AGL abandons CSG as prices fall
Source: The Australian, 5 Feb 2016
AGL Energy will exit its controversial coal-seam gas business as sliding oil prices and lower-than-expected domestic demand cut price expectations, overturn NSW supply-shortfall expectations and make Queensland’s Arrow gas development unlikely in the short term.
The move has led to growing speculation that new Santos chief executive Kevin Gallagher will shut down his embattled company’s Narrabri project, the last remaining serious coal-seam gas project in NSW.
AGL managing director Andy Vesey insisted community opposition had no impact on the decision, but this did not stop anti-CSG groups hailing the move as a victory.
Sydney-based AGL will walk away from its $1 billion Gloucester project because of a combination of poor gas flows from its appraisal wells and lower-than-expected domestic gas prices.
It will also book $795m of pre-tax impairments on CSG assets (including Queensland assets it has previously announced it would try to sell) and stop drilling new wells at its small Camden project near Sydney, meaning production will stop 12 years early, in 2023.
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