By Lauren Barrett

METGASCO boss Peter Henderson could be forgiven for being bitter and frustrated after his company’s plans for New South Wales came crashing to a halt earlier this year.

The embattled company was left reeling in May when NSW Energy Minister Anthony Roberts suspended its drilling licence just days before hundreds of police officers were expected to descend to the Rosella site to confront a 1,000-strong protest group.

Mr Henderson told attendees at the Good Oil conference in Perth in September that he had hoped to give a glowing update about the company’s progress at the Rosella exploration well in Bentley, but it was not meant to be in the wake of a change in circumstances.

The embattled company was left reeling in May when NSW Energy Minister Anthony Roberts suspended its drilling licence just days before hundreds of police officers were expected to descend to the Rosella site to confront a 1,000-strong protest group.

Mr Henderson told attendees at the Good Oil conference in Perth in September that he had hoped to give a glowing update about the company’s progress at the Rosella exploration well in Bentley, but it was not meant to be in the wake of a change in circumstances.

The decision, which according to Mr Henderson occurred “without any prior notice”, has cost the company about $3 million in the anticipated cost of drilling the well and led to a sharp 40 per cent decline in its share price.

The company also believes the move has severely dented the investment community’s confidence in being able to do business in NSW.

Metgasco has been unsuccessful in its attempts to have the drilling suspension overturned and has started legal action in the NSW Supreme Court in a bid to rectify the situation. In addition, the company is in talks with the government to seek an out-of-court settlement.

Just weeks after Mr Henderson opened up to delegates at the Good Oil conference about the recent setbacks, Metgasco told its shareholders in a statement that it had downgraded its reserves, reclassifying them as resources, and had cut the value of its capitalised exploration and evaluation expenditure in the area to nil.

Metgasco’s 2C contingent resources now stand at 2055 petajoules, down from 2373PJ.

Mr Henderson said the decision came in the wake of the immediate uncertainty arising from the political environment in the state and its impact on the business environment for energy exploration and production companies.

“Metgasco’s depressed share price is a clear indication that the investment community is not confident in the NSW Government’s resolve to support gas exploration in the state,” the company said.

“Under these circumstances…Metgasco’s board concluded there is significant uncertainty as to the timing of development of its gas resources in the Northern Rivers region.

“Metgasco’s board determined that it was appropriate to reduce the value of previously capitalised exploration and evaluation expenditure to nil, and reclassify its reserves to resources.”

Testing times

Metgasco has an established history in the Clarence Moreton basin in the North Coast of NSW, having been exploring for gas in the area for ten years. The company has injected $120 million in exploration and associated costs, has drilled more than 50 wells and has had more than 300 land voluntary land access agreements with landowners.

“Despite these achievements, we have failed to move from exploration to production as we planned,” Mr Henderson told delegates at the Good Oil conference.

“Over the last three years we have been subject and frustrated to a series of policy changes and delays in the NSW government which are in turn a response to the active anti-gas protest in NSW and the eastern coast of Australia in particular.”

Mr Henderson expressed that Metgasco wasn’t alone in its dissatisfaction.

“All companies trying to do business in NSW have been frustrated in some way or another,” he said.

Mr Henderson, while not directly expressing his frustration at the anti-gas movement, detailed how widespread it was in NSW.

He noted that a lot of people, particularly around the town of Nimbin, “pride themselves as being the protest centre of Australia.”

He said many of the protestors against its Rosella drilling program were opposed to coal seam gas, but shortly changed their slogan to anti-gas after learning the well was a conventional one.

Mr Henderson said the team had expected to come up against some level of opposition and protests but didn’t foresee the estimated 1,000 people from Adelaide, Sydney and Brisbane who descended on the camp in March when the company was first about to mobilise the rig.

The large congregation occurred despite only 30 landholders residing in the Bentley area.

Mr Henderson said they thought the company had done everything they could in terms of providing an effective community consultation program and had no reason to believe there were any concerns.

“Until we got that suspension decision on 14 May, we had no reason to believe that there was any concern whatsoever with our [community consultation] effort,” he said.

Mr Henderson said the anti-gas movement had been very effective in changing people’s attitudes, even admitting that the company “was getting killed on social media by the Greens.”

“The problems that we have observed are not just a local community thing,” he said.

“I think they are a symptom of the general community-and the general community are the people in Melbourne, Sydney and Brisbane that do not accept our industry.

“We believe we make an overwhelmingly positive impact on society.

“But too many people in the community have been led to believe we are using old technology…and we represent an environmental problem.”

Mr Henderson warned other gas companies trying to do business in the region could suffer the same fate as Metgasco.

“AGL in Gloucester is faced with the same problems we have now for the wells they are trying to frack,” he said.

“They will have the same problem despite all the efforts they have put into consultation.”

“If they are found guilty of not consulting or not providing genuine, effective consultation then they’re in trouble to. Everyone is in trouble.”

Mr Henderson urged the State Government to vocally get behind the industry, believing this could in turn lead to increased community support.

Not giving up

Metgasco is remaining resilient in the face of trying times, determined not to turn its back on the Rosella well or NSW.

“Metgasco remains committed to pursuing significant gas potential in its New South Wales exploration licences,” he said.

Mr Henderson cited recent events such as the government and Santos signing an MoU to fast track its Pilliga gas project as some positive signs for the industry.

The growing awareness of a looming gas supply shortage was also a factor that remained on Metgasco’s side.

“We most certainly have not given up,” Mr Henderson said.

The company’s financial statements will be issued before 30 September, while the Supreme Court hearing relating to the drilling approval suspension has been scheduled for 20 and 21 October.