The company was responding to local media reports after details of its exploration approval were disclosed in state parliament late last week.
Apollo said its wholly owned subsidiary Macquarie Energy had received approval in March from the state of New South Wales' Department of Industry and Investment to drill one exploration corehole in an industrial precinct in the suburb of St Peters, located 7.5 km from the center of Sydney.
"No final decision has been taken to proceed with drilling the hole at the St Peters site," Apollo Gas managing director Andrew Mayo said in a statement on Monday. "We committed some time ago to a consultation process which will take place before any field work is carried out."
Apollo said Macquarie's approval hinged on its Review of Environmental Factors or REF, which included a requirement to conduct a community consultation program prior to any test drilling.
"While the REF ... mentions that drilling could commence in 2010, a decision was taken by the company some time ago to delay any exploration until the City of Sydney releases details of its Decentralized Energy Master Plan," Mayo said. He emphasized the project was at a "very early stage."
Apollo said corehole drilling is a standard method of exploring for coalseam gas to gather key data and did not produce gas or water. The hole may be drilled in 2011, it added.
Two local councils with jurisdiction at the St Peters site and local residents complained to local media outlets on Monday about not being consulted about Macquarie's plans.
"The community needs to be absolutely informed of what's going on here, if they're to have gas wells popping up around them over the next few years or so," member of parliament for the state Greens party Cate Faehrmann told the Australian Broadcasting Commission. "We need to just make absolutely sure that there are no adverse impacts on water supplies and human health," he said.
The health concerns follow two Australian coalseam gas producers reporting the discovery of traces of carcinogenic benzene in fluid samples from wells in the neighboring state of Queensland in recent weeks.
Arrow Energy last Monday reported its monitoring tests had detected minute traces of benzene in three of 60 fluid samples taken from wells in the northern Bowen Basin in central Queensland.
On October 19, Asia Pacific LNG reported the discovery of traces of BTEX in fluid samples from eight Queensland coalseam gas wells drilled by Australia Pacific LNG. APLNG, a 50:50 joint venture between Australia's Origin Energy and US-based ConocoPhillips, subsequently cleared water bores around the wells of any contamination.
Apollo said Macquarie Energy had been granted Petroleum Exploration Licence 463 in October 2008 that allows it to explore for hydrocarbons, including coalseam gas, within in a 2,385 sq km area stretching from the Sydney suburb of Kurnell, located 35 km south of the city center, to the town
of Gosford, located 77 km to the north, and inland as far as Eastern Creek, 40 km to the west.
