Jess Hill: It's a frosty winter's morning here in the tiny town of Wee Waa, in north-western New South Wales.

Dave Alexander: Hi, I'm Dave Alexander. I'm an owner with my wife of the Wee Waa Motel. We're a family-run business and we've been here for just over four and a half years.

Jess Hill: The Wee Waa Motel is just north of the Pilliga Forest, home to the state's biggest undeveloped coal seam gasfield. But Dave Alexander doesn't want to talk about gas mining, he wants to talk about gas prices.

Dave Alexander: When we first came in, the kitchen was predominantly electric. But what we've done, we've brought in new gas grillers and everything and converted almost to gas, which was the economic way for us to go then. We did a deal with one of the main suppliers at L Gas. And, we were getting it at about 73 cents a litre.

Jess Hill: The gas was cheap, and Dave Alexander was happy. Then late last year, something unexpected happened.

Dave Alexander: It went from 73c to $1.03, or $1.04 a litre. Now, we've been told on the grapevine that this month it's going to go up again. And if it goes up more than 3 or 4 cents a litre, we'll just re-go to electric again.

Jess Hill: Dave Alexander and his wife run the motel on a tight budget, which is why they went with gas in the first place. Going back to expensive electricity isn't a good solution, so they've come up with a different idea.

Dave Alexander: I've already had it quoted for a major system on the roof for solar. Because the only way we can recoup the money is by continuing to increase tariffs, which doesn't work.

Jess Hill: Did they say why they were raising the prices?

Dave Alexander: No. No, nothing at all.

Jess Hill: And they didn't actually announced the first…

Dave Alexander: No, we knew when the chap would come out in the tanker, fill the tanks we've got round the side, and we got the bill.

Jess Hill: The rude shock Dave Alexander got from his gas bill is about to be shared by people all over eastern Australia. Wholesale gas prices are set to triple, because on the east coast we're about to start exporting gas for the first time. For big domestic gas users, this is very bad news.

Ben Eade: We're seeing prices leap from historical averages of sort of $3 to $4 a gigajoule to $9 to $12 a gigajoule or more.

Jess Hill: Ben Eade is the executive director of Manufacturing Australia. He says domestic gas prices are now rising to meet what the North Asian market is prepared to pay, and they're prepared to pay the highest gas price in the world.

Ben Eade: The fact is, high energy costs are killing industry in Australia, and high gas costs in particular.

Jess Hill: A new report commissioned by industry groups and prepared by Deloitte Access Economics says that these skyrocketing gas prices will damage the Australian manufacturing sector to the tune of $118 billion over the next seven years, and lead to a loss of more than 14,000 jobs.

Ben Eade: The impact of this issue on domestic manufacturing and domestic heavy industry is significant and couldn't be more urgent. We've already seen manufacturers close plants because of the impact of either supply shortages, market uncertainty or skyrocketing prices for gas.

Jess Hill: Even in Queensland, where the supply of coal seam gas has increased by more than 400% in the last decade, at least one multinational mining companies is struggling to find gas. In February, Rio Tinto* announced that it was getting barely any offers for gas to supply its Yarwun alumina refinery, which sits within sight of the LNG hubs that are being built in Gladstone Harbour. Rio Tinto says it still doesn't know where its gas will come from next year.

Ben Eade: When you have world-class businesses operating large-scale plants in Australia that are all of a sudden going to be potentially wiped out because of a train wreck coming down the line, not of their making, you have to start to wonder whether there's something not quite right with the dynamics of the east coast gas market.

Jess Hill: As industry screams blue murder over rising gas prices, the Prime Minister has been overseas, selling a different story. At the Texas branch of the Asia Society, Tony Abbott was the guest speaker at an event sponsored by Chevron, BHP Billiton and Conoco Philips. Our prime minister had some exciting news to share.

Tony Abbott: Australia will soon be the world's number one exporter of liquefied natural gas. We are already the world's largest exporter of black coal.

Jess Hill: Thanks to Queensland's coal seam gas boom, Australia is set to overtake the Gulf state of Qatar as the world's largest exporter of liquefied natural gas.

