AGL’s makes shock exit from Australian CSG market, Gloucester project to be scrapped
GAS firm AGL will withdraw from the Australian CSG market, scrapping its controversial Gloucester coal seam gas project and pulling out of its Sydney CSG wells 12 years early.
NSW
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GAS firm AGL has confirmed its shock exit from Australian CSG market — scrapping its controversial Gloucester coal seam gas project, pulling out of its Sydney CSG wells 12-years early and selling assets in Queensland.
The company blamed the plunging oil price and lower than expected production volumes at the Gloucester project, which has been the subject of long-running protests over broad fears surrounding CSG, including potential contamination of the water table.
AGL’s licence for Gloucester will be handed back to the state government and the site decommissioned and rehabilitated.
Its CSG wells at Camden, in southwest Sydney will cease production in 2023, 12 years earlier than anticipated.
AGL is also exiting three CSG projects in Queensland, at Moranbah, Silver Springs and Spring Gully.
“Exiting our gas assets in NSW has been a difficult decision for the company,” said AGL managing director and CEO, Andy Vesey.
“AGL has invested significantly in these projects and communities over the past seven years for the Gloucester Gas Project, and ten years in the case of the Camden Gas Project.
“We are proud of the dedication and professionalism of our employees and contractors in their efforts to get to this point and our work to bring benefits to the communities in which we operate.
“We remain committed to leaving a positive legacy in these regions.”
AGL had drilled pilot wells at its Waukivory project at Gloucester and carried out economic modelling of the potential gas resources.
“Unfortunately, the economic returns to support the investment of approximately $1 billion were not adequate,” the company said in a statement to the stock market on Thursday morning.
“Consequently, in the interest of our shareholders and customers, this is the most responsible course of action.”
The company said the total cost of exiting the CSG market would be around $640 million, including impairment charges and the cost of rehabilitation.
NSW has had a chequered history with CSG, which has the potential to dramatically boost domestic supplies of gas but which has been the subject of significant campaigns by environmentalists and Green groups.
The state currently produces only about five per cent of its own gas and the development and production of local gas resources has the potential to lower household utility bills.
The state’s chief scientist ruled in 2015 that the CSG industry was largely safe and that any risks could be managed.
The Baird government has been buying back CSG licences that covered much of the state and plans to reset the industry.
The anti-CSG movement on the state’s far north coast was responsible for boosting the Green vote at the 2015 state election, at the cost of the National Party.
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