Despite forecasts of falling demand for gas in NSW, the push for further commercial exploitation of coal seam gas (CSG) in some of the state's richest agricultural areas is about to regain momentum following the NSW election.
Even though the Australian Energy Market Regulator says there is now no supply gap in NSW and demand for gas will fall 17 per cent by 2019, the CSG industry is preparing to step up its efforts, arguing that the issue is now one of "energy security" for NSW .
Numerous government decisions will be taken in coming months that will either constrain the CSG industry or allow it to expand. There's currently a freeze on new exploration licences that will be replaced with a strategic release framework, new codes and conditions are being finalised, and CSG will soon be regulated by the Environment Protection Agency. The NSW government also plans to have a "use it or lose it" regime for licences and it is still deciding whether to appeal a halt on Metgasco's operations near Lismore.
Assisting the industry are an army of former political staff and former politicians, many of whom had a role in the regulation of the industry before jumping the fence to industry. A few have come back the other way, moving from senior jobs in the major gas companies to senior advising roles in ministers offices.
The accompanying graphic reveals the extent of cross pollination between those who set policy at a state and federal level in the coal seam gas industry and those who seek to profit from it - as direct participants or as advocates for the companies.
Green's MP Jeremy Buckingham says the revolving door between politics and the mining sector has utterly undermined the community's faith in our ability to regulate mining and CSG.
"It's very concerning to see a decision maker who helped to create the industry now spruiking it," he says.
"The community feel that often it's just a foregone conclusion and that the government is paying lip service to regulation".
The Australian Petroleum Production and Exploration, the coal seam gas industry body, declined to comment when contacted by Fairfax Media.
Often politicians and political staffers jump directly into a role that involves them advocating for the companies, unrestrained by rules that are designed to provide cooling off periods between politics and business.
For instance Martin Ferguson, the former Labor resources minister, became chairman of the advisory committee for the peak oil and gas industry association, the Australian Petroleum Production and Exploration Association, six months after leaving politics.
He has been a fierce advocate of CSG, arguing that NSW must forge ahead with development of CSG in order to achieve "energy security for NSW."
His colleagues, Greg Combet, the former Gillard government minister for Climate change and Craig Emerson, her minister for Trade, waited a year before penning an opinion article in support of the CSG industry in the Australian Financial Review.
They are both working as economic consultants to AGL and Santos, the two biggest players in CSG in NSW.
Former National party leaders, John Anderson and Mark Vaile also moved into high profile roles in mining and CSG companies after politics. John Anderson became chairman of Eastern Star Gas, the company behind the Narrabri Gas project about two years after leaving politics. The company was taken over in 2011 by Santos and Anderson made an estimated $9 million out the deal.
Mark Vaile became a director and then chairman of Whitehaven coal, the company behind one of the state's most controversial mines at Maules Creek. He is regularly seen in the corridors of Macquarie Street.
There are state and federal rules that impose cooling off periods for politicians and senior bureaucrats who move government to lobbying, but the act of lobbying is defined very narrowly to prevent only "gun for hire" third party lobbying. This leaves politicians free to take jobs at industry associations and in business. In NSW minister must seek advice from the ethics adviser before taking private sector jobs.
The most high profile shift between politics and the mining industry has been Stephen Galilee, who is the former chief of staff for then Treasurer, Mike Baird. Galilee moved soon in late 2011 to become chief executive of the NSW Minerals Council. A spokesman for the council said it does not lobby on the gas industry - it leaves that to APPEA - but it is intimately involved in all things mining including the planning and environmental regimes.
As an advocate for an "an association or organisation constituted to represent the interests of its members" - Galilee was free to move from advising the government one month to representing the industry the next.
Those who encounter Galilee say he is very professional in the way he deals with politicians who once would have sought his counsel.
But there are a myriad of informal relationships that are less obvious to those being lobbied and to the public at large. These long standing personal relationships work to ensure a company can pick up the phone to a politician or adviser in the office if there is an issue at hand or a meeting is needed.
Take for example, AGL Energy, one of the two biggest players in CSG in NSW. AGL tends to favour in-house representation in its dealings with politicians. The current head of government relations is Lisa Harrington, who was until 2013 a senior adviser to Mike Baird. She replaced Sarah Macnamara at AGL, who went back to work in the Prime Minister's office with her old colleague Peta Credlin whom she knew from her days in Communications minister, Helen Coonan's office. Macnamara was Abbott's policy adviser on resources for a year and is now chief of staff to the federal minister for industry (and resources) Ian Macfarlane. Shaughn Morgan, AGL's manager of Government and external affairs, has similarly impressive credentials on the Labor side. He was an adviser to NSW Attorney General Jeff Shaw in the 1990s and worked with Adam Searle, now Labor's NSW resources spokesman. Morgan also has connections with another important constituency for the CSG industry - farmers - having been CEO of the NSW Farmers' Federation for four years.
