Dart Energy suspends Australian operations

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Dart takes action in the face of tough new CSG regulations, suspending its Australian projects to focus on UK assets instead

Dart Energy suspends Australian operations
Dart Energy suspends Australian operations

By Anna Game-Lopata | April 2, 2013

Coal Seam Gas (CSG) giant Dart Energy has consolidated its supply chain to focus on UK assets resulting in the suspension of Australian projects.

The company, formerly Apollo Gas in Australia, has international interests in Britain, Europe and Asia.

In Australia, Dart recently acquired a
large Northern Rivers gas tenement following a demerger from Arrow Energy.

The company's PEL 445 covers 7100sq km including Bonalbo, Urbenville, Kyogle, Nimbin, Lismore, Ballina and Evans Head in NSW.

But the CSG explorer says market conditions and tough new regulations in NSW have forced it to re-think its position.

It points squarely at the NSW government’s new policy, announced in late February, to ban CSG developments within two kilometres of residential areas and industry clusters, as one of the key reasons for its decision to restructure and cut costs.

"The board of Dart is extremely disappointed with the uncertainty created by recent NSW and Federal government decisions in relation to CSG development in Australia," Chairman Nick Davies says.

"The consequence is that investment is leaving the country, field operations are being suspended, Australian jobs are being lost, and the impending energy crisis in New South Wales is not being addressed, and indeed, will only get worse.

"This is in direct contrast to the United Kingdom, where the Government is actively seeking to support the responsible development of unconventional gas resources."

To reflect this position, Dart Energy says in the short term it will focus on its "attractive" CSG projects in Scotland, and on the company’s extensive shale assets in England, specifically the Bowland basin.

Field operations in NSW will be suspended until "NSW and Federal policies are in place to support the industry in being able to meet the needs of projected natural gas demand".

Dart will also suspend field operations at its Fullerton Cove project near Newcastle, despite the recent lifting of a court injunction on the company sinking exploratory wells.

Operations in Indonesia will continue, but at a reduced pace.

In China, the focus will be on securing regulatory approvals for its shale gas PSC, and finalising the associated farm-out to fund that exploration program.

Other operations such as in India and continental Europe considered non-core will be scaled back substantially, with a view to partnering, farming-out, selling, or exiting, in a manner that best maximises returns to the Company.

Dart adds it will reduce its global staff base by 70 percent, taking the number of employees to 50, and slicing 60 per cent of its overall costs.

The CSG ban in NSW, which applies to any coal seam gas proposal yet to be approved under the Environment Protection and Assessment Act or the Petroleum (Onshore) Act, is part of a raft of new reforms in the state.

In addition, the Environmental Protection Authority (EPA) will be appointed as the lead regulator of environmental and health effects of coal seam gas activity in the state, which will also need to hold an Environment Protection Licence.

The EPA will be in charge of compliance and enforcement and empowered to revoke licences if breaches are detected.
A new Office of Coal Seam Gas Regulation will be established.

Chief Scientist and Engineer, Mary O'Kane, will review all coal seam gas activity in NSW, including the effect on water catchments, and report on any risks by July.

The review will ''provide an evidence base to support better understanding of the CSG industry in NSW and identify any gaps in the management of risks arising from CSG activities''.

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