Australian State Extends Temporary Ban on Fracking to April

New South Wales, Australia’s most populous state, will keep a temporary ban on hydraulic fracturing, or fracking, for three more months to strengthen standards for the process used to extract natural gas from coal.

The state will extend the moratorium until April from the end of this year to complete an independent review of the health, safety and environmental risks, Chris Hartcher, New South Wales’s resources minister, said in a statement today.

Santos Ltd. (STO) and AGL Energy Ltd. are among companies with coal-seam gas operations in the state. Fracking, which injects water and chemicals into rock formations to free trapped gas, has drawn criticism from environmental groups and politicians who say it may contaminate water supplies.

“We’re proceeding with caution and making sure the proper frameworks are in place,” Hartcher said.

Prime Minister Julia Gillard said Nov. 21 that the government will allocate A$150 million ($153 million) to establish an independent committee to provide scientific advice on the impact of coal-seam gas projects on water supplies.

“The framework is not designed to add extra work or increase the regulatory burden for upcoming projects,” Gillard said in a statement. “It does mean, however, that their applications will be subject to rigorous and independent scientific assessment before states grant an approval.”

The New South Wales review will focus on standards in Queensland state, the U.S. and Canada, Hartcher said.

Origin Energy Ltd. (ORG), building a $20 billion project in Queensland with ConocoPhillips to convert coal-seam gas to liquid, said fracking has been used in Australia since the 1970s. Origin’s fracking fluids use 99 percent water and sand, with small amounts of 10 chemicals commonly found in household products such as soap and toothpaste, Grant King, its managing director, said in a copy of a speech delivered in Sydney yesterday.

To contact the reporter on this story: James Paton in Sydney at jpaton4@bloomberg.net

To contact the editor responsible for this story: Amit Prakash at aprakash1@bloomberg.net.

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