Background Briefing

A weekend retreat for the rich and famous, parts of the Wyong area on the NSW Central Coast also sit over rich methane gas fields. The residents claim their water is at risk.
It's escalated into a war between the geologists, the politicians, the residents and the mining company. Addiction to energy versus nature and lifestyle.

Transcript

This transcript was typed from a recording of the program. The ABC cannot guarantee its complete accuracy because of the possibility of mishearing and occasional difficulty in identifying speakers.

Anna Hipsley: One hour's drive north of Sydney lie the lush, verdant valleys of Dooralong and Yarramalong, pockets of pristine green near Wyong. The valleys form part of the major catchment area for the New South Wales Central coast, providing for half the water needs of more than a quarter of a million people. Right now though, they're also providing a major headache for the State Government's Minister for Mineral Resources.

Kerry Hickey: If you have a look at the geology in the Wyong area, there is a clear difference between the shale area which has a clay base, which keeps the two aquifers apart; there is no seeping between the two aquifers. How is that impacting on your groundwater? Can you show me how that impacts on your groundwater? Because the chief geologist in my department can't.

Anna Hipsley: Kerry Hickey's outburst in Parliament last month was another fiery chapter in a battle that's been playing out for months between the government, the local residents and a company that wants to sink 200 gas wells in one of the most beautiful valleys in the State.

Hi, I'm Anna Hipsley, and you're listening to Background Briefing on ABC Radio National.

This is a battle over energy. New South Wales needs gas and the valleys have one of the largest untapped reserves in the country. But the residents of Dooralong and Yarramalong have harnessed the help of celebrities and experts to keep big business out. It's also been a big media story for the local area.

Authors, broadcasters, high profile environmentalists and former politicians have joined the fight, and earlier this year, hydro-geologist Tim Jones submitted a report claiming that any mining could contaminate the catchment and lower the water table.

Chris Hartcher, the Liberal MP for the area, seized on that report during a special session of Parliament, in a challenge that clearly incensed Minister Kerry Hickey.

Kerry Hickey: For you to stand in here and say that I have not addressed the water issues, when you clearly you haven't looked at the site in DPI, where this has all be done; the analysis of the Tim Jones has been posted. Many months work of our senior people inside mineral sources; and you're questioning them? You're questioning them? I must say, what is Tim Jones' title? He's a hydrologist, but he has got no idea of what he's talking about the geology here in the Wyong area. And neither have you. And I find it totally, totally bizarre to think that you come in here and put the misinformation that's out there; people are not stupid, Chris, and I think that you really need to understand they will straight through you.
"The department is saying that there is no reason, no logical reason to stop the exploration wells going into that area."
Anna Hipsley: The Department of Mineral Resources spent more than three months reviewing the Tim Jones report, only to dismiss it outright.

Background Briefing spoke with Kerry Hickey in his Sydney office about the allegations it contained.

Kerry Hickey: I can tell you we did not take his report lightly. We held up the whole process and made sure that every recommendation or every point or conclusion that he reached was researched, to make sure that if he was right, we would have said so. The scientific evidence from my department says his report is flawed. The department is saying that there is no reason, no logical reason to stop the exploration wells going into that area.

Anna Hipsley: The Minister called the report a scare campaign of the highest order, saying it was responsible for much of the misinformation and hysteria floating around the central coast. He also rubbished Tim Jones' credentials, saying he wasn't qualified to make his assessments.

When we put Kerry Hickey's response to Tim Jones, he had this to say.

Tim Jones: You know, I've got a Bachelor of Multidisciplinary Science. I did all my tertiary education in Western Australia, at Curtin University and the University of Western Australia. I've worked for a few years as a consultant, and then I worked with government, and in that capacity I worked throughout Australia, pretty well, on hydro-geological and geological investigations for mining companies, for gas companies, for the government, for the department in either impact studies or water resource development. Now I've come to the table with pretty near just over 15 years of experience. If the Minister wants to discount that as being irrelevant, well good luck to him.

Anna Hipsley: Tim Jones is currently employed as a senior hydro-geologist with the Queensland government, although his report was conducted through is independent consulting company, Northern Geoscience.

During his Christmas break, Tim Jones travelled to Dooralong and Yarramalong and spent a week reviewing the geology and hydrogeology of the region.

Tim Jones: I've got to tell you that it's put my job at risk with the Queensland government. The flak that's coming back to the heads in my department are coming back on me, and I've had a fairly sticky time over the whole thing. And all of the work I've done for the Australian Gas Alliance and on the Wyong gas project has been voluntary; I haven't been paid at all for any of this work, and all I want to see done is that due process is done for the people of the central coast. It's an area where I grow up, it's an area I love, I've got good friends who live there, and I would like to see due process followed.
Author Bryce Courtenay, radio personality John Laws, scriptwriter Garry Reilly and former New South Wales Premier Neville Wran all have houses here.
Anna Hipsley: In Dooralong and Yarramalong, horse studs, turf farms and dairy cows dot the landscape. There's no denying the valleys are pristine. They're beautiful, peaceful, and the lucky recipients of more rain than most of the rest of the country has seen all year.

