AGL quits upstream natural gas projects
AGL Energy Ltd., Sydney, has decided to quit the natural gas exploration and production business, a move that includes walking away from several controversial coal seam gas (CSG) projects.
Specifically the company is abandoning its Gloucester CSG project in northern New South Wales and it will cease production in 2023 from its Camden gas project near Sydney, also in New South Wales.
In addition, AGL plans to sell its gas assets at Moranbah, Silver Springs, and Spring Gully, all of which are in Queensland.
AGL Energy is one of Australia’s largest energy retailers. It entered the upstream business more than 10 years ago so that it could source supplies for its retail and commercial operations and boost its margins.
To exit from the upstream scene now has been a difficult decision, according to Chief Executive Andy Vesey, as AGL has invested significant amounts into the New South Wales projects in particular.
The factors influencing the decision include the sharp fall in global oil and gas prices plus the long lead times experienced in project development and, in the Gloucester project’s case, lower-than-expected production volumes.
AGL remains confident it will have sufficient gas supplies for its residential and small business customers.
The decision has been widely acclaimed by activist groups that have waged a long campaign in New South Wales against the company’s gas developments, saying they threaten drinking water as well as dairy, horticulture, and tourism operations in the project regions.
AGL maintains it has made a business decision and it had not quit under pressure from the protest groups.