Linc Energy fined record A$4.5m for environmental damage by Brisbane court

SINGAPORE-listed oil and gas company Linc Energy was slapped on May 11 with a A$4.5 million (S$4.54 million) fine by the Brisbane District court for serious environmental damage at its underground coal gasification (UGC) plant in Darling Downs, west of Queensland.

Linc Energy was found guilty on five counts of wilfully and unlawfully causing environmental harm. The company did not defend itself during the 10-week trial, which concluded that the firm was responsible for damage from toxic gas leaking from its operations between 2007 and 2013 in the Chinchilla area, where it burned coal underground at extreme temperatures to create gas.

Five former Linc Energy executives also face charges related to the operation of the UCG site, and will face a committal hearing in Brisbane later this year.

ABC News in Australia said the fine was the largest ever imposed upon a company in Queensland for such an offence. Australian media speculated though that the penalty may never be paid as the company is being liquidated.

Linc Energy in an exchange filing disclosing the fine on Friday, said "it is the liquidators' position that the penalty ordered by the court is not provable as a debt in the liquidation of the company."

It added that "this was the principal basis for the liquidators obtaining directions from the Supreme Court of Queensland to the effect that they were justified in not causing the company to defend the criminal proceedings."

District Court judge Michael Shanahan said in the sentencing hearing that the firm's behaviour was "serious and extensive", and noted that the company was well aware of the leaking gas problem, with dangerous levels of carbon monoxide, hydrogen and hydrogen sulphide found at soils on the Chinchilla site as it rushed to get its UGC plant to a commercial scale, according to Australian media reports.

"The offences have resulted in contamination of the groundwater system, and will require monitoring and remediation for many years to come," Justice Shanahan said.

The trial also heard that the company's former CEO, Peter Bond had prioritised Linc's commercial interests over the requirements of operating its mining activity in an environmentally safe manner. Scientists and workers had warned about gases bubbling from the ground, but the company continued with its operations.

In addition, a witness statement by former gas operator Timothy Ford, which he prepared in 2015 before his death of an undisclosed cause, was tendered as evidence, ABC News reported.

According to the statement, the toxic gas burnt Mr Ford's eyes and nose such that he would need to leave the plant after work to get fresh air because it made him feel sick.

Workers were allegedly told not to drink onsite tank water and advised to drink milk and eat yoghurt instead to protect their stomach from acid.

"We were not allowed to drink the tank water and were given bottled water... During my time at the Linc site, would be the sickest I have been. It is my belief that workplace was causing my sickness," Mr Ford had said.

Linc Energy delisted from the Australian Stock Exchange and moved to the Singapore bourse in 2013.

The counter has been suspended and last traded at 8.9 Singapore cents apiece on March 24, 2016.