By Andrew Hobbs

METGASCO chairman Len Gill has labelled the suspension of its approval to drill an exploration well at the Rosella site, near Bentley in northern New South Wales by that state’s government as “unlawful”.

The suspension covers work at Metgasco’s Petroleum Exploration Licence 16, which covers the Bentley site near Lismore, originally granted by the Carr government in 1996.

NSW minister for Resources and Energy Anthony Roberts said the NSW Office of Coal Seam Gas (OCSG) had suspended the company’s drilling approval on the grounds that it did not fulfil a condition of its exploration licence, “namely to undertake genuine and effective consultation with the community as required.”

OCSG director Rachel Connell and NSW Land and Water Commissioner Jock Laurie held a meeting with local landholders just before the suspension was announced, at which matters of consultation between the community and Metgasco were raised.

“I have been advised by OCSG that fundamental concerns have been expressed by members of the effected (sic) community about the way in which Metgasco has characterised its activities,” Mr Roberts said in an announcement.

“Metgasco must now demonstrate to OCSG that it has complied with this fundamental condition of its licence,” he said.

Mr Gill, in a letter to shareholders, said the first Metgasco had heard about government concerns over its consultative process was when it was informed of the decision after the close of business on 14 May.

“We strongly believe the Company’s extensive community consultation program has been thorough and fully compliant with the licence requirements,” he wrote.

“The program has been significantly more comprehensive than that which was applied to more than 50 of our wells which have been accepted by regulators, and even the two most recent wells which were drilled in early 2013.”

The NSW Government has also withdrawn police support for Metgasco’s operations – often the only group which stood between the company and protestors.

These twin factors had forced Metgasco to cancel drilling of the well, which had been scheduled to take place in early June, and de-mobilise equipment and personnel.

“The suspension will result in a direct loss of up to $3 million, being the estimated cancellation costs directly attributable to this well,” Mr Gill said.

The cancellation has been welcomed by protestors, with Gasfield Free Northern Rivers spokesman Adam Guise thanking the Minister for his decision.

“We would also like to acknowledge and thank the NSW Police for their respectful and considered consultation with the community over the course of this blockade,” he added.

“There is a huge sense of relief amongst the community that we will not have to face the prospect of a large contingent of police being used to break the peaceful action in coming days.”

“We sincerely hope that today’s announcement will be followed up by real action that recognises that the communities of the Northern Rivers are overwhelmingly opposed to gasfield industrialisation of our region.”

Metgasco had sent the OCSG an “extensive submission … demonstrating that the Company had fully complied with licence conditions relating to community consultation.”

It asked the OCSG to review its decision before putting its case to Premier Mike Baird.

“The wider impact of the government’s decision to summarily suspend exploration projects without due process or justification is to undermine the fundamentals of a robust and confident business environment in NSW,” Mr Gill said.

Mr Baird has referred the appeal to Mr Roberts, Metgasco said in late May.

The company also criticised Mr Roberts’ mentioning, in the suspension announcement, that he had written to the Commissioner of the Independent Commission Against Corruption (ICAC) “following receipt of information concerning shareholdings and interests in Metgasco”.

“I have referred this to the Commissioner to ensure that any decisions pertaining to PEL 16 have been made entirely properly and without any undue interest or inf luence,” Mr Roberts said.

The Sydney Morning Herald had reported that Tony Bellas, the chairman of Metgasco’s largest shareholder, ERM Power, is in business with Dennis Jabour, the nephew of former Labor powerbroker Eddie Obeid.

A Metgasco statement released following the article said ERM was a passive investor in the company without board representation, saying its staff and Board had no associations with Mr Bellas who, it added, was not accused of any wrongdoing.

“We make no complaint that someone has made a referral to ICAC, though we are not aware of any valid basis for a referral. We do, however, take exception to the public announcement that an ICAC referral has been made,” Mr Gill wrote.

“The announcement has the potential to interfere with ICAC’s processes and, from our perspective, has caused severe damage to our reputation before ICAC has even been able to consider the referral and before we have had a chance to respond.”

These two announcements had seen the company’s share price fall to close at 4.4 cents on 22 May, down from 8.8 cents on 14 May, before the suspension announcement was made.

Mr Gill said shareholders were facing losses of around $18 million as a result of the OCSG decision and Mr Roberts’ announcement, but added that the company was committed to the Northern Rivers region of NSW.

It had engaged “specialist legal services” as well as public relations company Citadel PR following the decision.