An appeal seeking to block the development of Santos’ Narrabri gas project has been dismissed

An appeal against Santos’ multi-billion dollar Narrabri gas project has been dismissed in a New South Wales Court.

Area team leader Scott Purcell at the Santos Narrabri Operations Centre. Picture: Joshua Smith

An appeal which sought to block the approval of Santos’s $3.6bn Narrabri coal seam gas project has been dismissed in the New South Wales Land and Environment Court.

Community action group, the Mullaley Gas and Pipeline Accord (MGPA), was seeking to have the approval declared invalid on four grounds including that the government’s Independent Planning Commission did not adequately consider the environmental impacts of the greenhouse gas emissions generated by the project.

The group also argued the planning consent should have included conditions around Scope 3 emissions - those which are generated by downstream users of the gas to be produced.

The project will involve the drilling of up to 850 gas wells on up to 425 well pads over the life of the project, which is expected to be about 25 years.

Justice Brian Preston dismissed the appeal on all four grounds argued by the MGPA.

“MGPA has not established any of the grounds of review of the IPC’s decision to grant development consent to the project. The summons should be dismissed,’’ the judgment, handed down on Monday morning, says.

Santos is now free to start the 12-18 month appraisal process for the project needed before a final investment decision is made, with Santos first announcing it would begin appraisal in November last year, before the appeal was lodged in December.

Santos has been developing the Narrabri project for more than a decade after acquiring it from Eastern Star Gas for more than $900m in mid-2011.

The project has been subject to numerous protests, including at Santos annual meetings.

Protestors at the Santos head office in Adelaide in March 2020. Picture: Matt Turner

Santos has argued that the project represents a vital source of gas for Australia’s east coast, and managing director Kevin Gallagher has previously expressed frustration that an appeal could be brought against the project’s approval at such a late stage in the process.

He said on Monday the company would now push on with the porject, after being delayed by a year by the appeal.

“We are seeing play out in real time around the world what happens if you do not have domestic energy security,” Mr Gallagher said.

“On the east coast of Australia, regulators continue to warn about an increasingly tight market in the future. A shortage of supply means only one thing and that is higher prices for NSW households and businesses. If gas was currently being imported into NSW from the international spot market via an import terminal it would cost NSW customers more than five times the cost of gas from Narrabri. As I have said for many years, Narrabri gas will always be cheaper for NSW customers than gas imported from other states or overseas.

“It’s why we have committed 100 per cent of the gas from the Narrabri Gas Project to the domestic market. Following the NSW government’s Future of Gas Statement in July, Narrabri will be the only source of local gas for the state.

“This decision now allows us to get on with the appraisal drilling phase of the project and create jobs, drive investment and attract new businesses to the region, building a better future for the people of Narrabri.”

It is understood avenues for appeal remain.

The judgment says the NSW IPC, in approving the project, accepted the argument from Santos “that a strategic justification for the project was the GHG emissions advantage of CSG over coal, as the combustion of CSG produces lower levels of GHG emissions than the combustion of coal for electricity generation’’.

But it pointed out that this was not the only justification for the project, and the IPC also “found that the extent and impacts of the GHG emissions of the project were justified because of the strategic alignment of the project with the NSW Gas Plan and NSW Energy Package’’.

The judgment says that the MGPA argued the assessment of the project, which looked at the benefits of CSG over coal, was not a relevant way to look at the issue.

“By focusing on the relative comparison of the GHG emissions from CSG with those of coal, the IPC disabled itself from having regard to the likely impacts of the project,’’ Justice Brian Preston says the MGPA argued.

Santos managing director Kevin Gallagher at the company’s Adelaide headquarters.

“The central error in the IPC’s reasoning was in thinking that, because the GHG emissions of the project would be lower than those of hypothetical coal projects, it followed that those emissions would have an acceptable or justifiable impact on the environment.

“MGPA submitted that this conclusion did not ineluctably follow. There needed still to be an evaluation of the likely impacts of whatever would be the GHG emissions of the project.

“By failing to consider the impacts of the GHG emissions from the project, MGPA submitted, the IPC failed properly to take into account the mandatory matter specified in ... the EPA Act.’’

Santos argued that the IPC looked at the impact of the project more broadly, not just in the context of the benefit of CSG over coal.

“I find that MGPA has not established that the IPC erred in law by considering the expected emissions advantage of CSG compared to coal,’’ Justice Preston found.

The judged said the IPC looked at three issues - identifying the extent of GHG emissions, assessing their impacts, and evaluating the acceptability of the impacts.

“The IPC found that the environmental impacts of the GHG emissions were acceptable for four reasons, only one of which concerned the emissions advantage of CSG over coal,’’ the judgment says.

“First, the IPC found that the total GHG emissions over the project’s life would be relatively small, both in amount and as a percentage of Australia’s and global GHG emissions.

“The Department (of Planning Industry and Environment) found that the project’s direct and indirect GHG emissions, including emissions from the downstream burning of the gas, would be minor, at less than 1 per cent of Australia’s total emissions.’’

Costs in the matter are yet to be argued.

Santos shares were 1.5 per cent higher at $7.44 around noon on Monday.

Originally published as An appeal seeking to block the development of Santos’ Narrabri gas project has been dismissed