Energy company cites low oil prices for decision to cease exploration and wind down or sell its gas fields, with CSG opponents calling the move a well-earned victory

This article is more than 4 years old

This article is more than 4 years old

AGL is pulling out of coal seam gas in Australia, ceasing its exploration and winding down or selling its operational gas fields.



Plummeting oil and gas prices were cited by AGL as one of the main reasons for the decision in its announcement to the ASX on Thursday morning, as well as lower than expected production volumes from one of its fields in NSW.

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AGL said a review had concluded that “production of natural gas assets will no longer be a core business for the company”.



The decision by American chief executive Andrew Vesey follows his pledge last year to shut all its coal-fired power stations by 2050.

“Exiting our gas assets in NSW has been a difficult decision,” Vesey said. “AGL has invested significantly in these projects and communities over the past seven years.

“We are talking about potential investment of a billion dollars, so we had to make sure there were returns for shareholders. That has increasingly become uncertain in recent weeks,” Vesey told analysts.



Crude oil prices have slid about 70% in the past 18 months, and last month slipped to a 13-year low below $US27 a barrel, with gas prices following in its wake.



Farmers and residents who have been fighting coal seam gas have told Guardian Australia they are “ecstatic” with the decision. Lock the Gate Alliance – a collection of farmers, conservationists and residents who are concerned about unsafe gas mining – say it’s a well-earned victory for the thousands of people who have protested against CSG around the country.

In Gloucester near the Hunter Valley in New South Wales, AGL had planned a 300-well development the company said could supply 15% of NSW’s gas needs, which would no longer go ahead.

“We are thrilled. It’s a fantastic decision,” said Steve Phillips, Lock the Gate coordinator in the Hunter. He says the protests would have had an impact on the decision. “I think the fact they had no social license to go ahead would have been a factor for them.”

Pierre Power is a father of three, and a resident in Narellan Vale in NSW, next to AGL’s Camden gas field, which AGL said it would phase out by 2023. Power said he lives within about 500m of one well, which had a major leak in 2014. Another 11 were located within a kilometre of his house, he said.

“I’m ecstatic,” he said of AGL’s announcement.

When asked whether the 2023 phase-out was fast enough, he said: “Well it’s better than eight or nine years, but obviously I’d like them gone. Especially because I’ve got young kids growing up in the area.”

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Activists’ eyes moved quickly to Santos, which remained the only company trying to develop coal seam gas in NSW.

“This leaves Santos as the last one standing, trying to get CSG off the ground” Phillips said.

Shares in AGL rose 1% to $18.77 following the announcement.

In NSW, Santos has been planning a CSG field in the Pilliga forest near Narrabri. It has been plagued by protests and one of its waste-water ponds was recently found to have leaked.

“Santos should take AGL’s lead to drop its coal seam gas plans in NSW and leave the Pilliga forest,” said Naomi Hodgson from the Wilderness Society.

“Santos should listen to the people of NSW and quit before it loses any more money on this disastrous project and tarnishes its reputation further.”

Santos has been contacted for comment.