PERTH (miningweekly.com) – ASX-listed unconventional gas explorer Metgasco has launched legal action against the New South Wales government, claiming damages for the suspension of its 2014 drilling programme and preparing a judicial review over two of its licences.

Metgasco had been in discussions with the state government since the Supreme Court in April overturned a suspension of drilling at Metgasco’s Rosella exploration well.

Metgasco turned to the Supreme Court last year after the New South Wales Office of Coal Seam Gas (OCSG) failed to amend a previous suspension of drilling activities at the Rosella exploration well.

The OCSG maintained the suspension, providing the company with written material in support of the renewed suspension, which had originally been based on claims that Metgasco had failed to adequately conduct community consultation.

The New South Wales Supreme Court found in favour of Metgasco, after the state government failed to lodge supporting evidence for the OCSG’s decision. The state government did not appeal the decision.

Metgasco said on Tuesday that the company had now suspended formal discussions with the state government over the future of its three Northern Rivers licence areas, as matters between the two parties could not be settled.

Instead, it was pursuing damages in relation to the suspension of the 2014 drilling programme and would prepare for a judicial review to have one of its licences renewed, while seeking the award of a production licence for a second.

Metgasco would also turn to the court to conclude contractual agreements for a seismic acquisition programme to the east of Lismore and for the drilling of the Rosella prospect.

“Details of the seismic and drilling programmes will be issued over the next few months, as contract details, including drilling rig choice and availability, are concluded,” said Metgasco MD and CEO Peter Henderson.

“We expect the government will provide all necessary police protection to allow the lawful activities to be undertaken safely and securely and we were given assurances in this respect as part of our discussions with government.”

Henderson added that Metgasco would have preferred to settle the claim for the 2014 suspension damages outside of court and was happy to resume good-faith discussions with the state government, but said these would not be conducted at the expense of having to indefinitely suspend its business activities.

Greens group Lock The Gate Alliance had called on the state government to cancel Metgasco’s licences in the region, through an Act of Parliament.

“If Metgasco doesn’t want to conclude negotiations for a graceful exit from the Northern Rivers, then that’s all the cue government needs to call their bluff, walk in to Parliament next week, cancel the licences by Act of Parliament and protect the Northern Rivers forever through legislation,” Gasfield Free Northern Rivers co-coordinator Elly Bird said.