Santos hits legal roadblock with Narrabri gas project

Energy giant Santos has suffered a serious setback in its plan to develop its $3.5bn Narrabri gas project after traditional owners lodged a last-minute legal appeal over native title consent.

Traditional owners have lodged a last-minute legal appeal over native title consent, delaying Santos’s plans to supply half of NSW’s gas needs by 2025. Picture: NCA NewsWire / Jeremy Piper

Energy giant Santos has suffered a serious setback in its plan to develop its $3.5bn Narrabri gas project after traditional owners lodged a last-minute legal appeal over native title consent, delaying the scheme that aims to supply half NSW’s gas needs by 2025.

The appeal by the Gomeroi people in the Federal Court arrived just a day before the 28-day deadline and is expected to add several months to the timeline, with a judge yet to be appointed.

A legal representative for native title adviser NTS confirmed that the appeal was lodged on Friday, but declined to specify its grounds as it did not have permission from the 19 members that make up the representative body.

Santos won approval from the National Native Title Tribunal on December 19 to drill for gas on the 95,000ha site after agreeing to an Aboriginal cultural heritage management plan and pledging to “engage constructively” with the Gomeroi people.

However, traditional owners of the land had previously said grants for petroleum leases should not be made, with the Narrabri project resulting in “grave and irreversible” consequences for Gomeroi culture, lands and waters, and contributing to climate change.

Santos has already spent more than $1.5bn on Narrabri and the court hitch threatens to add a further hurdle, according to Credit Suisse, foiling its ability to ease a shortage of gas supply forecast for both NSW and the east coast over the next few years.

“Narrabri has enough hurdles as it is. In addition to the social ­licence, legal challenge and approvals issues, there are large technical uncertainties, Santos’s ability to fund it is unclear, and appetite to pursue any new gas project is low in the wake of the introduction of the gas cap policy,” Credit Suisse analyst Saul Kavonic said.

“Santos has indicated it may require fiscal stability guarantees from government to proceed, which is unlikely to be entertained in our view.”

Santos has been frustrated by a series of long-winded regulatory hurdles after first promoting the gas facility in 2014 and initially submitting its environmental impact statement for Narrabri six years ago. In recent times, the scheme has attracted broad support across the political sphere with both the Albanese government and NSW Premier Dominic Perrottet backing it.

NSW Energy Minister Matt Kean said his department had moved to clear the last regulatory hurdle needed for Santos to begin construction of the Hunter Gas Pipeline that will connect the Narrabri project to the market.

“The pipeline approval has been done last week. That means the project can proceed and gas will be coming to market as soon as they (Santos) can build it,” Mr Kean told 2GB on Monday.

NSW Energy Minister Matt Kean. Picture: NCA NewsWire/ David Swift

Mr Kean is understood to have signed an authority to survey, ­effectively a tool of last resort to allow Santos to continue surveying on private property if a deal with landowners can’t be reached.

He had faced criticism from South Australian Energy Minister Tom Koutsantonis, who had labelled NSW a “national disgrace” for the lethargic approval of the Narrabri project, accusing Mr Kean of “hypocrisy”.

The 850-well proposal ­received a record 23,000 submissions on its environmental impact statement with 98 per cent opposed to the project, although about a third of local submissions supported the development, the NSW Planning Department said.

Among the concerns raised by critics was the potential for the Gunnedah Basin and surrounding aquifers to be poisoned due to under­ground drilling, putting in danger local farms and the region’s agriculture.

Brickworks has agreed to buy up to 3 petajoules of gas annually for seven years from 2025 from Narrabri under a non-binding deal signed with Santos. Narrabri could supply half NSW’s gas needs, but the project has been ­delayed for years and a final investment decision is only expected this year following a 12-18 month appraisal program.

The Hunter Gas Pipeline is owned by Garbis Simonian, boss of failed east coast retailer Weston Energy, whose collapse in May last year added to a crisis in the national electricity market.

The pipeline would let gas flow from Wallumbilla in Queensland to Newcastle, passing close to the Narrabri facility, which remains subject to a final investment decision by Santos.

Construction of the pipeline, which has planning approval, is expected to start early next year, indicating gas from Narrabri is unlikely to materialise until 2025.

Santos said it had “significant interest” from customers in signing up for long-term gas supplies.

While Santos has said it would be willing to speed up development of Narrabri to meet soaring demand, even if final approvals were granted now it would probably still only be able to enter the market a year early, in 2025.

Santos has previously referenced the NSW Chief Scientist’s 2014 inquiry into coal-seam gas concluding the fossil fuel can be safely extracted.

Originally published as Santos hits legal roadblock with Narrabri gas project