Nick Caltabiano, General Manager | NEO Consulting
If you’re refinancing, selling or buying a service station, you can expect to be asked the same question. Is there contamination on site?
Your lender asks because the land secures the loan, and a buyer asks because they take on any contamination already in the ground. The answer can have a major impact on land value, and the only reliable way to answer it is environmental due diligence by qualified consultants.
Supporting service stations is where NEO Consulting started its business over 10 years ago. We’ve since assessed and validated hundreds of sites across NSW, ACT, Queensland and Victoria. Here’s the advice I give owners before a deal
Why your lender wants environmental due diligence
In NSW, service stations and other petroleum sites made up 26% of significantly contaminated sites declared by the EPA between 2021 and 2024. Because a valuer can’t see beneath the slab, they either value the site as uncontaminated or factor contamination in. An environmental due diligence report tells the lender which valuation to rely on.
Owners and occupiers can also carry duties to report or manage contamination, even where a previous operator caused it.
In our experience, the most costly outcome is a surprise late in the deal. A heavily contaminated site can still sell, but often only to cash buyers, because banks won’t lend against it.
What an environmental due diligence report covers
A sale or refinance doesn’t involve a DA, so we scope the work as a due diligence investigation. Depending on your site, this could include desktop review and walkover, soil and groundwater sampling. The report usually covers:
- A review of site history from aerial photos, council and title records and state contamination registers
- A site walkover covering tanks, fill points, fuel lines, dispensers, the workshop and drainage
- Integrity testing of tanks and fuel lines
- Soil and groundwater sampling where risk is identified, analysed by NATA accredited laboratories against the NEPM
- Clear findings on the source of any contamination, the pathway by which it may migrate, the receptors it may affect and recommended next steps
Sydney case study: turning a contaminated service station into a growing asset
A South Sydney owner bought a site with a known history of contamination. When his fuel reconciliation (SIRA) flagged a leak, our team was on site within days to test the tanks and fuel lines. One of the seven underground tanks had failed and was removed from site along with 15,000 litres of fuel.
As the remaining six tanks were the same age, the owner chose to replace them, and three cracked under minimal force during removal. The site now operates with double-walled tanks and has reported no fuel loss. Following our validation report, it was removed from the NSW EPA’s Contaminated Land Record.
In this case, it was the site’s SIRA fuel reconciliation that first flagged the leak. Service Station operators can get monthly SIRA reconciliation through TankTrace.
How to prepare
- Start early. Allow one to two weeks from go-ahead to final report, and longer if contamination is suspected. On a tight finance deadline? Call us on (02) 7258 2800 and we’ll tell you how fast we can turn it around.
- Gather your records. Tank installation and test records, SIRA reports, well results and any council or EPA notices help us scope the work tightly and keep costs down.
- Ask your lender or broker what they need. Requirements vary, including how recent the report must be.
- If you’re selling, consider a vendor report so you can set out the facts on your terms. If you’re buying, talk to your solicitor about making the contract subject to a satisfactory environmental due diligence report.
Send us your site details and let us know who is requesting the report. We’ll come back with a free scope of work that covers only what your lender or buyer needs. You can also read our full guide to environmental due diligence for service stations.