Tony Abbott: Affordable, reliable energy fuels enterprise, and drives employment. It is the engine of economic development and wealth creation, and Australia should, we really should, be an affordable energy superpower, using nature's gifts to the benefit of our own people, and the benefit of the wider world.

Jess Hill: But energy in Australia is anything but cheap. We pay some of the world's highest electricity prices, they're double what they were a decade ago. Now we're paying record prices for gas.

Martin Jones: Gas price rises have been overshadowed by electricity price rises in the last few years. We all know electricity price rises have gone up by about 80% since 2009. But gas prices have gone up too. They've gone up by 50% over the same period and we're expecting them to go up by another 20% to 30% over the next few years.

Jess Hill: Martin Jones is a consumer advocate with the Consumer Utilities Advocacy Centre. He says until now, the gas price rises have been largely due to the billions that have been spent on gas pipelines in the last few years, which we have to pay for through our gas bills.

Now gas prices are increasing even more, rising to meet the new export price. Martin Jones says these price hikes are likely to hit hardest in Victoria, because Victorians are the biggest users of gas in the country.

Martin Jones: Because Victorian households use so much, an increase in gas prices as expected will lead to increases of gas bills of several hundred dollars.

Jess Hill: Australians are already struggling to pay their energy bills. According to the social services agency ACOSS, a growing number of Australians are in what's called 'energy poverty', which means they're having to choose between using electricity and things like food and other essentials.

It's not just affecting pensioners or people on the dole, it's hitting families like Andrea's. Andrea lives in the coastal Melbourne suburb of Frankston with her husband and their five children. Her family already has $3,000 worth of gas and electricity bills they can't pay. They now pay fortnightly, instead of quarterly, just to keep up.

Andrea: Currently I pay $150 a fortnight towards the electricity, and I pay $80 a fortnight to gas and that's just for my usage, that's not going to cut into the debt.

Jess Hill: Wow, that's $80 a fortnight for gas.

Andrea: Yup.

Jess Hill: And so how do you feel about the prospect of a 20% to 30% gas price rise in Victoria that's basically supposed to be kicking in right now?

Andrea: I know that there's families a lot worse off than us, and if we're struggling, I just dread to think about the situations that they're in. And what can you do? I mean, these are essential services, so do you just go into debt or do people stop heating their houses and potentially have sick children, or…I know the elderly, I know when my father was alive, he'd sit in one room under blankets because he had this perception that he couldn't afford to heat his house.

Jess Hill: Andrea says things get scary in winter, because her gas bills are five times higher then than they are in summer. Their rented house has gas-ducted heating but this winter she can't afford to turn it on.

Andrea: We've stopped using that altogether for this winter, because we just can't continue going on the way we have been. We can't accrue any more debt to our gas and electricity provider.

Jess Hill: So what are you doing for heating?

Andrea: So we have a gas space heater in the little lounge dining room. We live in one room basically at the moment. I put the clothes horse in front of that gas heater and I stick the mountains and mountains and mountains of washing that you can imagine I have with five children and a tradesman husband, and I try and dry them off in front of that heater as much as I can.

Jess Hill: At night, the temperature in Frankston drops to around six degrees. But Andrea can't afford to leave the heater going all night, so she sets the heaters in her children's rooms on timers, so that they can kick in for half-an-hour as they go to sleep, and switch back on first thing in the morning, when they wake up.

Andrea: But I've definitely noticed the kids have been waking a lot more overnight because they are getting cold during the night, so…hot water bottles, the kids have all got their own hot water bottle that they take off to bed with them.

Jess Hill: How do you feel about how all of this is being managed by our politicians?

