MOMENTUM is building to boost production of coal seam gas (CSG) in NSW with new federal Industry Minister Ian Macfarlane citing it as the most urgent resource issue facing the government.
At the same time, NSW Resources and Energy Minister Chris Hartcher has called in heavyweight support in the form of former federal resources minister Martin Ferguson to help broker a breakthrough in the crisis in natural gas supply that is threatening the state.
Mr Ferguson, resources minister for most of the former Labor government, will co-chair a high-level invitation-only summit of energy policymakers, business leaders and advisers next week in Sydney which will tackle NSW's energy security problem, with a focus on coal seam gas.
In an interview with The Australian Financial Review, Mr Macfarlane said it was inconceivable that in his native Queensland, some 4000 farmers had individual agreements with gas companies in which they benefited from having CSG wells on their land but there were next to none in NSW.
Pointing out he has been a farmer longer than a politician, Mr Macfarlane said he would personally drive the push to remove impediments to gas extraction in NSW.
"We need to make sure we get this gas out of the ground," he said, noting current NSW gas wells would run dry by 2016. "I want to broker a mutually agreed outcome."
The approach by the minister puts him on a collision course with the Nationals. Agriculture Minister Barnaby Joyce said his party would approve expansion of the industry only if five criteria were met. These were no damage to aquifers, no use of prime agricultural land, no disturbance to rural households, a fair return to farmers, and a fair return to local communities.
Mr Macfarlane said farmers were wary because gas companies had made mistakes in the past. "A lack of finesse with stakeholders is a nice way of saying it," he said.
But he believed there was unnecessary concern and there were farmers in NSW "who want to co-exist". He wants to set up meetings with Premier Barry O'Farrell and Mr Hartcher and is planning a forum with stakeholders near Casino incoming weeks.
This will be separate to the one-day summit in Sydney organised by the NSW government which will be addressed by Business Council of Australia president Tony Shepherd, NSW Chief Scientist Mary O'Kane and Australian Energy Market Operator chief executive Matt Zema.
Michael Fraser, who as chief executive of AGL Energy has been highly critical of NSW's coal seam gas regulations, was invited but has had to decline as he is overseas. Senior executives from Santos, which also has coal seam gas ambitions in NSW, are expected to attend. Development of NSW's gas resources has been stymied by a series of changes in policy and regulation, most recently involving draft rules proposed under Mr O'Farrell that ban coal seam gas drilling around residential areas and industries such as vineyards and horse studs.
Mr Hartcher said about 150 people have been invited to the summit, which will tackle the total energy mix for NSW to meet future needs, including coal and renewable energy, not just gas.
"It's not to be seen as a political issue, it's a community issue," he said. "Business, trade unions and academia are all invited."
NSW consumes almost a quarter of the east coast gas market but produces less than 1 per cent of that supply. "Developing new supplies is absolutely critical if we are to put downward pressure on energy prices in NSW and continuing to say 'no' to natural gas development in NSW will have significant consequence for industry, manufacturers, and households in that state," said Michael Bradley of the Australian Petroleum Production and Exploration Association. Before the federal election, Kevin Rudd cited high energy prices as the key impediment to increasing productivity. He said boosting the production of coal seam gas in NSW was critical to reducing gas prices for industry and households.
Tony Abbott at times walked both sides of the street, empathising with the industry but also the Nationals by telling farmers they should have the right to determine who entered their land.
Mr Macfarlane, whose portfolio covers resources and manufacturing, is of the view farmers can benefit.
Mr Ferguson has been frequent critic of the stalling of coal seam gas development in NSW. Speaking in Canberra last week, Mr Ferguson called for "political leadership" in NSW to overcome the "misleading" campaign against coal seam gas by environmental campaigners.
"Governments need to show leadership by not only carefully regulating these projects but by calling out those activists for what they are: ideological crusaders who oppose almost any form of wealth-creating development," he said. Mr Ferguson's co-chair at the summit will be former NSW MP Robert Webster, a grazier and director of Brickworks, one of the manufacturers that has been most vocal about the problem created by escalating gas prices in eastern Australia.
In a letter to the Financial Review Greens mining spokesman Jeremy Buckingham said recent efforts by the CSG industry to win the community over with "pro-gas grassroots campaigns" were failing.
"First we had "We want CSG" with images of farms but not gas wells. Then we had football star Darren Lockyer paid to say CSG looked clean to him. Now we have the 'Our natural advantage' campaigns," he wrote.
"Far from winning the community over, these social media campaigns are failing because the vast majority of the community holds genuine and deep concerns about the threat coal seam gas poses to land, water and communities.
"Regardless of industry spin, most MPs know that CSG is a major issue for voters."
The phrase "coal seam gas" is set to be wiped from official documents in NSW and possibly across Australia as governments come under increasing pressure over the contentious energy policy area.
A leaked briefing note prepared for NSW energy and resources minister Chris Hartcher recommends the phrase and its acronym CSG be replaced with the standard term "natural gas from coal seams".
