The Coal Seam Gas (CSG) conundrum: It’s a trust thing

The most recent episode in the on-going saga around CSG development in NSW is the suspension of the AGL’s Gloucester project due to detection of BTEX (benzene, toluene, ethylbenzene and xylenes) chemicals in the flowback water in some of the wells that are used for gas extraction by hydraulic fracturing.
The provenance of these chemicals is not quite clear and there is currently an investigation to determine just that. More worrying are the indications that AGL has not been upfront and transparent about this issue. There have been allegations of cover-ups, withholding information and delaying communication. All this creates great distrust, even among people who would otherwise be up for a rational discussion on CSG.
Relatively straightforward economic modelling (described in a paper that I will be presenting at the upcoming AARES conference) shows that it is in the best interest of all involved parties that any information about the effects of CSG on the surrounding environment, including aquifers and agricultural land, is transparent and readily and imminently shared. There is no benefit for the CSG developers in withholding any information, as this creates distrust and further strengthens the opposition to the CSG. So, it’s a trust thing, and until and unless the developers understand that, and are prepared to be honest and credible about the information that they have, they hold no hope of overcoming the obstacles to their CSG development proposals.

Author: Tiho Ancev

Tiho Ancev is a Professor of Agricultural and Resource Economics in the School of Economics, University of Sydney. His main research areas are agricultural, environmental, natural resource and energy economics. Tiho’s main contributions have been in water economics and policy, economics of energy, economics of air pollution and climate change policies, and economics of precision agriculture and agricultural input use. He has published widely on these topics in top international peer reviewed journals. Tiho has led and contributed to national and international research projects in these research areas. He is currently the Managing Editor-in-Chief of the Australian Journal of Agricultural and Resource Economics.