After the documents negotiated between Forests NSW and Eastern Star Gas regarding land access to the Pilliga State Forest for coal seam gas activities were released on 3 January, both The Greens and Santos took the opportunity to respond.
Here is what Greens NSW mining spokesperson Jeremy Buckingham had to say:
0.3% per well from Pilliga coal seam gas project a swindle
3 January 2012
The Greens NSW spokesperson on mining Jeremy Buckingham has called for the land holder access agreement between Forests NSW and Santos to be renegotiated after the agreements released by Freedom of Information revealed that Forests NSW was only receiving a pathetic $2,500 per annum from every active coal seam gas well.
Eastern Star Gas (now purchased by Santos) has previously said that each well in the Pilliga project would produce revenue of approximately $800,000. A $2,500 payment per well means Forests NSW will receive only 0.3% of the revenue from each well.
“This revelation shows how little NSW taxpayers are getting for the massive amount of damage this industry is doing to the Pilliga Forest and potentially our waterways and aquifers,” said Greens MP Jeremy Buckingham.
“Santos stand to make billions by pock-marking the Pilliga forest if its proposal for 1,100 coal seam gas wells if approved. But NSW taxpayers will get little compensation . This project is a dud.
“I’ve seen the damage done by the pilot coal seam gas operations in the Pilliga, including massive amounts of clearing, large tracts of dead trees where coal seam gas water has spilled, unlined waste water ponds, introduced weeds, large evaporation ponds and leaking infrastructure.
“Santos plans to turn an important nature reserve into a heavy industrial zone, but pay virtually nothing to the community.
“Taxpayers will also be ripped off when it comes to royalties from coal seam gas, with a five year royalty holiday for gas in NSW. In Queensland gas royalties are 10% from day one, yet here in NSW the gas companies will pay no royalties for the first five years, and only 10% after 10 years of operations. It’s a swindle,” he said.
This is the statement from Santos (who are relevant in that they now operate the CSG licences in the Pilliga, that were previously owned by Eastern Star Gas, the company referred to in the released Occupation Permit – more on that here):
Sustainable CSG operations in Pilliga promise significant environmental, economic and energy benefits
4 January 2012
The Greens media release yesterday on a land access agreement for the Pilliga State Forest signed between Eastern Star Gas (now owned by Santos) and Forests NSW is either disingenuous or highlights a lack of understanding of the financial contribution resources projects make to governments and communities.
The land access payments are only one small portion of the contribution to NSW from our proposed CSG operations.
The agreement between Eastern Star and Forests NSW negotiated last year covers access rights to land in the Pilliga State Forest. In addition to these payments, coal seam gas producers pay significant royalties to the State Government. If Santos develops our NSW CSG business successfully, then we estimate these royalties will exceed $150 million a year over more than 20 years.
A report by Allen Consulting Group released before Christmas highlighted our plans to develop the CSG reserves of north west New South Wales could deliver a $15.2 billion boost to the state’s economy and see the creation of 2,900 ongoing full-time jobs. On an annual basis, these benefits would contribute $820 million a year to the NSW economy and $470 million in direct benefits to regional areas.
Santos completed a takeover of Eastern Star in November, and is now reviewing all of the company’s exploration and appraisal operations and development plans.
Eastern Star has been exploring and appraising the CSG resource in the Pilliga since 2003. Eastern Star had proposed to drill up to 1,100 wells in the forest, but Santos is now reviewing those plans. We would not expect to drill as many wells.
There are currently 30 CSG pilot wells in the Pilliga. Even in a fully-developed project, the footprint of the CSG wells would occupy a cleared area representing less than 0.5% of the total forest area.
Santos considers that by using state-of-the-art, low-impact, high-efficiency drilling technology into a world-class CSG resource, our NSW CSG project will produce significant natural gas supplies, and therefore royalties to NSW, in a safe and sustainable manner with minimal impact on current land use.
We have a long term view and we are carefully planning our work program to gather the scientific data needed to ensure that any future development is safe and sustainable.
A final decision to move to development and production will not be made until this work is complete and extensive environmental reviews and approvals have been granted.
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[...] fee of $2500 per active gas well per year to Forests NSW, a price that has been criticised by The Greens and some environmental NGOs as too low. Santos hit back explaining that the land access fee was only one way the state profits from CSG, [...]