Some families have been here for generations, but the valleys have also become the playground of hobby farmers and well-heeled Sydneysiders.

Author Bryce Courtenay, radio personality John Laws, scriptwriter Garry Reilly and former New South Wales Premier Neville Wran all have houses here, and the celebrity factor has added considerable weight to the fight to keep the gas out. They've joined the residents in supporting the local action group called the Australian Gas Alliance.

It's run by lawyer Tony Davis, who divides his time between an office in Sydney and his property in Dooralong.

On a wet, midweek morning, driving out to Tony's property, on virtually every fence and gatepost is a brilliant yellow sign urging locals to 'Say No to Sydney Gas'.

Passing the cemetery at Jilliby, there between the trees is the first evidence of the gas company's activities in the valleys: the bright orange flame of methane being burnt off from a coal seam exploration well.

Tony Davis lives in the heart of the Dooralong Valley. Over a cup of tea, he makes his objections to the gas project abundantly clear.

Tony Davis: What about Centennial Park and Botanic Gardens? There's gas under there. We're not against gas. I mean it's fine if they're going to do it in conjunction where there are mines. If they're going to do it where people don't live. But you don't march into people's homes and do this.

Anna Hipsley: How many residents have you got on board in the valleys?

Tony Davis: All of them.

Anna Hipsley: All of them?

Tony Davis: Yes. 1,000. And then we've probably got about nearly 200,000 on the Central Coast who are sympathising with what we're doing and wanting to join. And then we're getting people from other areas, because they realise if this happens to our beautiful area, maybe it'll happen to Ourimbah Valley, to beautiful valleys further up the coast. People from Martinsville have called us to say 'Are we next? Is this going to destroy every beautiful bit of New South Wales?'

Anna Hipsley: A creek dissects the backyard of Tony's property. Large plate-glass windows offer a panoramic view of a small dam and green-fenced paddocks spanning out to the tree line.

There won't be any gas wells here. Tony's land is too small. But it hasn't stopped him from becoming a crusader for others in the valley.

As we talk, the phone rings constantly, and a steady stream of supporters arrive for a chat and to drop off petitions and letters.

Tony Davis: Hi Sandra, what have you got? More letters.

Sandra: There's your two letters, your two originals. OK.

Tony Davis: Terrific.

Tony: There's some more letters here, Tony.

Tony Davis: There's several hundred letters, individually written to Hickey and the Premier by people in the valleys and the central coast, complaining, and each one's individual. They've already been delivered to Hickey to show that the entire population is totally against this concept.

Anna Hipsley: Dooralong and Yarramalong are attractive targets for gas exploration for a number of reasons. New South Wales guzzles one-third of the country's gas, but is without a sizeable gas industry of its own.

As an energy source, methane is clean, green and easy to extract. It produces almost half the emissions of coal, the perfect untapped resource for Premier Bob Carr, who has just set new greenhouse emission targets.

The valleys are also a stone's throw from Sydney, and right next to existing gas supply pipelines.

State Minister for Mineral Resources, Kerry Hickey.

Kerry Hickey: We do need gas exploration, we do need gas for this State, we do need to have an ensure that a gas supply, a constant gas supply, comes back to this State, or otherwise we become uncompetitive with the rest of the States in Australia, and people will not do business with us. Where do we go for our gas? Queensland, South Australia? Victoria? We saw with the Moomba crisis last Christmas, Sydney almost choked without a gas supply. We need a gas supply.

Twelve years ago, the New South Wales government extended leasing rights. Since then, it's been throwing money into the industry, including a $30-million initiative to map the geology of the State and identify untapped energy sources.

The company, Sydney Gas, holds exploration licences for the Sydney Basin, giving it exclusive access to its coal seam methane deposits.

Minister, Kerry Hickey.

Kerry Hickey: I think there's 1.5-billion tonnes of coal bed methane in the Sydney Basin alone. That's enough to generate enough gas supply to run Australia for gas reserves for a five-year period. And that's just in the Sydney Basin, without taking in the Gunnedah Basins and the other basins around the State.

Anna Hipsley: Coal seam methane mining is a relatively new industry with its roots in the United States. In Queensland, it's been commercially produced for nine years, and new exploration companies are now cropping up all over the country.

Sydney Gas began producing coal seam methane in New South Wales in 2001. Last year the company sank two exploration wells in Dooralong. In April they received government approval to sink two more, much to the dismay of the local residents.

Alan Hayes has lived in the Dooralong Valley for almost 30 years and is the Vice President of the Gas Action Group. He's collecting the mail as I pull into his driveway. We talk out the back of the house, overlooking a rambling garden.

Alan Hayes: The vegetable garden down there, which is overgrown at the moment, is not normally like that, but since the gas business has come along, I just haven't had time to get into it.

I know a lot of people think, Oh well, why should we argue about gas wells, but it's really nothing to do with being selfish for one's own property. I mean I'm very much an environmentalist, and what concerns me is that it will impact on the water catchment and the environment as a whole. That's not just the water, but that is the environment itself, that means the surface of the land, the trees, the birds, everything.

Anna Hipsley: The coal seams in Dooralong and Yarramalong are between 400 and 600 metres below the ground. Methane gas has accumulated on the surface of the coal and is held there by water. To get the gas out, the water has to be removed. A hole about six inches wide is drilled into the ground, down to the coal seam, and a steel pipe is cemented into place.

To assist the flow of gas, the coal is fractured and the water is pumped out through the steel pipe. Each coal seam contains a different amount of water. In Dooralong, 1.5-million litres of water has so far been removed from the coal seam in the past 12 months. That's enough to fill one-and-a-half Olympic swimming pools.

Sydney Gas says removing it isn't causing the water table to drop, because layers of impermeable rock above the coal seam prevent fresh groundwater seeping down to take its place.
"...you don't try out a nuclear bomb until you know what a nuclear bomb will do. You don't go and mine in a water catchment, unless you know 100% it's safe ..."
But the residents' action group has not been convinced by those arguments. Lawyer and founder of the Gas Alliance, Tony Davis:

Tony Davis: You don't take risk, you know, you don't try out a nuclear bomb until you know what a nuclear bomb will do. You don't go and mine in a water catchment, unless you know 100% it's safe, and they don't.

Anna Hipsley: Mining gas in a key water catchment was always going to be contentious, but there have also been allegations made about the way Sydney Gas has handled the local community.

Tony Davis: We've had reports from many people that they felt intimidated, bullied, the way the company approached them. From my own experience, the first meeting I went to, they said 'We operate on a one-on-one basis, where we deal with landholders directly', and from Day One I objected to that, and said, 'No, that's not right.'

Anna Hipsley: While the law allows extraction of resources from private properties, companies must draw up a contract with the owners over land access and compensation.

If an agreement can't be reached, an independent arbiter gets involved. If the landowner is still unhappy, the case may go before the Warden's Court. But so far, Sydney Gas has won every challenge brought against it in other parts of the State.

Tony Davis.

Tony Davis: From the people I've spoken to in Dooralong, yes, they feel threatened. Because the original letter they get basically says 'You've got no choice. We have the Act behind us, we can come on your land, we can build roads, we can bring houses on your land. You're entitled to compensation, which probably won't be more than we're going to offer you', and then they offer you very little. So that's quite intimidating, I feel, yes.

Anna Hipsley: There have also been objections to the amount of information available about the gas proposal, and the level of community consultation.

Alan Hayes is the Vice President of the Gas Action Group and publishes the community newsletter.

Alan Hayes: Look, in the very instance, how we discovered that this was going to take place, there were two things. Tony picked up a letter from somebody in their mailbox, and just prior to that, the drilling had started on Max Mudie's property, and nobody knew what it was about. And Sydney Gas also then, very shortly after that, rang me and wanted to book six months advertising. I suggested at the time that maybe they should hold a community meeting, to tell people what was going on. So reluctantly, they agreed, but they probably agreed because they didn't believe there was going to be any opposition. So that was held at the Dooralong Resort. And it was there that the whole thing started to unfold and come undone for them, because we realised what they were telling us wasn't quite right.

Anna Hipsley: Have they been open in terms of exchange of documents and what information they do have, to allay your fears?

Alan Hayes: No. Never. The only thing they ever put out is their company propaganda, like the Annual Reports, which I was entitled to get because I'm a shareholder in the company. But other than that, they don't. They never produce the scientific evidence.

Anna Hipsley: This issue of the company's interaction with the local community has been brought to the attention of government.

Minister for Mineral Resources, Kerry Hickey.

Kerry Hickey: There's been quite a few issues raised with me, and I've gone on and raised them with the company and asked them to assess the way that they're doing business.

Anna Hipsley: The same problems have also cropped up in Camden, south-west of Sydney, where Sydney Gas is currently extracting methane gas.

Ross Carter has been monitoring the Camden operations for the Department of Environment and Conservation.

Ross Carter: I was aware that during the planning process, I the community expressed some concerns over the way that the company was communicating and interacting with them. And I think that our view with any operating company is that they need to form very strong links with the community and keep communication channels open, and we've informed Sydney Gas Company of that a number of times, that we think that's very important in managing their operation and the environment, is to be very open and transparent with the community.

Anna Hipsley: Do you think they've followed your advice?

Ross Carter: Look, I'm really not sure.

Anna Hipsley: Sydney Gas concedes there were problems with community consultation in Camden, but current CEO, Bruce Butcher, says they haven't been repeated in Wyong.

There were few issues with the first two wells in Dooralong, but after Sydney Gas lodged a proposal for two more, opposition from the residents escalated.

Last year the New South Wales government set up a committee to help address concerns about the project. Residents, members of the local Council, and a government official, sit on the panel, along with two representatives from Sydney Gas.

It's met on three occasions, but has so far failed to dissolve any of the friction between the residents and the company.

Radio National's Background Briefing spoke with Mayor of Wyong Shire Council, Brenton Pavier, who sits on the Community Committee.

Anna Hipsley: Have you been happy with Sydney Gas's consultation with the Council on this issue?

Brenton Pavier: I think they could have done better. I don't think their PR machinery has been great; but certainly they've been willing to talk to this Council. And maybe it's been a mindset of this Council that we've taken such a stance on behalf of the community, which I have no apology for. But I do believe that they could have done better and their PR machinery isn't what I'd call good.

Anna Hipsley: In fact Sydney Gas has very little PR machinery at all. Their media spokesperson left last year and hasn't been replaced. All inquiries about the Sydney Gas projects made by Background Briefing were diverted straight to CEO Bruce Butcher, who was at first reluctant to talk.

His position may have had something to do with a widely publicised interview that aired on the Nine Network's A Current Affair program earlier this year.

Presenter: Hush money, bullying tactics, and a secret government report.

Woman: They tried to shut me up. They offered $15,000.

Ray Martin: If you're wrong, what are you going to say? 'Whoops, sorry'? Meanwhile half of the drinking water that goes through the Central Coast is polluted.

Bruce Butcher: We're not wrong, there is no way in the world …

Anna Hipsley: Bruce Butcher felt he came off second best, and said the Sydney Gas Board had since advised him not to talk with the media. In the end though, he did agree to see me, finding an hour to spare one Sunday afternoon at his company's headquarters in Sydney's central business district.

In a board room decorated with glossy pictures of mining activities and smiling men in hard hats, he tells me that despite share prices dropping steadily over the past six months, Sydney Gas has never been in such good shape.

Bruce Butcher: I'm very proud of the work we've done at Sydney Gas. Sydney Gas is a public company. Sydney Gas has no control over who its shareholders are. Shareholders can buy and sell on the open market, and they do. We have increase in production, we've got two gas plants operating; we are drilling and bringing on new wells every other week. The production from these wells is increasing.

Anna Hipsley: Bruce Butcher is a serious-looking man, with a clean-shaven head and wire-rimmed glasses, and he's clearly dedicated to his job. Under his stewardship, Sydney Gas has become New South Wales' first commercial gas producer.

Bruce Butcher tells me he has been working seven days a week since his appointment as CEO and Managing Director four-and-a-half years ago, and is making significant progress.

Bruce Butcher: We are working a very heavily regulated environment; we have a number of government agencies that scrutinise with a high level of particularity, every single aspect of our operations. I'm delighted to be able to say that Sydney Gas has satisfied everything that the government requires of us, and the Minister's been in a position to make a determination that enables us to go forward and drill more wells.

"The real issue here though is the scaremongering that's been stirred up by very few people in the valleys who are rich celebrity hobby farmers." Bruce Butcher.

Bruce Butcher: There are certainly a number of people in the valleys who are very upset and yes, I do understand it. At first blush, the valleys are very, very pretty, there's no question of that. There will always be the few opposed to the project. There will always be the few that you can't convince. The real issue here though is the scaremongering that's been stirred up by very few people in the valleys who are rich celebrity hobby farmers. A small group, but a very rich group of people, very influential and very selfish, decided they didn't want wells in their backyard.
"...certain people in Wyong are actually making threats to other people in Wyong..."
Anna Hipsley: Bruce Butcher says the Gas Action Group will do anything it can to prevent Sydney Gas operating in the valleys. But he rejects any suggestion his company has used intimidation tactics to push ahead with the project.

Bruce Butcher: I'm hearing unfortunate stories coming out of Wyong where certain people in Wyong are actually making threats to other people in Wyong, none of which are coming from Sydney Gas, but are designed to ensure that people who would like to sit down and talk to Sydney Gas are intimidated themselves, so that they think twice about doing that. They're not being given an opportunity of sitting down, having conservations with Sydney Gas. Now that's very unfortunate. It's rather curious that Sydney Gas is being made out as the villain here, when the stories I hear would make your hair curl.

Anna Hipsley: Background Briefing was unable to make contact with any residents who confirmed this allegation.

In late 2003 two residents signed contracts with Sydney Gas allowing the company to sink an exploration well on each of their properties. The wells were drilled, and Bruce Butcher says everything was running smoothly until the Gas Alliance began hijacking the community consultation process.

Bruce Butcher: I've got a very real interest in sitting down with people and discussing with them over a cup of tea, just like you and I have in this conversation, and explaining to them what our processes are all about, what impact our operations do actually have.

Anna Hipsley: Why haven't you done that though? If you're saying that's what you'd like to do, why haven't you actually done that, and called a meeting and sat down and addressed these issues to dispel the misinformation you say is floating around?

Bruce Butcher: It's a difficult job when you've got people who aren't remotely interested in the facts, who are determined to keep you out of a particular area and will go to any lengths to ensure they do that.

Anna Hipsley: Aside from its presence on the Community Consultative Committee, Sydney Gas has had no further contact with the local action group since the company's Annual General Meeting in November.

A full Environmental Impact Statement on the Dooralong and Yarramalong valleys, commissioned by Sydney Gas, is due out later this year.

Bruce Butcher says that report, by environmental consulting firm Parsons Brinckerhoff, will prove that his company's operations have no impact whatsoever on the water table or the water quality, and will hopefully put an end to the community opposition.

Bruce Butcher: The scaremongering, the rumour-mongering, the absolute rubbish that's being perpetrated by those opposed to the project, will be completely dispelled once the Parson Brinckerhoff report is made public. It's very important for people to be able to see for themselves our operations cause no damage whatsoever to the environment, cause no damage whatsoever to the water. The surface water is contained within two levels or strata of aquifers. And this is where the drinking water from Wyong comes from. Below that, you have many layers of impervious shale that prevent 100% communication of water up or down. It is simply impermeable.

Tony Galligan is the government's Director of Minerals Development. He told Background Briefing that since the '70s, between 30 and 50 cord holes have been drilled through the valleys. They determine the geology of the area and identify the layers of rock above the coal seam.

Tony Galligan says Sydney Gas has enough information to conclude methane gas extraction in Dooralong and Yarramalong will not lower the water table, and that the techniques used prevent any possibility of contamination of underground aquifers.

But the residents' Gas Alliance has three senior hydro-geologists who say very differently. Chief among them is Tim Jones.

Tim Jones: My only objections to the whole proposal wasn't whether it should go ahead or not, it's just the inconsistencies in the information that's been provided.

Anna Hipsley: It all comes back to geology.

Tim Jones has come up with a differing geological profile of the valleys. He says the information possessed by the government and Sydney Gas is not sufficient to make the blanket statement that there is no risk to water resources.

Tim Jones: It may well be true that there are overlying impermeable structures in some areas of the catchment but it's not continuous. It's not going to be the same throughout entire valleys. There's geological structures present that will provide transient pathways for vertical groundwater movement. Geological logs from previous drill holes and an inspection of the coal seam where it's exposed at the coast, proves that the Newcastle coal measures which are being mined by the Sydney Gas proposal, that they are overlain by permeable sandstone. Dewatering of these coal measures will promote downward groundwater movement, which in turn will lower the groundwater table and the surface water streams, which in turn will reduce the water supply to the central coast.

Anna Hipsley: Tim Jones says while there is some good information available, more tests need to be carried out.

Tim Jones: To be able to make a thorough call on the geology of the area, you need to drill stratographic core holes in those areas. You need at least 10 to 20 holes to be able to validate the geology of the area, and this simply hasn't been done. I haven't said that mining's a good thing or a bad thing, but what I'm saying is to be sensible and to seriously address the risk they need to be able to do a thorough investigation, not only on the geology but on the hydro-geology of the area. You can't do it from a desk, it has to be done on the ground and over a period of time to collect it, and the amount of time series data that's required.

Anna Hipsley: Background Briefing questioned whether Sydney Gas has undertaken or intends to undertake any further geological tests in the valleys.

Bruce Butcher confirmed more may be needed as part of the Environmental Impact Statement, which would also address all the issues raised by Tim Jones.

Bruce Butcher: I'm taking what Tim Jones has reported seriously. I've asked Parson Brinckerhoff who are our experts, to look very carefully at what Tim Jones has written, and I want the scientists to be able to categorically respond to each and every allegation that Tim Jones has made, because at the end of the day I want to satisfy the people of Wyong, I want to satisfy the New South Wales government 100% that there is no risk at all, insofar as our operations are concerned at Wyong.

Anna Hipsley: While production in Wyong is still in its exploratory phase, Sydney Gas has been operating in Camden, south-west of Sydney, for the past four years.

Their second gas treatment plant is currently tied to 53 wells producing methane gas.
Even with every attempt made to protect the environment, there is still a considerable visual impact
Bruce Butcher has organised a tour of the Camden facility, so Radio National's Background Briefing can see how methane mining impacts on the landscape.

Even with every attempt made to protect the environment, there is still a considerable visual impact, especially in the initial stages when the wells are being constructed. The wells are spread across the landscape, but operations are concentrated at the chief processing plant, where all the gas is channelled.

The General Manager of Operations at Camden is Mike Roy. He's been working on site for Sydney Gas for the past five years.

Anna Hipsley: Where we're standing now, is in the middle of your new treatment plant here?

Mike Roy: Yes, that's right. We're located about 5 kilometres outside of Campbelltown, and this plant was constructed in the later part of 2004, and was commissioned and put on line December 17th, and we've been selling bas into the AGL Moomba pipeline since that time. We're located right next door to an open pit quarry.

Anna Hipsley: So that's that sound we can hear?

Mike Roy: That's the sound. They're extracting sandstone for the general area. The area is fairly industrial where we built our gas plant.

Anna Hipsley: And this is kind of it, it's just this small area here? You've got your workshop, you've got your plant, and your little car park and amenities block?

Mike Roy: That is correct, yes, this is the area we're leasing, yes.

Anna Hipsley: And this area basically controls the gas output for the whole of the Camden area?

Mike Roy: Yes, probably right now there's about 50 kilometres of gas gathering network that is buried, that collects all the gas from the wells we've drilled in the general area, and the gas is collected under low pressure and is brought into the suction of the compressor. If you just come this way…

Anna Hipsley: The main Camden facility is the size of two sports ovals, hidden in the gently rolling hills off the freeway. The on-site offices are painted a muted green, presumably to blend in with the landscape. But it's so dry here that mustard yellow would be more appropriate.

We leave the plant to drive out to some surrounding properties to see the gas wells. In the car is Sydney Gas' project officer for Wyong and the Hunter Valley, and local resident Kevin Rofe. Kevin has lived here all his life and watched Sydney Gas get up and running.

Kevin Rofe: They started on my cousin's property, which is another one of my grandfather's farms, which is just over the valley there. I watched them for 18 months, two years, to see what they did. I had some involvement with them as a contractor repairing their machinery and such, so they weren't doing anything wrong that I could see. I mean I went to all the local community meetings, and after they went on my place actually, became one of the panellists on a community access panel that was a regular thing for about 2-1/2 years.

Anna Hipsley: Kevin Rofe has five wells on his property. He's also been drawing wages from Sydney Gas for the past 11 months.

We drive past dry paddocks and a few cows, but not many. Camden was dairy country, but not any more.

Kevin Rofe: Just the economics of running a dairy farm became negative. There was something like 90-odd producers in this area; we'd be down to about 6, 5. We're trying to make as much money out of the property as we can so I've leased it out to a neighbour who runs beef cattle.

Anna Hipsley: Sydney Gas compensates the landowners for each well on their property, up to $2,000 for every well drilled, and up to $1,000 a year as long as the well is operational.

Compensation is also offered on a per metre basis for any additional infrastructure, like roads, fences and pipelines.

Kevin's taking us to Barry Harvey's property on the western side of town. Barry's one of the few farmers around here who still runs dairy cows. He's got a herd of around 60. On the way up the hill, we pass one of Barry's wells.

Kevin Rofe: Wherever possible they place them out of the general - so we can still farm this entire paddock, and they put it over in the corners, or out of the way so they don't interfere with your normal farming practices. This displays the fact that how close they can farm, how much of a disturbance that results in our installations. I mean he's growing crops right up to the fence. So you're looking at an area the size of a carport. As you can see, that's not stopping him from doing anything. In fact he'll tell you, and like I am, the income is very much welcome.
"If you look out at the wells, around the wells you'll find bloody wallaby shit and everything, and ducks feed on the grass around the wells, so there's been no change of any wildlife or anything around the place."
Anna Hipsley: Hey, good-day. Anna, nice to meet you.

Barry Harvey: Barry Harvey.

Anna Hipsley: Hi, Barry. Just been checking our your wells. How many wells have you actually got? It'll be three years this month since they put the three wells into production. If there's a problem, I just ring up and everything's sorted out within a few minutes. The little bit of ground that they've got is nothing. If Sydney Gas was the problem I had I'd be happy. Mother Nature's not looking after us too well. Bird life or animals or anything, there's plenty of that around. If you look out at the wells, around the wells you'll find bloody wallaby shit and everything, and ducks feed on the grass around the wells, so there's been no change of any wildlife or anything around the place.

Anna Hipsley: In the initial stages of production though, drilling a well is an intensive process. Trucks come and go, drilling equipment has to be hauled in. There's dust, and noise as wells are sunk, pipes are laid, roads are built and fences are constructed. After the wells start producing gas, the tanks and generator are taken away. What's left is a metre or so of narrow metal pipe sticking out of the ground, and a tank about the size of two garbage bins to hold any excess moisture that comes out of the coal.

On a property of a couple of hundred acres, they don't look so imposing. But despite the assurances of Sydney Gas their operations pose no threat to the environment, there have already been a few problems.

Ross Carter regulates the Sydney Gas operations in Camden for the Department of Environment and Conservation.

Ross Carter: Look, it's fair to say that we had some initial concerns over some issues down there. The first issue that concerned us was to do with fraccing water, which is the water that's used to fracture the coal seam, to allow the gas to be drawn from it. We were concerned about how that water was being managed. They were using fraccing water and storing it in some ponds that had been constructed down there by a mining company that had been undertaking some other exploration earlier. The ponds weren't constructed to hold saline water. The notice that we issued on them is called a clean-up notice, so it's a legal requirement for them to take action, and we issue those notices where we're concerned that there is a real potential for there to be an environmental problem.

Anna Hipsley: What sort of problem are we talking about? What could that water possibly do?

Ross Carter: Well saline water can I suppose cause normal ponds to commence to leak, so it can begin to affect soils in the vicinity, and if it's discharged to fresh waters, it's putting essentially water that's similar to seawater into fresh water, and that can affect the organisms that are living in waters around that.

Anna Hipsley: That problem has since been rectified. The project appears to be running smoothly, and the residents that Background Briefing spoke to seemed glad of the money.

Sydney Gas employee Kevin Rofe says he's actually better off since the gas came to town.

Kevin Rofe: I mean I had BHP come to me and they wanted to drill coal exploration on my property. This was several years before Sydney Gas, and they gently sort of said that 'We had the right to do it', and that if I tried to object, it would end up in court. The chap over at Menangle tried it and he lost out big time, so it was obvious that you had to get on with them, because they had the right to come on. So they drilled several explorations holes on the properties here, on Barry's, mine, my cousins', whatever. When Sydney Gas came along I just knew that they had the same sort of ability to come on.

Kevin Rofe: Well yes. I wouldn't put my family through that. So instead of having all the legal problems with it, I've now got an income, and of course now I work for them, so, but that's many, many years after they finished on my property. And I've got all the improvements and whatever. I think I'm far better off.

Anna Hipsley: Kevin Rofe says the opposition to the gas in Camden has now died off, and he's confident the opposition in Wyong will as well. But there are a couple of key differences between the two sites.

In Camden, the Sydney Gas operations affect about 25 people, and the wells are on farmland used primarily for grazing, properties of between 400 and 700 acres.

In Wyong, Sydney Gas operations will affect up to 1,000 people on blocks of land a quarter of the size. Much of the land is intensively farmed and most of the residents definitely don't need the money.

Dooralong resident and member of the Gas Alliance, Alan Hayes.

Alan Hayes: The Gas Alliance has got quite a lot of money sitting in the bank at the moment, to fight this. Donations, we ran the Twin Valleys Bush Dance, which raised in excess of $28,000 profit.
"When the water is gone, you can't turn a dollar note into water, it's just not the sort of thing that happens. You can't bring back what you've taken out, what you've destroyed."
Anna Hipsley: The celebrity factor is helping as well. Author Bryce Courtenay has owned a house in the Yarramalong Valley for five years. I talk to him over the phone while he's in Sydney, busy writing his latest book.

Bryce Courtenay: In effect, what we're doing is we're placing cheap methane gas in place of the single most important factor in the entire country, and that is water. And we're now allowing people to come along and destroy what is one of the last true catchment areas in the central coast. And of course the government is saying, Wow, it's cheap gas to industry, we'll all benefit from it. When the water is gone, you can't turn a dollar note into water, it's just not the sort of thing that happens. You can't bring back what you've taken out, what you've destroyed.

Anna Hipsley: The Sydney Gas operations are already having an impact on property prices. Several real estate agents in the valleys have confirmed that people are holding off buying until they know for sure if the gas mining will go ahead.

If the wells are approved, they're predicting a drop in value of around 25%. But Bryce Courtenay insists the battle against Sydney Gas isn't a case of 'not in my backyard'.

Bryce Courtenay: No, Anna, you know, this isn't a backyard issue, this isn't 'Don't put a road through here because our properties will lose their value.' The Yarramalong and the Dooralong Valleys were dairy farming areas for a long, long time. These were battlers who lived there, and yes, some yuppies like me have moved in, that's quite true. But by and large they are still battlers down there. Their land has become valuable; it is their only inheritance. And if it's de-franchised the way the gas would do, then they even lose that. But that isn't the issue, it is an issue, but it isn't the issue. The issue is simply resources. The water table, the stuff that we can't do without in this driest continent on earth.
"As a matter of fact in the context of places like Dooralong and Yarramalong I've described this legislation as a piece of fascist legislation"
Also supporting the Gas Alliance is former New South Wales Premier, Neville Wran, who purchased his property in Dooralong 14 years ago. His main objection, aside from the issue of the water, is the legislation that allows companies to operate on private property.

Neville Wran: I think it's tremendously unfair. As a matter of fact in the context of places like Dooralong and Yarramalong I've described this legislation as a piece of fascist legislation. The reality is of course that the legislation was never intended to apply to small closely settled holdings such as you have at Dooralong and Yarramalong, which are virtually corridor suburbs of Gosford and Wyong. This onshore petroleum law was intended for wide open spaces. Nobody can look you in the eye and say there is not a possibility of contamination, there is not the possibility of reducing the level of the water table. Until it is demonstrated by some open process there is no risk of contamination, there's no risk of lowering the water table, caution should be exercised by those in authority and particularly the government and particularly those representing the government in that area.

Anna Hipsley: Supporters of the gas action group are citing examples of the destruction coal seam methane extraction has caused in the United States. Since the late 1980s, the Powder River Basin, a previously unspoiled expanse of rolling prairie on the Wyoming-Montana border, has been the target of energy companies eager to harness this 'clean' gas.

The Wyoming project is massive when compared to that planned for Wyong, with 15,000 producing gas wells, and plans for 35,000 more. The locals there have also formed an action group, called the Powder River Basin Resource Council.

Jill Morrison has worked for them for the past 15 years.

Jill Morrison: The impacts are quite profound and quite far-reaching. Anywhere from people losing their water wells because they have to de-water the aquifer in order to get the gas to release out of the coal bed. Then they're discharging this water onto the surface, and it's destroying the soil and damaging the native vegetation.

Anna Hipsley: So you're actually seeing your groundwater resources dropping, and people's bore levels dropping?

Jill Morrison: Oh yes.

Anna Hipsley: By how much?

Jill Morrison: Well the government has been monitoring that, but at the centre of the development, it's dropped over 400 feet and can do down to 700 feet.

Anna Hipsley: So we're talking a lot of water.

Jill Morrison: Right. Right now I think they're discharging over 2-million barrels of water day.

Anna Hipsley: Sydney Gas says it's irresponsible and misleading to draw any parallels with the Powder River Basin experience. The company says the geology in America is completely different, and the coal seam in Wyoming contains considerably more water.

These assurances though, have done little to satisfy opponents to coal seam methane mining.

Jill Morrison.

Jill Morrison: We heard all those things and more at the beginning of this development. There is only going to be a total of 200 wells. It wasn't going to affect your water wells; you know, there wasn't going to be very much water. The impacts on the rivers were going to be very minor. We heard all of those things, and you know what? They were only true in maybe 1% of the total case.

Anna Hipsley: And it's not just water that has the Wyong action group worried. Gas Alliance founder, Tony Davis.

Tony Davis: Information from America, Canada, from the Northern Cheyanne, the Crow reservations, their air quality has dropped by 25% since methane gas started down in Wyoming, Montana. And that's a result not only of the gas escaping but also all the dust that's thrown up in digging hundreds of wells, and all the trucks that go to get the water out and take soil away etc. Things have happened that nobody imagined would happen in America. They did not imagine the poor Northern Cheyanne would all have asthmatic problems from the dust.

Tony Davis: Yes. We're now starting the legal battle. We've already got one court case coming up in June and there's more on the way. They are trying to raise money and their shares, have a look, their shares have been going down steadily now for what? Six months? And my feeling is that people are now waking up to the fact that the environment is more important than profits for a small company.

Anna Hipsley: Of course this is about more than money. It's about energy and meeting increasing demands. Whether the Gas Alliance has any success in stopping this project remains to be seen. In the meantime, Sydney Gas will continue monitoring gas flow in the area, and forging ahead with its Environmental Impact Study.

The proposal for 200 production wells is likely to be put before the New South Wales Government by the end of this year.

It's impact can't be assessed properly until then. But if the appraisal of the Dooralong exploration wells is anything to go by, it looks like our demand for energy will win this battle.

Kerry Hickey: I think we weigh it up. I'm of the opinion, as far as I'm concerned, I want to keep the pristine nature of the area as well. As Mining Minister, I also can see the benefit of Coal Bed Methane extraction. Now if the environment was going to be impacted upon in a way that was detrimental, then I would say quite clearly, No. No gas exploration in this area because it's too valuable. But I've got to say in assessing these wells, the impact is very minimal, very minimal. And the impact is acceptable by my standards. Now I'm not going to have my credentials damaged in a way that will reflect in future years. I want my kids to say, Well look, Dad tried to do a good job, he did try to ensure that the environment was looked after, he done the best he could.

Anna Hipsley: Background Briefing's Co-ordinating Producer is Linda McGinnis. Technical Operator, John Jacobs. Our Executive Producer is Kirsten Garrett. I'm Anna Hipsley, and you're listening to ABC Radio National.

Post Script: The proposal for the 200 production wells will go through the Development Consent process, under the auspices of the New South Wales Minister for Infrastructure, Planning and Natural Resources, Craig Knowles. A full environmental impact statement is required as part of this process. As Minister for Mineral Resources, Kerry Hickey is only responsible for the approval of exploration wells.