Metgasco will not be rushing to recommence its CSG activities in the northern rivers following the general election, it wrote in a letter to shareholders yesterday.
The company insists it is state government regulations banning CSG activity within two kilometres of residential areas that caused it to mothball operations early this year.
Metgasco insists it holds ‘the largest uncontracted gas reserves on the eastern coast of Australia’ and adds its Kingfisher tight gas discovery ‘could be significant to NSW in its own right’.
But the company blames the state government regulations, which it says have yet to be defined despite being introduced in February.
‘Other CSG companies in NSW followed our action soon after by suspending their activities, withdrawing from NSW altogether or significantly reducing their exploration and development programs. In fact, today there is little CSG activity in NSW and some doubt about whether even the downsized projects of larger companies will proceed in the current environment,’ the letter reads.
The company is referring to Dart Energy and Planet Gas, which has halted its projects. AGL had its projects in the Gloucester region, which have also been strongly opposed, approved by the federal government last year.
‘The Board is confident that it made the correct decision regarding suspension of activities in March. It is more than six months since the premier’s announcement and there are still no regulations regarding how the proposed exclusion zones will work, government departments are still sorting out new responsibilities, revisions to the Petroleum Onshore Act have yet to be passed through the NSW upper house and the business and investment community still lacks confidence in the NSW government’s commitment to the CSG industry and NSW’s energy security,’ the letter continues.
‘This is despite wide acceptance of an imminent shortage of gas supply in NSW and demands from many sections of the business community for action to stimulate the gas industry so as to ensure acceptably priced gas supplies are available.
‘Had Metgasco not suspended its activities we would have faced delays in approvals, which would have led to increased costs. We would have needed to raise additional funds, which would have been extraordinarily difficult if not practically impossible in the current market.’
The company also said it would be ‘difficult if not impossible’ to raise further cash on the stock market in the current environment.
It added that while its Clarence Morton Basin assets were effectively frozen, ‘there is no absolute need to invest elsewhere during 2013 and we will not propose opportunities for the sake of appearing to be active’.
The letter said the company would ‘work to establish a better NSW regulatory and business environment and pursue interests outside of NSW that add value to Metgasco’.
It will continue its PR activities directly and through industry lobby group APPEA.
Metgasco shares closed at 6.3 cents yesterday.