Bloomberg News

Santos Delays Drilling at Coal-Seam Gas Well Amid Water Concerns

November 15, 2011

Nov. 15 (Bloomberg) -- Santos Ltd., Australia’s third- biggest oil producer, will delay drilling a coal-seam gas well in northern New South Wales state as it awaits a report analyzing the impact of exploration on the water supply.

Drilling at the Spring Ridge site, about 400 kilometers (248 miles) north of Sydney, will be deferred until the study is completed in March, the Adelaide-based company said in an e- mailed statement today. The delay will allow for further discussion with the local community amid concerns that the water supply may get polluted, it said.

“Santos remains committed to working with regional communities to develop their gas resources safely and sustainably, while maintaining their vital role as food producers,” James Baulderstone, vice president of eastern Australia for Santos, said in the statement.

The energy producer agreed in July to buy the shares in Eastern Star Gas Ltd. it didn’t already own for about A$730 million ($742 million) and is betting demand for eastern Australian natural gas would more than triple by 2020. Santos is building a $16 billion venture in Queensland state to liquefy gas from coal seams for export to Asia.

The government of New South Wales and state farmers agreed the company’s exploration plans should proceed in areas surrounding the towns of Gunnedah and Narrabri, Santos said.

Santos fell 0.2 percent to A$13.41 at the 4:10 p.m. close in Sydney. The S&P/ASX 200 Index dropped 0.4 percent.

--Editors: Amit Prakash, Ryan Woo.

To contact the reporter on this story: James Paton in Sydney at jpaton4@bloomberg.net

To contact the editor responsible for this story: Amit Prakash at aprakash1@bloomberg.net.


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