Andrea: I think we're facts and figures on a piece of paper basically and we're averaged out. And maybe people like our families are expendable or collateral damage, but I think if they actually came and lived like we lived, they'd have a better understanding...it's probably been a long time since they've had to put their clothes in front of the heater that the children are sitting around because they can't afford to use the dryer. So, you know, look, I don't blame anybody for the situation that we're in. But to put us under the crunch any more…you know…

Jess Hill: It's not just families being hit by the gas price. Incitec Pivot is Australia's largest manufacturer of fertiliser. It uses gas as a 'feedstock' for its fertiliser production, so the price of gas is critical to their business. Last year, when Incitec Pivot went to renew its gas supply contract, it could only find a supplier willing to sign a short-term contract, and at a staggering price. This new gas is going to cost them an extra $50 million a year, for a plant that last year only made a $25 million profit. Incitec Pivot was planning to spend nearly a billion dollars on a new factory in Newcastle, but it's changed its mind. It's building it in the United States instead, where gas is cheap.

Incitec Pivot's chief communications officer is Stewart Murrihy.

Stewart Murrihy: Under the current circumstances where we see a gas price that is sitting at around $10 to $12 delivered, compared to a gas price in the US that's sitting around $4 and $5, there's just no comparison.

And the price spike on the east coast of Australia is having that impact on a range of our colleague companies. They are making decisions to develop off-shore rather than in Australia, and it's an issue that needs to be addressed for the national interest of Australia.

Jess Hill: The US fracking boom has flooded the country with cheap gas, and driven a boom in its manufacturing sector. Now as they prepare to export some of that gas, there's a national debate about how to protect the local economy from high international prices.

Stewart Murrihy: At least the Americans are having the debate. We in Australia really have never had this debate that understands what's best for the national interest of the country in terms of employment, the value adding, regional communities. We can have our cake and eat it too, we can have a great export industry and we can have industries in Australia.

Jess Hill: Some gas exporting countries reserve gas for domestic use. The US is now considering such a policy.*

Colin Barnett: I think it's just a gross oversight in energy policy in Australia.

Jess Hill: The Liberal Western Australian Premier, Colin Barnett, presides over a gas-rich state that's been exporting gas for decades. In 2006, the WA state government legislated that 15% of the state's gas be reserved for domestic consumption. It's what's called a 'domestic reservation policy'. Last year, Colin Barnett told Radio National he can't understand why the federal government isn't doing the same for the rest of the country.

Colin Barnett: I think Australia should simply impose, similar to Western Australia, 15% reservation for the domestic economy. I mean, why should we have on the east coast now energy consumers in industry saying we've got a shortage of gas and the price is going to go through the roof, when we're supplying vast amounts of gas into international markets? No other country in the world would do that.

Jess Hill: Industry groups are calling on the government to introduce a national interest test to ensure that local gas supply is taken care of before more export contracts are signed. This is what happens in Canada and in the US. But federal industry minister, Ian Macfarlane, has no interest in this idea.

Ian Macfarlane: Well, if you are talking about closing our borders and restricting free trade then that's going to be a very lonely argument. If you're asking me to put Australia, a low population, high export oriented country, in a closed border position then I'm not prepared to do it.

Jess Hill: Energy-poor countries like Japan and South Korea are prepared to pay top dollar for Australia's gas. Ian Macfarlane says that if Australians want to use gas, they're going to have to get used to paying top dollar too.

Ian Macfarlane: Well, in terms of internationalisation of gas prices, gas is the last commodity to receive an international price, and the reality is that just as we've had an international price for oil for over four decades, gas is now being sold in Australia at an international price. That's the reality of a world market, and to protect one section of the Australian market to the detriment of those people who want to take the risk and invest the billions of dollars it takes to develop a CSG project simply doesn't make economic sense, and we'll just see that investment go somewhere else.

Jess Hill: When the giant LNG hubs in Queensland start exporting gas to North Asia next year, gas extraction will need to triple to meet the new demand. Some of that gas will be coming from the Moomba gasfields in the Cooper Basin, owned by Santos, which have traditionally supplied around half of New South Wale's gas needs. The federal industry minister says that as of 2016, New South Wales will run short of gas, and hundreds, if not thousands of jobs will be at risk because of low supply and the high prices that he says will result from that. Despite this, the federal government has agreed to sell more gas to Japan, as part of a new free trade agreement.

