Coal seam gas projects in Australia

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Coal seam gas (abbreviated "CSG") is formed by the geological process of heating and compressing plant matter to create coal. Over millions of years, methane forms within the coal. The methane is trapped by water in the gaps and cracks between the coal molecules. These gaps are known as cleats. Australia has been found to have many deposits, and is increasingly mining them through hydraulic fracturing, also known as fracking.

CSG is a form of coalbed methane (CBM), or coalbed gas, and is a type of natural gas extracted from coal beds. In recent decades it has become an increasingly used source of energy in Australia, as well as the United States, Canada, and other countries.

Coal seam gas projects

In April 2010 the Australian Bureau of Agricultural and Resource Economics (ABARE) released its Minerals and energy: Major development projects listing. The list includes details of major coal mines and coal seam gas projects proposed or under construction around Australia.

The projects ABARE identified were:

• Talinga Coal Seam gas project Stage 2 is proposed by Australia Pacific LNG (APLNG), a 50:50 joint venture between Origin Energy and ConocoPhillips. The project is located 160 km E of Roma, in Queensland. The Stage 2 expansion project is currently under construction will be commissioned in 2010 with the aim of delivering 33PJ per annum. The projected capital cost of the project is $260m.
• Camden Gas Project stage 2 (coal seam gas) is proposed by AGL. The project is located near Camden in New South Wales. The project is an expansion of the existing project and has been granted planning approval. It is projected to provide 12 PJ per annum and cost $35m to build. It is projected to employ 35 people during construction and 3 when operating.
• Camden Gas Project stage 3 (coal seam gas) is proposed by AGL. The project is located near Camden in New South Wales. The project is an expansion of the existing project with planning approval currently being sought. The project is projected to cost $100m and employ 60 people during construction and 10 when operating.
• Casino project is proposed by Metgasco. The project is located near Casino in New South Wales. A feasibility study into the project is currently under way. The project is projected to provide 18 PJ per annum and employ 150 people during construction and 100 when operating.
• Gloucester Coal Seam gas project is proposed by AGL. The project is located in the Hunter Valley in New South Wales. A feasibility study is under way on the project and is expected to be completed in 2010. The project is expected to provide 15-25 PJ per annum and cost $200 million to build. The project is expected to employ between 100-150 people during construction and 30-40 when operating.
• Surat Gas Project is proposed by Arrow Energy, The project is located in the Surat Basin in Queensland. An Environmental Impact Statement is currently being undertaken. The notional commissioning date is 2012. The project is expected to provide 62 PJ per annum. Employment data is not available.
• Walloon coal seam gas field is proposed by the BG Group. The project is located 80 km N of Roma in Queensland. A feasibility study is currently being undertaken. The notional commissioning date for the project is 2013. It is expected that the project will provide 190 PJ per annum and cost $230 million to construct.

October 2010: Two new projects approved

On October 22, 2010, the Australian federal government gave conditional approval to two major coal seam gas projects in central Queensland. Environment Minister Tony Burke announced that his department had given conditional environmental approvals for Gladstone Liquefied Natural Gas (GLNG) - a $16 billion joint venture between Santos, Malaysia's Petronas, and France's Total - and BG Group's Queensland Curtis LNG. The project involves 2650 coal seam gas wells being drilled over 25 years in Queensland's Surat and Bowen Basins, a 435km steel pipeline from the Fairview gas fields to Gladstone, and an liquefied natural gas (LNG) plant and export facility on Curtis Island.

The approvals were delayed earlier in 2010 by Burke's predecessor, Peter Garrett, who was concerned about the projects' potential impact on groundwater and the Great Barrier Reef. It received Queensland Government environmental approval in May 2010, and has entered into 42 agreements with indigenous groups. GLNG has agreements to sell 1.5 million tonnes a year of LNG to Total for 20 years starting in 2014, and 3.5 million tonnes a year of LNG to Petronas over the same period - Australia's largest trade agreement with Malaysia. QGC Pty Limited, a BG Group business, received Queensland Government approval for the Queensland Curtis LNG (QCLNG) project in June 2010. Green groups and farmers have raised concerns about coal seam gas development. The same week as the approval four toxic chemicals - benzene, toluene, ethylbenzene and xylene (BTEX) - were discovered in eight exploration wells owned by the Australia Pacific LNG in the Surat Basin. But the Queensland Government has ruled out a moratorium on the industry.

