PERTH (miningweekly.com) – Gas developer Metgasco has suspended exploration and development work on its $100-million Clarence Moreton coal seam gas (CSG) project, blaming an “uncertain operating environment” created by recent legislative changes.

During February, the New South Wales (NSW) government announced a 2 km buffer zone around residential areas, preventing new CSG activity, as well as exclusion zones around certain agricultural activities.

The state government also said it would review all CSG activity in the state, with a report expected in July.

More recently, the federal government also announced that it would amend the environmental laws to protect water resources from large CSG and coal operations.

Metgasco told shareholders this week that the new regulations had created an environment of substantial uncertainty for energy companies in the state, and noted that, as regulation currently stood, it was not clear exactly how they would affect the approval timing and conditions for new wells and developments.

“With the NSW Chief Scientist report not due until mid-year, Metgasco, like all other energy companies looking to undertake CSG developments in NSW, is potentially faced with another six months or more of regulatory uncertainty and delays,” MD Peter Henderson said.

He noted that the decision to suspend the work at Clarence Moreton, while very disappointing in light of the benefits to the Northern Rivers region, was necessary to preserve shareholder value.

“The CSG industry in NSW endured an 18-month shutdown while the state government reviewed the industry and put in place regulations it lauded as the toughest in Australia, if not the world.

“Only five months after introducing these new regulations and confirming its support for the industry, the NSW government has yet again announced new regulations, this time without any consultation with the energy industry.”

Henderson said that, until the CSG regulations were firmly established and tested, Metgasco planned to scale back its organisation while maintaining a small presence in the Northern Rivers region, to manage community consultation and maintain key relationships.

The company will rehabilitate most, if not all wells and facilities located on its permits.

“This was not an easy decision to make, but a necessary one, given the regulatory uncertainty,” Henderson said.

To date, Metgasco has spent nearly A$100-million in acquiring licences and undertaking exploration activities in northern NSW.