Ian Macfarlane: Well, what we'll give to Japan is the reliability of supply based on a contract, and again, those consumers in Japan who are prepared to sign up to contracts have benefitted from a long-term reliable supply from Australia.

Jess Hill: But I'm just wondering the difference between promising that energy security to Japan and then threatening New South Wales with a gas shortfall.

Ian Macfarlane: Well, we're not promising, we are making available gas.

Jess Hill: The minister says that if New South Wales has a gas shortage, it's up to the New South Wales government to fix it.

Ian Macfarlane: Well that's an issue for the New South Wales government to resolve. They have access to the gas fields and they can ensure those gas fields are developed.

Jess Hill: New South Wales produces only 5% of its own gas, and has left the vast majority of its coal seam gas in the ground. The biggest undeveloped gasfields in the state lie beneath the Pilliga State Forest, in north-western New South Wales. It's here that Santos wants to drill 850 coal seam gas wells, which it says could produce up to half of the state's gas needs.

Santos vice-president, James Baulderstone, insists that if Santos can tap the gas in the Pilliga, prices in New South Wales will come down.

James Baulderstone: By having the benefit of having the gas resource on the doorstep of Sydney, it means that that gas can be the cheapest gas that's produced, and then sold into the market at the cheapest possible price.

Jess Hill: And he's promising that should the project be approved, Santos will sell the gas to New South Wales customers, and not to Asia.

James Baulderstone: I'll sell it to Sydney because I'll make a better margin from it. Why would I try and sell that gas into Victoria, South Australia, or to Queensland, when the closest port of call is Sydney.

Jess Hill: But you'd certainly want to sell into Asia if you can get double or triple the price, wouldn't you?

James Baulderstone: No, not necessarily at all. Remember, I'm a long-term supplier into Sydney, we've sold gas into Sydney as Santos for 40 years. These customers you're talking about, the mums and dads, the small to medium businesses, the large industrial customers, I want to be selling those guys gas in the next 40 years.

Jess Hill: In return for this promise to sell gas to New South Wales, the state government has declared the Narrabri project to be one of strategic importance, and has agreed to fast-track the approvals process. But the guarantee to supply New South Wales is still little more than a gentleman's agreement. New South Wales Energy Minister, Anthony Roberts:

Anthony Roberts: You can't say that a molecule produced from the Pilliga, should it go ahead, would not end up in Northeast Asia. Certainly, my discussions with Santos and AGL, they are committed to supplying the New South Wales domestic marketplace.

Jess Hill: But it's clear that the Energy Minister has got some concerns about this gentleman's agreement.

Anthony Roberts: What would give me greater certainty, and your listeners greater certainty, is actually how much is being contracted for overseas in the first place? What has been contracted for; the volume? And what are in those contracts? The best answer for the people of New South Wales and this nation is to actually have an open and transparent gas marketplace. And quite frankly, do we have it now? No, we don't.

Jess Hill: There's certainly strong indications that Santos does intend to sell some of its gas into the Sydney market. And Santos certainly needs more gas for its export hub in Gladstone. Analysts from Credit Suisse say the company's LNG export hub is running so low on gas, Santos will probably need to buy more than a third of the gas it's already sold for export from other gas producers.

So will Santos sell gas to New South Wales for less than what they can sell it for in Asia? The New South Wales Energy Minister has some doubts.

Anthony Roberts: One thing I can tell you is that we are moving towards an international price. We are moving away from a marketplace that traditionally has been there just for domestic usage, of course with a domestic price, moving to an international price. Will international prices come down? There are some forecasts that say that they will as supply meets that demand.

Jess Hill: In fact, this year, Santos told analysts that it wanted to raise the domestic gas price. Matt Grudnoff is from the progressive think tank, the Australia Institute.

Matt Grudnoff: The price was always going to rise, and the gas industry knew this. In fact, Credit Suisse research basically talked to Santos and was complaining that their LNG facility, which will be the last to be constructed, was basically creating an oversupply into the export market. That is, Credit Suisse thought there wasn't enough gas for export to make that LNG facility viable. And Santos turned around and told them that building the LNG facility was about raising the domestic gas price.

