Australian miner Dart Energy said on Friday that it would no longer drill a coal seam gas (CSG) well in St Peters, Sydney, The firm confirmed its statement in a filing with the Australian Securities Exchange.

The move was in response to a unanimous decision by the Marrickville Council to ban CSG mining at the proposed site run by recycling firm Dial-a-Dump. Although local councils do not have the power to stop mining exploration - which is a state function - the council could enforce local planning regulations.

The council actually renewed on Tuesday the permission of Dial-a-Dump to use the site off Holland Street but included a clause in the development application to ban CSG mining on the site.

Greens Councillor Max Phillips said the council included the anti-CSG clause not only because of fears of environmental degradation linked with CSG mining but also because the area is zoned for industrial use which prohibits it from being used as a mining site.

Besides including an anti-CSG clause, the council said it would ask the New South Wales government not to renew Dart Energy's licence to sink an exploratory well in St Peters/

Dart actually holds exploration licences across Sydney and reports said it inked a deal with Dial-a-Dump to drill a CSG well. However, Dial-a-Dump lawyer Christopher Biggs insisted the firm has no agreement with any mining company to permit the exploration or mining of CSG on the St Peters property.

Groups opposed to the planned CSG project welcomed the decision by Dart Energy.

"Never before has this company ruled out coal seam gas in an urban environment, now they have, and it's an indicator that it's not safe and should be ruled out by Barry O'Farrell," ABC quoted New South Wales Greens Mining spokesman Jeremy Buckingham.

Jacinta Green, vice president of Lock the Gate, an anti-mining alliance, challenge Dart to give up entirely its claim on the land. She said that as long as Dart's approval is in the state Parliament, loopholes will remain and there is nothing to stop the miner from setting up in Alexandria which is just five metres away from St Peters.

The council's move puts in question the power of local governments to prevent CSG mining within their jurisdiction. A similar problem happened in January in Somerset, Queensland when the local council attempted to place a moratorium on CSG exploration in the area.

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