And Senator Coonan is still not far from the action. The firm she co-chairs with former Labor minister, John Dawkins, GRA Cosway is listed on the Federal register of lobbyists for AGL.
Santos, the other major player in CSG in NSW has tended to employ staff from Coalition ministers' offices and also uses external lobbying firms.
Robert Underdown, manager group government and public policy joined Santos in 2009 after five years in federal resources minister Ian Macfarlane's office that spanned government and opposition.
The manager public affairs, Matthew Doman, had stints in Liberal minister, Nick Minchin's office and with National leader, Mark Vaile, before joining Santos.
In NSW, Santos has at least two lobbying companies on its books: Bespoke Approach whose directors include the former premier, John Olsen, and former federal Labor senator, Nick Bolkus, both from Santos's home state of South Australia. Kreab Gavin Anderson, whose directors include people who have worked for the ALP secretariat and a former media adviser to Anthony Roberts, are also on the register for Santos.
Like AGL, Santos also has impeccable connections with Baird's staff. A senior adviser in Baird's office, Caroline Hutcherson spent several months working for Santos after her previous employer, then resources minister, Chris Hartcher resigned from Cabinet in December 2013 due to an ICAC inquiry. A spokesman for the Premier said Ms Hutcherson's role was managing parliamentary business and she was not advising the premier on CSG.
Ms Hutcherson was not the only one to find a job in the resources sector after Hartcher's political career imploded. Hartcher's chief of staff, Andrew Humpherson is consulting to the NSW Minerals Council; Charles Perrottet has landed a job with BP Australia.
Some staff come back the other way. Chris Rath, the former media and public policy manager for the NSW Minerals Council for the last two years, returned this month to Macquarie Street as an adviser to Resources Minister, Anthony Roberts. He is working on industry policy rather than CSG and mining, and a spokesman for the Minerals Council said they were deliberately steering away from him.
Of course, ministers want staff with expertise but there are no requirements for "gardening leave" when moving between industry and adviser roles, leaving it to individual ministers' offices to manage potential conflicts.
The issue with movements the other way - from government to industry - raise other issues most notably the risk that there may be a period of negotiation between the adviser and the new employer of which the minister is not aware.
Given the deep pockets and extraordinary reach of the mining and gas industry into all levels of government, it's hardly surprising that community groups often feel outgunned in the lobbying stakes.
If there's no shortage of gas, why do we need the coal seam gas industry?
The companies which dominate CSG are determined to forge ahead with the exploitation CSG exploration licences to capitalise on soaring export prices of liquid natural Gas (LNG) to Asia. In December 2014 the first shipment of CSG, converted to LNG, left from Queensland bound for Asia.
Historically, the east coast gas market was insulated from the rest of the world, and the domestic wholesale price was stable at about $3 to $4 a gigajoule. Now, there are buyers across Asia prepared to pay $12 or $13. That will inevitably translate to much higher domestic prices and higher profits for the gas producers. It will also give renewed impetus to exploration.
The latest argument from the industry in support of exploiting CSG in NSW is that NSW needs to ensure "energy security" and must reduce its reliance on gas imported from other states, notably Victoria, and Queensland.
Speaking at a CEDA conference in April, former federal Resources minister, Martin Ferguson, now the chairman of the peak body representing the coal seam gas industry, Australian Petroleum Production and Exploration Association, APPEA, said NSW was vulnerable if it did not exploit its own CSG reserves.
He said NSW imported nearly 95 per cent of its gas, which left it dependent on other states.
But is it really a problem to import gas from South Australia, Victoria or Queensland?
As Tony Wood, director of the energy program at the Grattan Institute put it: "Do you have a cow in your back yard?"
Rather he argues that it's a question of where the investment should be made - expanding the eastern Gas pipeline versus investing in a local coal seam gas industry.
The CSG industry, which has already made significant investments in exploration, wants the latter.
"The Baird government has a mandate to get on with the development of the gas industry," Mr Ferguson said of the Coalition's emphatic win at the polls.
So far the premier is hastening slowly, mindful of the backlash in some seats and the views of the National Party, which is divided on the issue.
The next stages of the Gas Plan will be implemented in coming months and the moratorium on further gas exploration is likely to remain until later in the year.
The Sydney Morning Herald
May 25, 2015