Santos to Explore for Coal Seam Gas in Pilliga Forest in New South Wales

---

Researched by Industrial Info Resources Australia (Perth, Australia)--In November 2011, Santos Limited (ASX:STO) (Adelaide, Australia) completed its acquisition of Eastern Star Gas Limited. The deal saw Santos take 80% ownership of the coal seam gas/coal bed methane (CSG/CBM) permits in New South Wales, which previously had been owned by Eastern Star.

At the time, some industry commentators applauded the takeover by Santos, citing Eastern Star's less-than-great track record of environmental breaches and safety concerns. The Bibblewindi Water Management Facility in the Pilliga Forest is one such example. The facility had a long history of operational problems, including a major leak in 2010 that sparked an investigation by the Environmental Protection Agency. Environmental groups have long pushed for the closure of the facility because of its location in the Pilliga Forest, the largest inland forest in New South Wales (NSW).

Earlier this year, Santos announced its plans to close the troubled Bibblewindi facility. Santos said it would construct new holding ponds and, eventually, a water treatment facility outside the Pilliga Forest at Leewood.

Santos has not pursued the development of CSG/CBM in NSW until now, possibly due to ongoing public concern and uncertain political regulations. Late in June, Santos announced it is seeking approval for a more focussed exploration and appraisal program, targeting areas in and around the Pilliga Forest in northwest NSW.

Santos believes the proposed Narrabri Gas Project could supply more than 25% of the natural gas used by NSW homes, small businesses, major industries and electricity generators. It is anticipating that additional data gathered by the planned exploration program will confirm this.

Environmental groups already are voicing their protest, as the project has a footprint of about 43 hectares, which includes clearing of 36 additional hectares in and around the Pilliga, most of which will be adjacent to existing roads and tracks in the forest. Santos insists that all cleared sites will be rehabilitated after the project is complete.

However, many environmental groups are still against the project, regardless of the promise of rehabilitation, and have reiterated their stance against the development of CSG/CBM in NSW.

"This exploration work will allow us to gather more data about the quantities, composition and flow rates of gas in the area and some additional technical information around the most effective drilling techniques," said Santos Manager for Community and Government Relations, Sam Crafter. The exploration program still requires various state government approvals.

Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, and eight offices outside of North America, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle™, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities.