How to Lose Social License to Operate: A Case Study of the NSW Coal Seam Gas Industry. What Happened and What can be Learned

Abstract

The coal seam gas (CSG) industry in NSW is now largely defunct due to the loss of social licence to operate. Six years of community outrage and Government indecision resulted in increased regulation and eventually withdrawals by the major operators. The demise of this industry occurred despite a gas shortage in the State, existing operational CSG fields with a good track record, initial government support, a neighbouring state, Queensland, with over 3,500 production wells, and a detailed investigation by the Government's Chief Scientist supporting the industry. Despite this, a groundswell of community opposition brought pressure to bear on the governments, operators and banks to force the effective closure of this potential industry. This paper analyses the history of this battle to identify lessons for the industry and operators in order that they are able to make earlier and better decisions should similar circumstances arise in future. It identifies the key milestones in this debate, including; Formation and consolidation of major community opposition groupsEnquiries set up be the GovernmentIndecisive politics and ineffective regulationThe Metgasco saga of community blockades and eventual Government buy back of the licenceWithdrawal of major operators The paper draws conclusions and provides recommendations on how the industry as a whole, and individual operators, could have identified and responded to these issues in a more productive manner. The recommendation provide guidance on how the industry could have : Recognised the groundswell of opposition much earlierUnderstood the complexities of the alliance that formed against the industryEngaged with the opponents to determine whether there was a way forwardMade better investment decisions, based on a detailed understanding of the scale of community concerns.