26^th June, 2008. 

Mr. Mark Harper,

Acting CEO,

Sydney Gas Operations Pty. Ltd.,

Level 11, 1 O’Connell Street,

SYDNEY  NSW  2000 

Dear Mark Harper, 

I refer to your letter of 16^th June. 

In relation to the matters to which you refer on the first page of your letter, it appears your comments were made with no knowledge of the history of the provision to us of the REFs.  This particular REF was provided to us on or about 18^th April pursuant to an undertaking given by Frank Krstic to the community in about November 2006, which undertaking was continually breached until now, as were other undertakings given to the community at the “open days” breached, at least one of which undertakings is still to be honoured. 

We are aware of the DPI’s assessment process.  We don’t agree with the process, but have to live with it, it appears, at this stage. Having in mind the REF for the 5 coreholes lodged in April, we do not agree that the DPI necessarily assessed it accurately. 

1. We have written separately to Dr. Saunders in relation to this heading. You have probably had the chance to read that letter by now. Indeed a draft Memorandum of Understanding was prepared and forwarded to Dr. Saunders, at his request, which MOU he asked, was to set out those matters which had been agreed upon between us and Dr. Saunders.  For some reason, of which we are not aware, Dr. Saunders has now altered his view and has sought to distance himself from the document he requested.  We were of the specific understanding that the MOU had been taken to your Board and that with the withdrawal of the clauses requiring any entity taking over Sydney Gas to be bound by the MOU, he was to take it to the AGL Board. These negotiations took place over a period of more than 10 months.  We really thought we were getting somewhere with a mutually beneficial way forward.  It will be up to the community as to what they make of this turn around. 

We are fully aware of the drilling rigs currently operating in our region operated on behalf of coal mining companies.  This drilling is within the mining leases and away from the aquifers, alluvials and water tables.  In addition, much of the drilling is on land owned by the Mining Company.

2. We take issue with the findings of the Parson Brinckerhoff report.  We do not accept your submission that the contents of that report are applicable to your exploration activities in all parts of the Hunter or any part of the Hunter.  Upon what basis do you make that submission?
3. Surely you must be more than “open to the idea that (you) consult with the community early in the process”.  Our understanding is that you are required to consult with the community, not that it is an idea you may be open to.  Obviously the community consultation should be prior to access agreements being signed.  Once such an agreement is signed then the community has no further input into the matter.  That is unacceptable and should be addressed by you.
4. We have seen your earlier draft access agreements, which you say are no longer to be used.  We have seen the template for the access agreements which you say you will now use for coreholes.  Are we to assume that the Access and Compensation Agreements signed for all coreholes approved as a result of the latest REF are or will be in identical terms to the draft template you have provided with your letter?
5. Your comments are noted.
6. Your comments are noted.  Whatever your intention in calling the Wollombi Brook an unidentified “creek”, the fact is that in the perspective of the community, you attempted to diminish its importance to our agriculture, viticulture, dairy and other rural pursuits.
7. We thought you may have been aware of the detail of potential impacts “that    exploration may have on these ecosystems..” etc., rather than simply referring us to the DPI.
8. Your comments are noted.  We see that, in outlining what you would do in the event of “unforeseeable damage”, that there is some likelihood of damage.  One would have thought that all possible damage would have been identified, foreseen, and plans in place for absolute avoidance of any damage.
9. Your apology is noted.  It is the community whom we represent who are unable to accept your apology, not necessarily myself personally.  We also note your commitment to do better in this area.
10. Your response is noted.  We do not accept that these environmental impacts have been properly addressed in the REF.
11. We note your comments.  Perhaps this answer should have been given to the meeting.
12. We are writing separately to Dr. Saunders in relation to this question, having in mind our discussions direct with him. We have not been advised, with supporting evidence, either by Sydney Gas or the Department as to whether or not there have been any negative impacts; what steps were taken to ensure there were no ongoing risks.  Further, if in any fraccing procedure there is one million litres of water per well, what size trucks will be used to take the water to the processing plant; over what period of time will those trucks be used during the fraccing or any other procedure requiring large quantities of water; how many truck movements in and out of the drilling area will there be; what other matters are addressed by you in relation to the “captured and recycled” water you have referred to?
13. We note your commitment to communicate with the community in the future.  All the reasons we believe these “open days” and “focus groups” were flawed have been set out in previous correspondence and we don’t propose to outline them yet again.  The “focus groups” were advised that the results of the groups would be published in the Singleton Argus.  This has not yet occurred.  Can you indicate when this publication will take place.   Will you provide us with details of the results of those “focus groups” or are they secret.
14. Your comments are noted.  The newsletter is an improvement on those of the past, however you should ensure that it is widely distributed to all members of the community.