China investments into coal seam gas exploration

In December 2010, it was announced that Queensland exploration minnow Exoma will receive a $78 million investment by China National Offshore Oil Corporation (CNOOC), China's biggest offshore energy company. If drilling over the next three years is successful, the next step could be a $12 billion infrastructure project that links a new pipeline to an export gas terminal at Abbot Point, about 150km south of Townsville. The deal is CNOOC's first offshore investment in coal seam gas exploration and is part of a multi-trillion dollar project by China's big three state-owned energy groups - Petrochina has two deals in Queensland's coal seam fields, and Sinopec has said it was planning its own coal seam deals in Australia. In March 2010, CNOOC agreed to spend $60bn buying 3.6 million metric tons of syngas a year from BG's proposed export terminal at Gladstone over 20 years, as well as a 5 per cent interest in its assets. CNOOC has also entered a joint venture in Australia with Altona Resources to exploit the Arckaringa Coal-to-Liquids and Power Project in South Australia.

Toxic chemicals used in fracking process

In October 2010, documents obtained by the Sydney Morning Herald showed that Australian mining companies are using highly toxic chemicals to extract coal seam gas during the controversial process known as "fracking." A government list of 36 chemicals used includes hydrochloric and acetic acid, and napthalene - an ingredient once used in napalm as well as more mundane items such as mothballs - and many other hydrocarbons.

The proposed use of fracking near watercourses, including a plan to deploy fracking next to Warragamba Dam, has raised concerns that drinking water could be contaminated. The Australian Petroleum Production and Exploration Association, which represents coal seam gas extraction applicants, said the process has been used for many years and is completely safe. But the Queensland government introduced legislation in mid-October 2010 to ban some chemicals used during fracking, including BTEX, a mixture that contains benzene. Queensland's Department of Environment and Resource Management said coal seam gas operators would be required to disclose all ingredients used in fracking.

Industry and Investment NSW, the New South Wales state government agency that oversees coal seam gas and petroleum exploration, said it knew of no instance where banned chemicals were used in fracking, but the agency was unable to supply a full list of the chemicals used to frack rocks in NSW, though it confirmed that hydrochloric acid has been used. The petroleum association said its members provide details of any chemicals used to regulators. It sent the Herald an indicative list of chemicals used in fracking in Australia, including hydrochloric acid. Some chemicals would be expected to dissolve to safe levels, but others are more persistent. According to Gavin Mudd, an environmental engineer at Monash University: "The large amount of salt, and chemicals like naphthalene, aren't easily biodegradable in the environment. Also, the process of drilling and fracking is making the chemicals more mobile than they normally would be. Often these impacts are cumulative; some of the chemicals can slowly build up in the food chain in the long term."

Benzene found near coal seam gas fracking site

In mid-October 2010, farmers near a coal seam gas "fracking" site in Queensland announced that they will have their water supplies tested for toxic benzene and other chemicals after Origin Energy found contaminated water near drilling sites. The discovery of BTEX - a mixture of benzene, toluene, ethylbenzene and xylene - around eight coal seam gas wells near Miles, west of Brisbane, marks the first time a resources company has admitted to contaminating water at a fracking site. Origin detected the chemicals in mid-October and told the Queensland government, which is legislating to ban the use of BTEX chemicals during coal seam gas drilling. Origin has shut down all 17 of its drilling rigs across a 40-kilometre-wide area while an investigation is carried out.

Fracking, or hydraulic fracturing, involves injecting water, sand and chemicals underground to fracture rock formations and force gas to the surface. The controversial process has fuelled protests from landholders in Australia and the United States, where government tests have detected harmful levels of hydrocarbons, including BTEX, in drinking water wells in areas where fracking is used. Origin refused to disclose the mixture of chemicals used in the fracking fluid that it was using on the site. The US company Halliburton supplied the fluids. Origin's manager of oil and gas operations, Paul Zealand, said BTEX was not being used as a fracking fluid, and that the contamination may have come from diesel fuel or lubricants used on machinery at the gas drilling sites. An engineering consultancy, URS, and the government will investigate.

Citizen groups working on coal seam gas issues

• Western Downs Alliance working on coal seam gas on the Darling Downs in Queensland.
• Basin Sustainability Alliance looking at the coal seam gas industry in Queensland.

Articles and resources

Related GEM.wiki articles

• Australia and coal
• Arrow Energy

External articles

• Liz Hayes, "Undermined", Sixty Minutes, NineMSN, May 14, 2010.

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