Narrabri gas pioneer Peter Coates ‘astounded’ by delays to approval
The ex-Santos chair who bought the original Narrabri gas permits a decade ago said he was astounded the $3.6bn project was still awaiting approval.
The ex-Santos chairman who bought the original Narrabri gas permits a decade ago said he was astounded the $3.6bn project was still awaiting approval and implored authorities to this week sanction the NSW development to ensure manufacturing remains viable in the state.
The Independent Planning Commission is expected to make its recommendation on Wednesday after Santos first submitted its environmental impact statement for Narrabri in February 2017.
Peter Coates, who signed off the deal acquiring the Narrabri licences in 2011 when Santos chairman, said the state needed additional gas that could be readily supplied by the project. “It’s astounding to me that it’s taken so long to get approval,” Mr Coates, who is now a director of mining giant Glencore, told The Australian.
“I fully expect it to get up. The state obviously needs the gas. Manufacturing in NSW and on the east coast is really struggling through lack of gas supply and I think it’s really important that it does get up. The ability of manufacturing to continue successfully in this state very much depends on the availability of energy.”
Industrial giants Perdaman and Brickworks have warned up to $2bn of planned spending on NSW manufacturing plants could be axed if Narrabri fails to win approval, threatening a rare investment boost as the nation faces a prolonged economic slump from the pandemic.
A deadline for the IPC to make a recommendation was extended to September 30 from the original September 4 deadline following a request for more time by the independent body to the state’s Department of Planning, Industry & Environment.
The IPC asked for extra time after a record seven-day public hearing and 10,000 submissions.
Among the chief concerns raised by critics of the proposed gas facility was the potential for the Gunnedah Basin and surrounding aquifers to be poisoned by underground drilling, endangering local farms and agricultural products produced from the land.
Still, Mr Coates — succeeded by current Santos chairman Keith Spence in February 2018 — said the risks were manageable for the development part-owned by EnergyAustralia.
“We purchased those leases under my watch. All of the potential risks associated with gas production have been taken into account. And I don’t think people need to be concerned. Obviously everyone’s got their own agenda and concerns but I really think they can have confidence in the ability of Santos to cover all of those risks effectively.”
A decision by the IPC could still go either way, Citi said on Friday, while noting approval would likely see final commonwealth hurdles fast-tracked.
“The regulatory environment in NSW is notoriously hard to navigate for upstream projects and Narrabri has been no exception,” Citi analyst James Byrne said. “With over 10,000 submissions — mostly negative — made during the IPC public consultation process, there is a non-trivial risk of rejection from overwhelming public (translating to political) pressure.
“If the IPC approves the project, we anticipate an expedited federal ministerial approval process of just one to two months. Santos would then be afforded the opportunity to appraise the resource with a final investment decision likely in early 2022.”
Citi has modelled the project based on less than half its original 850 proposed wells, given its expectation Santos will opt for more complex and expensive higher-production wells to reduce its environmental footprint.
Credit Suisse said the project should be approved.
“There is renewed industry optimism the political winds have changed,” Credit Suisse analyst Saul Kavonic said.
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