Coal seam gas drilling is back in NSW after the state puts up its hands over a court case

A protest sign at the proposed drilling site at Bentley near Lismore. Chris Hyde/Getty Images

Coals seam gas drilling is expected to start again in NSW following the end of legal action by an energy company against the state government.

Metgasco, the company at the centre of the legal fight, plans to start drilling, wants police protection against protesters and is seeking compensation for lost business.

NSW has decided not to appeal a court decision which ruled as unlawful a state government move to stop Metgasco drilling for coal seam gas at Bentley on the state’s north coast.

The case centres around a decision in May 2014 to suspend, at the last moment before exploration work began, the company’s drilling licence.

The supreme court ruling has widespread implications for the NSW Government which has been under pressure by rural lobby groups to stop coal seam gas.

At the time, Metgasco was forced to cancel drilling contracts and its share price fell by 40%.

Now the way is now open for Metgasco to seek compensation, expected to be in the tens of million of dollars.

Energy minister Anthony Roberts has told the company the government won’t appeal the Supreme Court decision.

And Metgasco managing director Peter Henderson says the company would prefer to settle the damages payment out of court.

“We would now like to meet with government to discuss the damage caused to Metgasco as a result of the suspension decision and the future of the gas industry in the Clarence electorate,” he said.

The company is keen to start drilling at the Rosella gas exploration well. Henderson asked the government to confirm that law and order will be maintained.

Before the government cancelled the permit, a massive police operation involving hundreds of officers had been planned to move an anti-coal seam gas blockade from the drilling site.

“NSW needs a gas industry and the NSW Government needs to show the investment community that businesses will be encouraged and licence rights honoured,” Henderson said.

Metgasco has been exploring for gas in the Clarence Moreton Basin for 10 years, investing about $120 million.

There’s currently a freeze on new coal seam gas licences and the new government of Mike Baird has not yet indicated whether it will allow expansion or not.

Metgasco shares are trading more than 50% higher today at $0.075.

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