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NSW planning commission approves $3.6bn Narrabri gas project in state’s north

A controversial proposal for a coal seam gas development at Narrabri, in northern New South Wales, has won final approval from state authorities subject to what they described as stringent conditions.

The state’s independent planning commission announced on Wednesday a “phased approval” under which the controversial $3.6bn project proposed by the oil and gas company Santos must meet specific requirements at each stage of development before it can proceed.

It imposed 134 conditions and did not approve some elements of the proposal, including the construction of a gas-fired power station at Leewood, a workers’ accommodation building and some infrastructure that would allow gas flaring.

Santos said it accepted the conditions and would move ahead with the project, which is seen as central to the Morrison government’s push for a “gas-fired recovery” from the Covid-19 recession.

If developed in full, it would involve up to 850 coal seam gas wells being drilled on 1,000 hectares of a 95,000-hectare site that includes Pilliga forest and nearby grazing land. Santos says it could provide up to 200 terajoules of gas a day for domestic use for 20 years, equivalent to 50% of NSW demand.

The planning commission heard evidence from hundreds of people and groups, most of them opposed. Objections included that it could damage groundwater relied on for agriculture, lead to a loss of pressure in the Great Artesian Basin, affect biodiversity in the Pilliga forest and release substantial greenhouse gas emissions at odds with Australia’s commitment to the Paris climate agreement.

The panel of three commissioners assessing the proposal – Stephen O’Connor, John Hann and Prof Snow Barlow – said the phased approval would cover four stages of development – appraisal, construction, production and rehabilitation. They found the project was likely to provide “a net economic benefit for the local community, region and state”.

The panel said it was satisfied potential impacts to groundwater could be effectively managed, and had imposed conditions requiring the company to provide further groundwater impact modelling before the project could start production. If the revised model predicted the project would not meet a required water management standard it would not be able to go ahead.

Other conditions imposed on the project include that Santos must offset any emissions above those the company had predicted would be released during extraction and transport. “Scope 3” emissions – effectively, those that result from the gas being burned by its customers – do not have to be offset.

Santos has said it would deliver “more affordable, secure, cleaner energy” for the state, create up to 1300 construction and 200 operational jobs could be developed “safely and sustainably” without harming water resources or the environment.

Its chief executive, Kevin Gallagher, welcomed Wednesday’s decision and said the company was “excited” about developing the gas field. “Now all we want to do is to get on with creating jobs in New South Wales and Narrabri, and making a real difference to people’s lives in rural and regional communities,” he said.

Georgina Woods, the NSW coordinator for environment group Lock the Gate, said the decision was “disastrous, but expected”. She said political pressure on the commission had led to it not being given enough time to properly consider the impact on groundwater and the climate.

“Responsibility for this disastrous decision lies squarely with the NSW government,” she said. “The planning minister, Rob Stokes, gave the commission too little time to consider the huge range of complex issues and the views of over 11,000 people who objected to this gas field.”

Polly Cutmore, a Gomeroi woman, said traditional owners did not want a gas field in the area. “The Pilliga is Gomeroi land and Santos is not welcome there,” she said.

The project has government backing including the formal support of the NSW Coalition. The prime minister, Scott Morrison, listed it as one of 15 projects of national significance, promising an accelerated assessment under federal environment laws and the energy and emissions reduction minister, Angus Taylor, has backed suggestions it will reduce energy costs for consumers. Those suggestions are contested.

In a speech earlier this month outlining the first steps of his gas plans, Morrison said “we need to accelerate development of new basins like the Beetaloo in the Northern Territory and Narrabri in NSW”. It prompted suggestions he was implicitly pressuring the independent commission.

David Chadwick, a stock and station agent in Coonamble, said the decision was based on “bad laws and bad politics” and feared the groundwater resources farmers were reliant on would be at risk. He said the Morrison and Berejiklian governments had been “hell-bent” on the gas field going ahead. “The National party, in particular, has utterly betrayed its traditional supporter base,” he said.

The Australian Workers Union welcomed the decision, and called on the Morrison government to introduce export controls to ensure the gas was used locally, as Santos has promised. “If handled correctly it will be a win for jobs, a win for households, and a win for the environment,” the union’s national secretary, Daniel Walton, said.

Gas is often described as having half the emissions of coal, but recent studies have suggested it could be more. A recent analysis suggested Australia’s emissions accounting underestimates national emissions by about 10%, largely due to a failure to properly recognise the impact of methane – a particularly potent greenhouse gas – released during gas production.

The project still needs final approval under federal environment laws, the Environment Protection and Biodiversity Protection (EPBC) Act.

Woods said communities opposing projects such as Narrabri felt there was no level of government acting in the interests of the environment. “I think we can expect the federal EPBC Act decision on this to be a fait accompli, and that is a really damning indictment on our system of government and our environmental laws,” she said.

Federal ministers Angus Taylor and Keith Pitt welcomed the development’s approval. Taylor, the minister for energy and emissions reduction, said it would deliver jobs and more supply to lower gas prices for New South Wales and the east coast market. “Gas will play an essential role in re-establishing a strong economy,” he said.

But the former prime minister, Malcolm Turnbull, dismissed the suggestion the Narrabri development would lead to ongoing cheap gas prices. Speaking at an online summit hosted by the Smart Energy Council, Turnbull said a gas-fired recovery from recession would require cheap gas but that was not available through proposed developments on Australia’s east coast.

“The fundamental issue is there is not this bonanza of cheap gas in Australia and absent that the talk of some gas-led industrial revolution is just based on a false premise,” he said.

Turnbull said gas was a transition fuel and repeated his criticism that it was “bonkers” that people advising the government were trying to persuade it to spend billions of taxpayers’ dollars to pay for infrastructure that would “in effect subsidise gas”.

“We run the real risk that you’ll be funding what will become, inevitably, stranded assets,” he said.

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