      From whom have you received positive feedback?

      From how many landholders have you received positive feedback?

      From which Councillors have you received positive feedback? 

      What was said by those persons which led you to conclude that it is much  more informative and open?

      Upon what basis do you conclude that “degassing gas myths” is the “most  popular” article in the newsletter.  What was said and by whom to lead you to  that conclusion? 
 

1. This was not a subjective assertion, but an objective assertion based on the observation of those taking part in the meeting and the contact they have made with our Group since.  Of course the lack of confidence and mistrust of Sydney Gas is not totally universal, it is just the majority of the community upon whose behalf our Group was formed who have this view.  Of course there is the occasional landholder who will sign an access and compensation agreement for his thirty pieces of silver.  We would not expect Sydney Gas to share the view of the majority of the landholders who were present at the meeting.  Hiding behind apologies when approvals have already taken place does nothing to improve the credibility of the company in the eyes of the community.
2. The landholders of Wollombi kept notes of those questions which were not answered, and also those where answers were corrected by you. They will no doubt will be putting those questions to you again.  Your introduction was missed by those from our Group who attended the meeting and we were wrongly informed that your name was Mark Castle.  We apologise for that.  However in your email to me of 4^th June, 2008 you merely signed your name.  You gave no indication that you held any office at Sydney Gas.  You signed the letter attached to that email over the printed name of Andy Lukas.  We assumed you were Andy Lukas’ secretary. It is your letter of 16^th June which describes you as Acting CEO.  We are still not aware of your actual standing in Sydney Gas. We believe that the three persons mentioned are junior staff, although we did not know that Liz Flaherty was actually staff, we thought she was a consultant PR person.
3. See b above.
4. We are aware of the content of the access agreements that have been divulged to us.  It was the community of Wollombi who informed us they didn’t understand.
5. This is an objective observation of all members of the community whom we represent.  It is supported by all the material we have set out to date, including that which we included in our letter to Dr. Saunders of today’s date.  In relation to your claim that the CCC is a very good forum for communication, we agree that it should be.  However, you have elected to not comply with its charter, as previously set out, in that amongst other things you failed to inform the CCC that the REF for the 5 coreholes was being prepared; failed to inform the CCC that the REF had been lodged; failed to inform the CCC that the approval had been granted; failed to inform the CCC that you had failed to consult with the communities of Wollombi and Paynes Crossing; failed to respond, prior to approval, to the matters our Group raised in relation to the REF; sought deferment of the CCC meeting until after the REF was lodged and approval given.
6. We are of the view that our assertions are representative of the view of the vast majority of the community and certainly, from our observations, representative of the majority of those in attendance at your meeting.  To assist you in your own assertions, please advise: How many landowners have welcomed you onto their land to conduct exploration; please identify them; upon what basis have you assumed that you were “welcomed”; how many landholders have indicated their support for your exploration; please name them.
7. Andy Lukas is at odds with prior CEO’s, but more to the point he is at odds with himself.  In his letter of 29^th May 2008 he says in point 12 that “it is extremely unlikely” that coring would impact on groundwater or surface water resources.”  In point 14 of the same letter he says he “can confirm categorically, that there will be absolutely no impact on the groundwater….”.  This sort of advice does make it hard for the community to have any confidence at all.  Andy Lukas also advised in point 12 that you would not be drilling in the vicinity of the Wollombi Brook so there “is no potential impact”.  In fact you are drilling through the water tables and aquifers which feed the Brook, so the potential for impact is indeed there.  In relation to the question of subsidence, we appreciate your confirmation. This matter had not been clarified. We had not known prior to now whether your Land and Community Manager had made an error or whether she had simply been told to change her advice for other reasons.

 

You have a copy of the independent hydrogeological assessment in Dooralong/Yarramalong, as does the Department.  We refer you to it.

The coal mining companies are not drilling through or under the alluvials, water tables or aquifers. The coal mining companies we refer to are those operating locally and whose operations are carefully controlled by their conditions of consent and the Mining Act.  Those controls do not exist under the Petroleum (Onshore) Act.

15. The environmental damage seen at Camden consisted of farming land which had been blighted with numerous large buildings, well infrastructure, piping infrastructure, SIS drilling rigs, noise, vibration, night time light emanations, and the like.  It is also noted that on 5^th April, 2004, Sydney Gas was served with a Clean Up Notice following a pollution incident involving the escape of fracturing water contaminating the ground with polycyclic aromatic hydrocarbon species…high in pH and salt.  It is understood that Sydney Gas complied with the Clean Up Notice.

The environmental damage at Wyong is shown in photographs of the Springs property of which you are aware.

