The New South Wales government is determined to develop the state’s coal seam gas industry to address a looming shortfall in gas supply, energy minister Chris Hartcher told an oil and gas industry conference in Adelaide.

Citing forecasts that NSW’s domestic gas market could face supplies bottlenecks as soon as 2014, Mr Hartcher said the state “needs to develop its own CSG reserves” which could provide 250 years of supply.

NSW had a “huge challenge and a huge opportunity”, Mr Hartcher said, but the development of the state’s CSG reserves would need to take place while engaging with farmers and environmentalists who had concerns including “possible challenges to the protection of the most valuable resource of all in Australia – water”.

The community needed to feel it was sharing in the benefits of CSG extraction, he said.

‘Fly-by-nighters’

National Farmers Federation vice president Duncan Fraser said the significant and rapid ramp-up of the CSG industry in Queensland and NSW “has and is creating conflict, but it should not have.

“Fly-by-nighters did the whole industry a disservice, the way they conducted negotiations with landholders”.

Mr Fraser said this had led to an “unholy alliance between natural enemies” with farmers and environmentalists concerned about the CSG industry, which needed to improve its social licence.

Issues for agriculture included independent scientific reassurance about water quantity and quality, and groundwater aquifer integrity. Better negotiations of access agreements and communication between landholders and gas companies and their contractors also had to be achieved, he said.

But Mr Fraser said the NFF was working towards a nationally harmonised regulatory approach and there was “some light at the end of the tunnel”.

“Some companies are changing their behaviour to be respectful,” Mr Fraser said. “Santos and Origin, from member feedback, are regarded more highly.”

New codes

Mr Hartcher said the NSW Government hoped to finalise a “world’s best practice” regulatory regime to apply to the state’s CSG industry within the next few months. It had already finalised new codes of practice covering well integrity and fracture stimulation or “fracking”, as well as CSG exploration.

“We regret our own timeframe has been somewhat prolonged but we are determined to get the regulatory process right so once the industry does move, it can move forward with certainty”.

Mr Hartcher said NSW had the highest dependence on black coal of any state and the carbon tax was expected to drive increased demand for gas for power generation.

Yesterday BHP Billiton Petroleum chief Mike Yeager told journalists the company had plenty of gas for sale to supply east coast markets.

“We want to make sure that the market knows that the Bass Strait field still has a large amount of gas that’s undeveloped,”.Mr Yeager said. “We have a lot of gas in eastern Australia that’s available. It’s more important to let the citizens of Victoria and New South Wales, and to some degree, you know, even Queensland .. there’s plenty of gas to supply those provinces for – you know, indefinitely.

“We have gas for sale and we will work with anybody at any time,” he said.