of highly emissions-intensive generation capacity by 2020.

But a June 30 deadline for locking in a deal has already been and gone.

“At the moment it looks as though neither the federal government nor the coal generators are trying very hard to reach agreement,” Environment Victoria campaign director Mark Wakeham said in a statement.

He argues any decision to rule out contracts for closure for Hazelwood or Yallourn power stations would make achieving the 2000 MW commitment impossible because the other three power stations in the process only generate 600 MW combined.

“If these facilities now claim they have a profitable future and their asset values remain high then there is no public policy justification for the compensation payments that are coming at great cost to Australian taxpayers.”

Coal generators are expected to share some $5.5 billion in compensation over five years.

“It’s now official, NSW does not need any baseload generation for at least 10 years” … opposition energy spokesman, Luke Foley. Photo: Janie Barrett

NSW will not need a new power generator for another 10 years, says a report that has raised questions about the government’s decision to sell the state’s generators to avoid the need to spend billions of dollars on boosting future supply.

A report commissioned by the Labor government in 2007 predicted NSW would need a new generator by 2014 to avoid blackouts, prompting Labor’s decision to privatise power generation.

The O’Farrell government has continued to argue NSW would need to spend $6 billion to $7 billion on new baseload power generation unless state-owned generators were privatised.

The opposition energy spokesman, Luke Foley, said forecasts for energy supply needs had fallen in the past four years for a range of reasons, including the global financial crisis, a decrease in energy use due to higher bills, and an increased uptake of solar energy.

The Australian Energy Market Operator released a report last week that says NSW does not need to increase its power supply until 2022.

”It’s now official, NSW does not need any new baseload generation for at least 10 years,” Mr Foley said. ”Mr O’Farrell’s argument that more than $6 billion needs to be spent on new baseload has been blown out of the water. That argument for privatisation of generation no longer exists.”

However, the Treasurer, Mike Baird, yesterday stood by what he said in late May, when Parliament passed legislation to allow the state’s power generators to be sold. He maintains the privatisation will avoid the need for the government to invest more than $6 billion on future baseload generation and that the money would be better spent on much-needed infrastructure.

Mr Baird said yesterday that forecasts of demand for electricity supply had fallen as a result of the global financial crisis and price increases, to which the federal government’s carbon tax would also contribute. But while it was impossible to know whether the economy would improve during the next five years, planning could not be postponed.

He said it was ”rubbish” to suggest the government did not need to start planning for electricity needs for another 10 years.

”It takes four to six years to get a generator up and running,” he said. ”We can’t wait for the supply and demand intersection to occur before we start planning.

”The forecast is there will be a supply and demand mismatch just after 2020. A prudent manager wouldn’t wait for the mismatch; they would ensure a buffer before it eventuated.

”The government’s view remains that outlay is best left to the private sector.”