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$1 million payday for farmers who allow CSG wells on their land

Gregor McNaughton at the site of a coal seam gas exploratory well drilled on his property at Seaspray, Victoria image www.ozrural.com

Gregor McNaughton at the site of a coal seam gas exploratory well drilled on his property at Seaspray, Victoria. Allowing such wells could prove financially lucrative, if controversial. Photo: Angela Wylie

A farmer whose property hosts four coal seam gas wells would be paid $1 million a decade, gas giant Santos has revealed as it resists government efforts to regulate compensation paid by the industry.

The Greens say farmers are deeply concerned about the health of their land and “communities will not be easily bought off with cash payments”.

Fears about the effect of water, land, air and property values has stymied the development of the coal seam gas industry in NSW and damaged the government in a number of seats at the March election, including a loss in Ballina to the Greens.

Anti-CSG protesters voice their opposition at a Santos CSG wells in the Pilliga.image www.ozrural.com

Anti-CSG protesters voice their opposition at a Santos CSG wells in the Pilliga. Photo: Dean Sewell

Premier Mike Baird has asked the Independent Pricing and Regulatory Tribunal to review payments by gas companies to landholders who host CSG activity, after NSW Chief Scientist Mary O’Kane said last year the government should move urgently to ensure a “fair and appropriate” compensation system.
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The practice of farmers accepting money to host coal seam gas operations divides communities and pits neighbours against each other.

A preliminary tribunal paper proposed that farmers be compensated based on factors including the value of the land occupied, noise and dust, visual effects and damage to the property.

But Santos, which is seeking to move the controversial Narrabri Gas Project into the production phase, says it had already struck “highly attractive” access deals with landholders.

It said NSW should not “regulate or legislate commercial arrangements” because landholders do not own mineral rights for their properties.

During the exploration phase, Santos pays landowners more than $30,000 a year. Once more intensive production begins, a farmer would receive an average $25,000 per well a year, or $100,000 for four wells. Over a decade, the amount would total $1 million, Santos’ submission revealed. Production can last up to 30 years, potentially netting a farmer $3 million or more from those four wells.

The regulatory tribunal says neighbours affected by noise or other coal seam gas disturbance should also be compensated.

However Santos rejected the notion, saying compensation to neighbouring properties was “hard to identify, quantify and to manage”.

Greens MP Jeremy Buckingham said communities “will not be easily bought off with cash payments”.

“Although the payments may appear generous, when the disruption, potential environmental damage and lower property values are factored in, it does not stack up,” he said.

The government has announced a Community Benefit Fund to support projects in regions where the CSG industry operates. For every $2 a gas company pays into the fund, the government would reduce $1 from its royalty liability, capped at 10 per cent of the royalty take.

The tribunal also says the government should consider giving a share of its royalty revenue to landowners so they can share in the benefits of coal seam gas, adding this would lead to more access agreements and gas production.

Mr Buckingham said taxpayers should not be “subsidising gas companies’ attempts to bribe their way into a community”, adding “if the company wants to try to buy a social licence, then it should do so with its own money alone”.

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Henry Sapiecha

June 26th, 2015
Topic: FREE STUFF, MINING OIL GAS, Money & Investments Tags: , , , ,

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