Supreme Court rules in Metgasco’s favour

The ruling ends more than 12 months of uncertainty for the company following the suspension of the licence at the Rosella site, near Bentley in the state’s north, by the Office of Coal Seam Gas on the grounds that Metgasco did not undertake effective community consultation.

NSW Minister for Resources and Energy Anthony Roberts said the suspension of PEL 16 was the result of an ongoing audit of all petroleum exploration licences in the state, aiming to ensure company compliance with title conditions.

Metgasco has continued to argue that the Government’s suspension decision was unlawful and unjustified, and severely damaged its interests, while the company reporting a net loss after tax of $A85.9 million for the 2013-14 financial year, with $A81.2 million blamed on the “impairment of the exploration and evaluation asset, a non-cash expense” at the Rosella well.

Metgasco Managing Director Peter Henderson said the ruling was a landmark decision for the resources industry in NSW and could have implications for broader industry in the state.

“Had we lost, future investors in NSW would have had to consider the real threat of sovereign risk and NSW’s image would have been tarnished,” Mr Henderson said.

Suspension unlawful

Justice Button found that in addition to the suspension being unlawful, the Office of Coal Seam Gas did not observe proper procedural fairness, and had confused consultation with persuasion.

“Effective consultation to my mind focuses on the quality of the process of consultation, rather than on any outcome whereby the persons who are the focus of the consultation are persuaded by it,” Justice Button said.

Justice Button awarded costs to Metgasco.

Protest action should not impact Govt

The Australian Petroleum Production and Exploration Association (APPEA) welcomed the decision, maintaining that protest action should not be considered by government and regulators as an indicator of ineffective consultation and therefore grounds for suspension of previously approved operations.

“Companies with required approvals in place should be allowed to get on with the job of safely producing gas for NSW households and businesses,” APPEA said.

“Industry has always recognised there are people with genuine concerns regarding resource development who are open to consultation, science-based evidence, and reasonable negotiation; and that there are others who are not.”

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