Santos cleared to start shale drilling in Australia's Northern Territory

FILE PHOTO: A sign for Santos Ltd, Australia's No. 2 independent gas producer, is displayed on the front of the company's office building in the rural township of Gunnedah, located in north-western New South Wales in Australia, March 9, 2018. REUTERS/David Gray/File Photo

MELBOURNE (Reuters) - Santos Ltd has won the first approval from Australia’s Northern Territory to resume shale drilling, nearly three years after the territory banned fracking amid concerns about the impact on water and indigenous sites.

The ban was lifted last year with recommendations for strict new rules to govern fracking, or hydraulic fracturing, which involves injecting water and chemicals at high pressure to break up rock to release oil or gas. (

On Wednesday, the Northern Territory government said it had approved Santos’s plan to drill in the McArthur Basin after the company revised its wastewater management and spill management plans.

Santos said it was racing to drill its first well before the wet season, which runs from November to April.

“We drilled Tanumbirini 1 in 2014 and liked what we saw, so we are delighted to be in a position to resume exploration drilling,” Chief Executive Kevin Gallagher said in a statement.

“We’ll be moving as quickly as possible and doing our best to beat the approaching wet season.”

The Northern Territory is estimated to hold 200 trillion cubic feet of shale gas resources.

Others waiting to drill there are Origin Energy, with holdings in the Beetaloo Basin, and Empire Energy Group and Armour Energy Ltd, both of which have acreage in the McArthur Basin.

Reporting by Sonali Paul; Editing by Clarence Fernandez