Jess Hill: The vast gasfields underneath the Pilliga are the biggest undeveloped coal seam gasfields in New South Wales. To get to that gas, Santos is trialling a form of horizontal drilling, which involves drilling down into a coal seam and then drilling horizontally through the coal. In a book commissioned by Santos to celebrate 60 years of oil and gas production in Australia, Santos vice president for eastern Australia James Baulderstone said that drilling horizontal wells was only possible if the gas price rose from $3 to $4 a gigajoule to $10 a gigajoule. In other words, Santos needed the price of gas to triple in order to make the Pilliga project viable.

While gas customers are understandably concerned about their bills, farmers out around the Pilliga are afraid that if Santos gets the go-ahead, the environmental costs could be much higher.

David Chadwick runs a feedlot near Coonamble. While he's 150 kilometres southwest of the Pilliga gasfields, he says the water beneath the Pilliga is the lifeblood of the entire region, and he doesn't feel like he can trust politicians to protect it.

David Chadwick: The more people are looking at this, the more cranky they are getting about the betrayal, and their frustration with government that they are not listening.

Jess Hill: How do you feel when you hear Santos and then politicians talking about the gas shortage that is going to come as a result of the Pilliga perhaps not getting approval?

David Chadwick: If they hadn't sold it to all over the world instead of perhaps looking after their own backyard first, perhaps we wouldn't have this problem. That infuriates me. Do none of these politicians have any vision beyond the next election? Who wrote into this thing that we give it away to the rest of the world, lock ourselves into world parity so we have no control over the pricing and starve ourselves of the capacity to compete in a manufacturing sector?

Jess Hill: David Chadwick says the corruption scandals that have engulfed both major parties in New South Wales have made people distrust the government.

David Chadwick: I think that's what driving the anti debate, is saying that these guys are proving that they don't really know what they're doing. We just want them to stop until we can figure out whether this is a safe industry or not.

Jess Hill: The Pilliga forest, where Santos is planning to think its gas wells, is particularly precious to farmers because it sits directly above the recharge area for the Great Artesian Basin. The need to protect this resource has driven dozens of otherwise conservative farmers to chain themselves to Santos drilling rigs. One of those farmers is 71-year-old Neil Kennedy. He says people don't understand how critical it is that that water be protected.

Neil Kennedy: Now, we out in the bush really understand that. We've been thirsty. Most people haven't. Most people aren't truly aware. 'Water is everywhere, we're surrounded by bloody water, water is everywhere.' They really do not understand the importance of water. Out here we do, we do understand water. We have to maintain our own pumps, we maintain windmills and overhead tanks and gravity feed, and we do all the things in the world, dig dams in the ground and things to trap water and keep it.

Jess Hill: Neil Kennedy's concerns are shared by the National Water Commission, which has said that if coal seam gas is not adequately managed and regulated, it could have significant long-term adverse impacts on surface and groundwater systems.

Out here, farmers rely entirely on groundwater from the underground aquifers of the Great Artesian Basin. Neil Kennedy is worried about the potential for coal seam gas drilling to threaten the purity of these aquifers.

Neil Kennedy: That is one of our problems, making all the people who don't live on the land aware of the absolute importance of water. Until we can create that awareness, we're going to have trouble with politicians. And most of the politicians have never been thirsty.

Jess Hill: Neil Kennedy is concerned about the water that Santos will have to extract from the coal seams to get at the gas. This water, which has been trapped in the coal seam for millions of years, is very salty, and contains chemical pollutants.

Neil Kennedy: With this coal seam gas mining, they first have to get all the water out of that coal seam before they can bring the gas out. In that seam, there's every type of bad chemical in the world, you know, whatever they are. They bring that to the top and they have to put that in ponds on top to try to…they say they don't know how to get rid of it. They have no idea how they're going to dispose of that salt.

Jess Hill: This salty water is a big problem for coal seam gas companies. In the Pilliga alone, Santos says it will bring up 50 tonnes of salt a day. Over the 25-year life of the project, that's the equivalent of filling the Melbourne Cricket Ground almost one-quarter full of salt.

