Andrew Watson’s family has been farming the fertile soil near the small Australian town of Narrabri for half a century, battling frequent droughts and forest fires. But this year natural disasters are the least of his concerns. Instead, Mr Watson is embroiled in a bitter dispute over a gas project that has divided the sleepy community.

Last month, the New South Wales government approved a A$3.6bn ($2.5bn) project led by Australian company Santos, saying it could provide half the state’s gas requirements for 20 years and solve a looming gas shortage that is pushing up energy costs.

The federal government is also backing the project, as part of a national energy policy that has put developing gas at the centre of its post-coronavirus recovery strategy.

But many farmers are worried that the 850 coal-seam gas wells and numerous pipelines required to extract gas could wreak environmental damage and render their farms uninsurable.

Just 300 of 23,000 public submissions to an environmental impact assessment conducted in 2017 were in favour of the project, which critics warn risks exacerbating climate change.

Owing to the sensitivity of the project, an independent planning commission in NSW will review the government approval over the coming weeks in what has become a critical test for Australia’s energy and economic recovery policy.

“As an irrigation farmer that pumps from bore [hole] waters, we’re concerned about the effect of mining coal-seam gas on the quality of aquifers and the impact of gas pipelines running through farming areas,” said Mr Watson, as he and his son harvested the cotton crop on his 3,800-hectare property.

In the hinterland surrounding Narrabri — a town of 6,000 people — there are many more doubters, with gateposts plastered with signs screaming opposition to the project. Tensions between rival groups have divided the community, with boycotts of some social and sporting clubs that accepted funding from Santos.

READ ALSO  Tripling of China-Europe shipping costs threatens goods supply

Mr Watson said a decision by AIG, one of Australia’s big insurers, to stop providing cover for farmers with coal-seam or shale gas infrastructure on their properties was another big concern.

NSW’s review of the project concluded it would not significantly affect local people or the environment.

Santos told the Financial Times that it relied on the best science to ensure the project was developed sustainably and noted “fracking” — a contentious process used to extract gas from wells — was not required.

There is less opposition to the project in town, where many business owners and councillors support a project they hope can rejuvenate a region where there are few jobs for young people. The company has also signalled that it would create an additional A$120m fund to subsidise community and local infrastructure if the project went ahead.

“The gas project is bringing hope and the prospect of jobs at a difficult time due to Covid-19,” said Ron Campbell, a town councillor and owner of a waste disposal business.

He said a supply of secure, cheap gas was essential to fulfil the council’s vision of transforming Narrabri into an industrial hub. Mr Campbell hopes the town will benefit from connection to a A$9bn freight rail project under construction that will link Brisbane and Melbourne.

Australian gas prices

Last year, Santos signed a gas supply agreement with fertiliser company Perdaman to build a A$1bn plant employing 700 people in Narrabri, which is contingent on its gas project.

Between 2015 and 2019, gas prices on Australia’s east coast doubled, as companies diverted local reserves to energy-hungry export markets in Asia. The natural depletion of east-coast reserves and delays to new onshore developments, such as in Narrabri, have prompted warnings from the NSW government of a gas shortfall.

READ ALSO  Microsoft invests in $30bn driverless car company Cruise
Andrew Watson
Andrew Watson, Narrabri farmer: ‘I regard agriculture as the ultimate sustainable industry’ © Jamie Smyth

However, critics doubt whether the project is even needed given the fall in gas prices owing to a drop in demand during the pandemic. They also question Australia’s continuing reliance on fossil fuels, which has left it with one of the most emissions-intensive economies in the developed world.

“We’ve got kids and they are going to be suffering from global warming, which we know is already here because of the recent bushfires and the worst drought in the state’s history,” said Stuart Murray, a Narrabri resident who opposes the project.

Mr Murray alleges the government is backing gas development and refusing to take tougher action to reduce global warming because of political donations from industry. According to government data, Santos donated at least A$148,000 to political parties in 2018-19.

Mr Murray said more investment in renewables, rather than fossil fuels, would benefit the community.

The federal and state governments reject his allegations, saying developing gas resources boosts security of supply and reduces prices. And there seems little prospect of the conservative government ditching its promotion of gas, which it supports as a fuel that can secure energy supply as coal plants begin to close in coming years.

“There is no credible plan to lower emissions and keep electricity prices down that does not involve the greater use of gas as an important transition fuel,” said Scott Morrison, Australia’s prime minister, in January when he announced A$2bn funding to develop new gas resources.

Mr Watson said authorities should focus their attention on supporting agriculture rather than resources, which could be replaced by sustainable alternatives such as renewables.

READ ALSO  Bets against dollar ratchet up despite rebound

“I regard agriculture as the ultimate sustainable industry. We use sunlight, water and soil to grow food and fibre to feed and clothe the world,” he said. “Extractive industries are here today and gone tomorrow but we will always need food.”

Via Financial Times