Trading Room home page

Bills to rise as CSG projects leave NSW

Market watch top headlines

Australian reports

World reports

Stocks to watch

BHP, WHC, PMV, QAN, SAI, YOW,

SYDNEY, Feb 19 AAP

February 19 2013, 6:24PM

Gas bills will rise and billions of dollars of investment could be driven out of NSW because of the state government's tough new coal seam gas regulations, energy companies say.

NSW Premier Barry O'Farrell is also fending off criticism a ban on CSG drilling near homes is a bid to woo Liberal voters in marginal western Sydney seats ahead of the federal election later this year.

The measures include an independent review of all CSG activities, their impact on water catchments and a 2km buffer zone around homes and industry clusters such as horse-breeders and wineries.

AGL Energy CEO Michael Fraser says the new regulations are "disastrous".

"If I look at investments that have been made and the potential future investments that have been potentially taken off the table then you could be talking a couple of billion dollars worth of investment," Mr Fraser told reporters in Sydney on Tuesday.

It's believed the expansion of AGL's Camden gas project in southwestern Sydney - suspended because of community anger - can't proceed under the changes.

"There is no doubt at the end of the day the higher price of gas will flow through to NSW homes and businesses," Mr Fraser warned.

"There are literally thousands of manufacturing jobs that are put at risk if we can't supply gas to them in the future or prices of that gas is too high."

Dart Energy said the decision would have major implications for investment confidence and a flow-on effect on the price of goods and services.

The company also said the NSW government had not given enough time for the raft of regulations it introduced last September, and hailed as the "toughest in Australia", to be fully implemented.

But Mr O'Farrell said he had listened to community concerns and "fine-tuned" the government's land-use policy.

"I am not surprised at push-back from business ... (but) business, like our children, needs boundaries," he said.

"Business have been told very clearly today, hands off residential zones across the state."

Mr O'Farrell sidestepped questions about whether the buffer zone was an acknowledgment the CSG industry was unsafe, saying it was designed to protect people's homes as assets.

He wasn't able to provide figures on how much of the state would be out of bounds but said it would impact 25 per cent of CSG areas in the Upper Hunter.

"There are still plenty of areas of NSW where the industry can still develop," he added.

Resources Minister Chris Hartcher said there would continue to be a gas industry in NSW.

"This decision today in no way impacts upon gas supply for the years ahead," he told reporters.

NSW Opposition Leader John Robertson said the government needed to "push the pause button" on CSG exploration until there was conclusive scientific evidence.

He also called for clarity on what would happen to farmland under the measures.

"What we still don't see is answers on what we're going to do to protect prime agricultural land, what we'll do to protect the bushland, what the government is going to do to protect the drinking water of five million Sydneysiders."

Federal Independent MP Tony Windsor called on the federal government to intervene to ensure the protection of water resources for future generations.

He said the announcement was driven by politics rather than sound policy and designed to appease horse-breeders and winemakers in the Hunter Valley and residents of western Sydney.

"It does nothing for farmers," he added.

By Tara Ravens