Gas company Metgasco has filed a judicial review over the NSW government’s decision to suspend its gas drilling program near Lismore, claiming the move was unlawful.
NSW Resources and Energy Minister, Anthony Roberts, suspended Metgasco’s drilling licence just days before the program was set to commence, stating the company needed to prove it had undertaken "genuine and effective consultation" with the community.
Roberts said the Office of Coal Seam Gas (OCSG) had advised him of concerns expressed by local community members about the way in which Metgasco had characterised its activities.
Metgasco said the decision was not authorised by legislation, and was made without affording it procedural fairness.
It said it was also looking into whether it could sue the government for damages and financial losses sustained as a result of the suspension, expected to amount to $3 million.
The company said it will ask the NSW Supreme Court to rule that it had complied with its community obligations.
In announcing his decision to suspend drilling, Roberts also revealed he had referred Metgasco to the Independent Commission Against Corruption (ICAC) following "receipt of information concerning shareholdings and interests” in the company.
Yesterday, the ICAC said it would not proceed with an inquiry into Metgasco shareholders.
Metgasco welcomed the news from ICAC, stating the public referral of the company to the commission had caused major reputational damage.
In a letter to shareholders, Metgasco chairman Len Gill said the suspension came as a complete surprise to the company, which had mobilised equipment and workers to the Bentley site.
He said the suspension would result in a direct loss of $3 million.
Shares in Metgasco have almost halved since the suspension and Gill warned investors risked losses of around $18 million.
Permission for the company to drill its Rosella-E-01 exploration well remains suspended.
Metgasco said it provided this information to the OCSG, which advised it has decided to maintain the suspension.
“The OCSG acknowledges that some sections of the community are opposed to the development of a gas industry for a variety reasons. We do not expect licence holders such as Metgasco to be able to change their view points,” the government department said.
“We do however expect that licence holders such as Metgasco will develop a detailed consultation plan in compliance with the guideline and demonstrate an ability to effectively and genuinely engage with the community.”
The OCSG said drilling could commence after an acceptable community consultation plan is in place.
Meanwhile, Roberts has been unapologetic in suspending the drilling permit.
“The government will continue to vigorously pursue titleholders to ensure they maintain high standards of community consultation,” he said in a statement.
The decision came after almost three months of protests by locals who oppose gas exploration activity in the area.
The Australian Petroleum Production & Exploration Association said the presence of protestors does not mean genuine consultation with the community has been not undertaken.
Metgasco has until Friday to make another submission to the OCSG before a final decision is made.