Neil Kennedy: They don't know what they're going to with it, how they're going to dispose of these chemicals in these evaporative ponds that they put there. The water evaporates, but the bad stuff they're bringing up is still there on the ground. They do not know, none of them. They'll say, 'Oh, we'll think of something one day.' But that's no good. A flood will come through and will wash all that into our river systems, the creeks and gulleys and everywhere else. It will not just contaminate our water, it'll contaminate our soil.

Jess Hill: And that's already happened in the Pilliga. Tony Pickard has taken Background Briefing to view the site of several coal seam gas water spills. We're standing here at the disused Bohena gasfield.

Tony Pickard: If you have a look, I refer to it as a tide mark, you can see the death and destruction up until the trees all the way around it.

Jess Hill: How big is this area, roundabouts?

Tony Pickard: Around about four hectares, because not only is it here, but it goes around in an S-shape, behind here and up around there.

Jess Hill: Tony Pickard is a semi-retired grazier and former marine engineer, who's appointed himself as the unofficial regulator of coal seam gas in the Pilliga.

The contamination site he's taken Background Briefing to happened in 2000, when the American oil and gas company, Forest Oil, was first exploring here. Fourteen years ago, the pond that was holding all the salty, produced water from the coal seams collapsed, and the salty water spilled into the forest.

Tony Pickard: In the old days, they didn't care what happened. The water was a by-product; 'get rid of it any way we bloody can, let's just pour it into a dam, evaporation takes place,' you know what I mean? That's fine. And that's all they were doing, they were just pouring it into there.

Jess Hill: Do you think there is any permanent damage from what's happened here?

Tony Pickard: Fourteen years ago. Is it growing yet? Let's be honest, it's not growing. Of course there's permanent damage. Any of the spill sites have got permanent damage.

Jess Hill: For the past six years, Tony Pickard has reported several spills to the government. He's also documented the salinity levels in the soil, and he's even tracking the progress of revegetation efforts here, and it doesn't look good.

Tony Pickard: Ah, there's me little mate! I've been watching him and I could never find him. He's not healthy. Four months ago I saw him. He should have been higher than this. Okay, there's a little gumtree on the middle of Bohena II. He's still struggling.

Jess Hill: It's the same story in the near Bibblewindi State Forest, another part of the Pilliga, where there was another coal seam water spill. This time, another company, which Santos had a big stake in, spilt 10,000 litres of salty coal seam gas water into the forest in 2011.

And how far does this trail of destruction here go into the forest?

Tony Pickard: About 300 metres. It's grown in the 12 months, well, since 2012 when I first saw it and photographed it, it's grown about 10 metres.

Jess Hill: Right. So there've actually has been more killed over time.

Tony Pickard: Yeah, because they've irrigated here. And it has rained on it. And it has taken the salt. Now, I can tell you, we had soil samples checked here. They were black. The material I sent away was black. 8,000 parts per million sodium in the surface soil.

Jess Hill: And that is compared to what you were saying was more like 25 on average.

Tony Pickard: Yeah, that's correct, we don't know what was in the pond. They never told us. So we don't know. But if you've still got a soil content on the surface of 8,000 sodium levels, it ain't real brilliant. We had a high bicarbonate level as well. Now, bicarbonates make the place alkali. So not only does the sodium kill…this is acid areas, these trees are built for acid, you turn the pH from 5.6 to 10, you know, they can't survive.

Jess Hill: Santos denied knowledge of the spill at the time it happened. They told the New South Wales Land and Environment Court they didn't know about it until they took a controlling stake in Eastern Star Gas. The court fined Santos $52,000.

Just a couple of hundred metres away, behind a fence, is another leaking holding pond. The aquifer beneath this pond is now contaminated with uranium 20 times higher than the safe water drinking guidelines. Santos and the EPA say the aquifer is not being used. Santos was fined $1,500, and that case is now part of a parliamentary investigation into the New South Wales EPA.

