Australian Coal Seam Gas Projects Face Scrutiny

SYDNEY--Australian coal seam gas projects or large coal mines that could lower the quality of water resources will now be assessed by federal lawmakers under new laws proposed Tuesday.

It comes as big international oil companies and miners invest billions of dollars developing resources for export to fast-growing Asian economies, while facing opposition from other land users like farmers and horse breeders. The most contentious projects are clustered on the eastern seaboard in Queensland and New South Wales states.

Adding a new layer of approvals is likely to push up costs of projects at a time when returns are coming under increasing pressure. Coal seam gas developments led by BG Group PLC (BG.LN), Origin Energy Ltd. (ORG.AU) and Santos Ltd. (STO.AU) in Queensland have all overrun budgets due to technical challenges and issues ranging from labor shortages to the high Australian dollar.

The impact of coal seam gas and coal mines on water resources is only monitored by state governments at present. Federal lawmakers are able to take account of water issues if they relate to threatened species or internationally significant wetlands.

"The proposed amendments will ensure that coal seam gas and large coal mining developments must be assessed and approved under national environment law, if they are likely to have a significant impact on a water resource," Environment Minister Tony Burke said in a statement.

To comply with the federal approval process, additional information will be required on top of what's needed in the state-based approvals process. Mr. Burke, however, said most of the data would have already been addressed in state-based procedures.

Companies already undergoing an assessment will need to work on providing additional information for the federal approvals process "straight away", Mr. Burke said.

Write to Ross Kelly at [e-mail]

Subscribe to WSJ: http://online.wsj.com?mod=djnwires