AGL wants Camden CSG expansion to proceed
Market watch top headlines
Electricity and gas company AGL Energy says it will still seek to grow its coal seam gas operations in New South Wales following a state government ban on CSG near residential areas.
AGL managing director Michael Fraser said he met with NSW Premier Barry O'Farrell on Tuesday to discuss the new policy which banned coal seam gas (CSG) projects within 2km of residential areas and placed exclusion zones around horse studs and vineyards in the Hunter Valley.
Mr Fraser said Mr O'Farrell was "engaged" and listened to the company's concerns about the policy during the meeting.
"The discussion was really about there (being) significant implications for NSW, for the NSW economy, for the price of energy to households and businesses," Mr Fraser said during a briefing for AGL's half-year results on Wednesday.
"So how do we look at mechanisms within the context of the policy that the government has announced that means that we can ultimately develop those resources in a way that addresses the community concerns and we don't just simply sterilise the resource."
AGL has CSG operations in NSW in the Hunter Valley - a key centre for wineries and thoroughbred horse breeding, Gloucester near Newcastle and at Camden, a residential and rural centre south-west of Sydney.
AGL shelved a controversial expansion of its Camden operation before the NSW government's surprise ban announcement on February 19.
An AGL spokeswoman said on Wednesday it would be "very difficult" for the suspended Camden North expansion to proceed in its current form under the NSW CSG policy.
Mr Fraser's comments referred to the potential impact of the buffer zone policy on AGL's Hunter Valley operations, and to the broader impact of the CSG ban on industry, the spokeswoman said.
Mr Fraser said he spoke to Mr O'Farrell about "sovereign risk issues" for doing business in NSW arising from the exclusion policy and the "completely arbitrary nature of the policy which ignores any science or evidence".
Mr Fraser acknowledged there was concern in the community but blamed that concern on "wild unsubstantiated accusations" about the CSG industry.
Mr Fraser said AGL may face unspecified impairment charges against the $325 million book value of its CSG projects in Camden and the Hunter Valley as a result of the NSW policy and any expansion of its Gloucester operation may be affected.
He also said AGL was "spending millions of dollars" at present in arbitration with interstate gas suppliers which were seeking to increase their prices for supplying gas to NSW.
NSW currently imports about 95 per cent of its gas requirements from other states and AGL has warned that prices will rise unless local sources are developed.
Peter Trute, AAP Senior Finance Writer