It is not inferred that Sydney Gas has any relationship to those who are engaged in CSM exploration and extraction in the Powder River Basin, however it is clear that, in relation to Powder River Basin, the contaminated water from the seams has resulted in the death of flora and sterilisation of farming land.  We have no doubt that should there be escape of contaminated water, as occurred at your Camden site on a small scale, and as occurred in the Pilliga, and as occurred in the Powder River Basin, that there would be similar death of flora and associated causal damage in the Hunter.  We believe this is perfectly logical and certainly not uniformed or misleading.

We are aware that the practice of allowing saline water to run over a site is strictly prohibited, but as you well know from your own experience, it happens.

Since the next meeting of the CCC is some time away, you no longer have to look forward to this explanation.

We note your intention to not volunteer to perform a full Environmental Assessment in relation to core holes or exploration wells.  We have previously raised with both the Department and the Minister the reasons we believe a full EA should be undertaken for your exploration.  Unfortunately that has fallen on deaf ears and we hoped you would be responsible enough to simply undertake such an assessment even though not specifically required.

16. We can’t see how this can be possibly correct, but even if the variables of topography and wind direction were considered of low variance, surely any variance should be investigated in the interests of the affected community.  We note, and correct us if we are wrong, that the Noise Impact Assessment was a desktop, computer simulation.  We would have thought that when the corehole at Bulga was being drilled that proper and accurate readings could have been taken and used as the base for future corehole drilling, rather than using the desk top model.

Further matters.

• We note your comments.  They don’t really take us any further.
• Why can’t you let the community know, now, the possible locations so that the community can have some input, notwithstanding your correct view that the community is not entitled to make any submissions?  What are your criteria for deciding when you ”are able to disclose” the locations?
• We have difficulty in understanding what commercial sensitivities outweigh the right of the community to know how their community is going to be affected.
• A full Environmental Assessment requires you to examine your processes and its effects in a more detailed fashion than an REF and also allows the Department of Planning to have input into the approval process.

You have given lip-service to the CCC throughout the whole of your last two letters, yet you have not complied with a number of requirements set out in the Charter of the CCC in that, amongst other things:

• You failed to inform the CCC that you had signed access and compensation agreements in respect of any further coreholes;
• You failed to inform the CCC that you were in the process of preparing the REF in respect of the 5 coreholes;
• You orchestrated an adjournment of the CCC until after you had provided a copy of the REF to Barry Smith and, more importantly until after approval;
• You failed to provide the CCC with a copy of answers to our concerns relating to the REF until after approval.

These actions can give rise to nothing other than suspicion of deceit; of exploration by stealth.  We don’t need to wait until the next CCC meeting to provide this explanation.

We don’t see it as necessary that everything be done through the CCC.  There is no reason we can’t discuss the exploration outside the walls of the CCC and take any agreement, or lack of agreement, or outstanding question, into the CCC.  This not only saves the time of the CCC in its meetings, but gives all parties more time to consider matters.  I can’t see why you would be disappointed that we would try and address concerns prior to CCC meetings, particularly when they are not held as regularly as the Charter requires.  For the above reasons we see it as important to have as much dialogue as possible.  If we saved all our dialogue for the CCC meetings, matters simply would not be fully or adequately addressed by virtue of the lack of time.

Please provide details of how many members of the community have indicated support for your activities; how many have thanked you for communicating with them; please identify them.

We note your assertion you have always been engaged in CCC meetings, yet you resisted our attempts to have the Minister form the Committee in relation to the Hunter Bulga Exploration area.

Finally, all our correspondence is distributed by either us or by Sydney Gas to the CCC members.  We are not addressing any concerns outside the CCC forum. In any event, there is no reason at all why concerns should not be addressed at any time rather than awaiting formal CCC meetings. 

Further matters.

Your responses were not published in the Cockfighter due to editorial deadlines. We had not had time to read your responses prior to the deadline. You are quite correct that we published your responses forthwith on our website and forwarded a copy to all members of our Group.

At the time of writing of the article in the Cockfighter we had been ignored.  We were ignored from the time of writing our letter to you regarding the REF, until after the approval was granted.

We note your advice that you offered to meet with us. As we have said above, we had no idea who you were (and still don’t know your standing in the company) and had no intention of meeting with a person who we thought was Andy Lukas’ secretary.  As we also said to you in an email of 4^th June, 2008, it is Dr. Saunders with whom we wished to meet, and he was well aware why.

Again, we don’t see why it is necessary for us to wait until the next meeting of the CCC for us to set out for you the circumstances surrounding our activities, and that detail is set out above.

At least there are a number of issues on the table to discuss at the next CCC meeting, which I hope to be able to attend. 
 

Graeme Gibson

for Bob Kennedy.

Hunter Bulga Gas Action Group Inc.