Metgasco puts development on hold The coal seam gas company Metgasco has put a major development on hold in northern NSW in response to the state government's decision to introduce "buffer zones" around residential areas and ban activity within horse breeding and wine producing regions. In a statement to the Australian Securities Exchange on Wednesday morning, Metgasco announced the suspension of its Clarence Moreton exploration and development program around Casino and parts of Lismore and Grafton on the NSW north coast. The company has drilled 52 exploration wells in the area and was last year granted a coal seam gas production licence for 40 wells. The company says the decision was taken by the Metgasco board due to "the uncertain operating environment" created by the NSW government's recent announcement. On February 19, the Premier, Barry O'Farrell, announced a ban on coal seam gas activity within two kilometres of residential areas and within wine producing and horse breeding areas. He also announced that the Chief Scientist and Engineer, Mary O'Kane, will review all coal seam gas activity in NSW, including the effect on water catchments, and report on any risks by July. The decision followed a surge in community anger which forced the energy company AGL to, last month, suspend plans to drill for coal seam gas beneath thousands of homes in south-western Sydney and ended the company's plans for the area. Announcing the Coalition's Strategic Regional Land Use policy last September, which regulates where and how coal and coal seam gas mining can occur in NSW, Mr O'Farrell told parliament the government was "removing uncertainty" for farmers, the industry and landholders. But the Metgasco statement says changes to the rules in February "have created an environment of substantial uncertainty for energy companies in the state." Metgasco says the timetable for Ms O'Kane's report potentially means six months of regulatory uncertainty and delays. However, the company indicated that once the regulatory environment is clarified it intends to resume operations. Metgasco managing director Peter Henderson said the decision was "very disappointing" but "necessary to preserve shareholder value." Metgasco, which has experienced strong community opposition to its operations in the region and suffered a bomb threat just before Christmas, said it would scale back its operations but maintain a small presence in the Northern Rivers region to manage community consultation and maintain key relationships. The company will rehabilitate most, if not all, wells and facilities located on its permits. Metgasco said it had spent nearly $100 million in acquiring its licences and undertaking exploration activities over that time, but its statement did not mention whether compensation would be sought from the State government. The announcement comes a day after federal environment Minister Tony Burke said the Commonwealth would take an increased regulatory responsibility for coal seam gas and large coal mines, based on an assessment of the impact on water resources by the Independent Expert Scientific Committee. Metgasco shares have slumped more than 50 per cent this year and closed at 9.3 cents on Tuesday. The Resources and Energy minister, Chris Hartcher, said it was "a commercial decision of the company."