March 6, 2012. Coal-seam gas explorers including AGL Energy Ltd. and Santos Ltd. that are active in Australia's Queensland and New South Wales states face the risk of higher costs and delays because of stricter rules, Deutsche Bank said. Queensland's Liberal National Party, expected to win the March 24 state election, proposes regulatory changes, including “full and fair” compensation to landowners, that may increase the cost of new coal-seam gas wells. The New South Wales government plans to release the results of an environmental and safety review of the coal-seam gas industry in the coming months that may lead to additional rules. The state also may remove a royalty discount for coal-seam gas companies, bringing its policy in line with other states. AGL, Santos, Dart Energy Ltd. and Arrow Energy Ltd. are among companies developing coal-seam gas projects on the east coast of Australia to meet rising demand for the fuel. Some environmental groups and politicians are concerned the projects will damage aquifers, contaminate and deplete water supplies, and diminish the capacity of food-producing land.