The coal seam gas water coming out of the Narrabri gasfields will produce 50 tonnes of salt a day. This is a toxic by-product, and they don't know how to dispose of it. Santos vice-president James Baulderstone says the company is looking at options.

James Baulderstone: Yes, we've got a couple of options there. The options are to either reinject it back under the ground into salty aquifers or crystallize it and put it to landfill, and we're working through that part of our EIS now, about what we finally do with that.

Jess Hill: There is a lot of disquiet from people up at Narrabri about what's going to happen with that salt. So, can you understand why at this point answers like 'there is a variety of options' aren't really good enough for people who are very concerned about what is actually going to happen with this salt?

James Baulderstone: I think a lot of people at Narrabri and I think a number of people also see that dealing with waste from any operation, there are opportunities for people also to be involved in dealing with the waste side effects.

Jess Hill: Wastewater expert Stuart Khan says the only real option Santos has is landfill.

Stuart Khan: And to dispose of salt in a landfill usually means building what we would call a monocell, a landfill site that would take nothing but that particular type of waste, and it would need to be very carefully lined, usually double lined with impermeable liners and very well controlled and a very carefully selected site in order to make sure that that salt is not mobilised back into the environment.

The big issue with salt is that it doesn't break down, it lasts forever, so if you build a landfill site, it doesn't really matter how good your impermeable liner is, or how good your structure is, whether it lasts 10 years, 100 years, 1,000 years, it still has a finite lifespan. So ultimately it's not a final solution for that salt.

Jess Hill: Associate professor Stuart Khan specialises in wastewater management. He was commissioned by the New South Wales Chief Scientist to write a report on the produced water from coal seam gas. He found that the industry had a 'complete lack of solutions' to dispose of the salt. Stuart Khan says storing the salt in landfill is only a temporary solution, and carries significant environmental risk. If there is heavy rain in the landfill area, he says, the salt could escape.

Stuart Khan: You will have contamination of local streams and groundwater systems as a consequence. So it's a temporary storage solution until we can come up with something better, and I'm afraid that's where the story ends at the moment. There is no something better.

Jess Hill: In his submission to the state's inquiry into coal seam gas, Stuart Khan said that regulators and other decision makers in New South Wales are faced with a severe lack of guidance, support, knowledge and experience for overseeing the safe management of coal seam gas activities.

Stuart Khan: I work with a water utility in New South Wales who were finding that there were coal seam gas companies coming along who were proposing to produce coal seam gas in their drinking water catchment. The water utility was asked to provide their feedback, but as you can imagine with an under-resourced New South Wales local government agency, that proposal went to one of their scientific officers, or environmental officers who I think was two years out of university at the time.

Jess Hill: In his submission he said there were a lot of outstanding questions about how coal seam gas is going to be managed. And as yet, there are few answers.

Stuart Khan: And I think that that's a big part of that problem, that there's a lack of knowledge, there's a lack of experience and therefore a lack of capability to be able to answer some of the questions you're asking; what are the risks, what are the concerns?

Jess Hill: And that's exactly what farmers around the Pilliga want to know. David Chadwick:

David Chadwick: Go away and do your own homework, question what you're being told. Question what we're telling you. We want everybody to question what they're hearing from both sides of the debate. Because we have no motivation to sink this industry. What possible good could come from that for us? We're Australians and we want to see Australia prosper. But you don't trash the joint as you're going through in the quest for a cheap buck. We must take a longer vision.

Jess Hill: Background Briefing's coordinating producer is Linda McGinness, research by Anna Whitfeld, technical production by Joe Wallace, the executive producer is Wendy Carlisle, and I'm Jess Hill.

* Corrections and clarifications

Background Briefing previously reported that Santos was considering building a pipeline into Queensland. Santos advises they have no plans to do so. Background Briefing apologises for the error.

The transcript has been clarified to make abundantly clear we are referring to Rio Tinto's difficulties in sourcing gas for its LNG hub.

The original story also reported that Australia was the only gas producing country in the world not to reserve gas for domestic use. This is incorrect and we apologise for the error