In recent years, coal seam gas (CSG) has emerged as alternative fuel in the era of climate change concern. However, the CSG exploration and production process are not without controversies due to clash among stakeholders on the effect of CSG. CSG is a form of natural gas (mostly composed of methane) and produced in the similar manner of coal originated (Australian Pacific LNG, 2011). CSG is formed underground coal seams and water in these seams keep CSG as thin films on the coals’ surface (Australian Pacific LNG, 2011). To extract the CSG, a small rig drills down to coal seam depth and sometimes, hydraulic fracturing (‘fracking’) is employed to create cracks to release the CSG and water in coal seams (ABC News, 2012). The products (CSG and water) are brought up to the top (the well) where they are separated (CSG is dehydrated and compressed while the water is treated using reverse osmosis) (Australian Pacific LNG, 2011). The challenge of managing coal seam gas is the relative new arrival of this fuel in the market.
CSG was known to the coal mining industry since 1900s and exploration of CSG in Australia started in Bowen Basin, Queensland (1976) (Australian Pacific LNG, 2011). However, the potential of CSG couldn’t be realised in 80s and 90s due to misunderstanding of the geological structure of coal seam and ‘inappropriate well completion techniques’ (Baker & Slater, 2008, pp.380). In the mid 1990s, the advancement of technologies of drilling and well completion techniques and better understanding of geology initiated commercial production of CSG in Queensland (1996) (Baker & Slater, 2008). Ever since, CSG industry has rapidly grown in Eastern Australia where most of CSG are found. Regulations have been placed on CSG by NSW and Queensland government based on acts (e.g. Petroleum Acts (Onshore) 1991 (NSW), Environment Protection Act 1994 (QLD)) (Roth, 2011). In state of Queensland, energy companies (dealing with CSG) require to submit environment management plan, have permit for clearing and need Environmental Authority (EA) prior commencing the operations (DERM, 2011). Despite the regulations, the credibility of management of CSG is tarnished due lack peer reviewed articles, growing risks and inadequate community consultation (Stop CSG Illawarra, 2012).
Water, one of the by-products of CSG drilling, is very salty and may contain heavy metals (ABC News, 2011). There seems to be a clash among industry, government and industry associations on how much water will be utilised in the extraction of CSG and subsequent of waste salt generated (which goes over millions of tonnes over 30 year period) (ABC News, 2011). Another concern of current management of CSG is the amount of water will be used for extraction phase. According to Queensland state government, over the period of 50 years (life span of CSG industry), total of 2500 gigalitres water will be used which accounts 0.0004% of total volume of Great Artesian Basin (where most of CSG reserves are found) (DERM, 2011). The big three energy companies (Santos, QGC and Origin Energy/Conoco Phillips) in CSG industry estimate 61 gigalitres of water use annually while the Federal Government maximum estimate for these companies is 1500 Gigalitres annually (Australian household water use is 1872 gigalitres annually) (ABC News, 2011). Water especially is a precious resource in Eastern Australia where CSG areas are found in agricultural areas. Though CSG has much lower carbon emissions than coal , Origin Energy/Conoco Phillips’ Gladstone CSG and LNG project will produce annually the same amount of emissions of total Australian passenger cars (Carlisle, 2011) (DERM,2011). Another CSG management concern is the chemicals employed for ‘fracking’ in CSG extraction. There is no current requirement of CSG industries to declare the chemicals involved in ‘fracking’ (Stop CSG Illawarra, 2012). However, recent Queensland Laws banned the BTEX (Benzene, toluene, ethyl benzene and xylene) in fracking process (DERM, 2011).
Stakeholders in CSG industry
Case Study: CSG in Illawarra, NSW
Illawarra Region is located just south of Sydney and roughly 400 000 people (including Wollongong) reside in the region around 2010 (Australian Bureau of Statistics, 2011). The CSG areas under petroleum leases overlap agricultural areas in Illawarra (ABC News, 2012). We shall examine on how upcoming CSG industry is affecting the stakeholders in the region in future.
Industry: APEX was awarded two Petroleum Exploration Licenses (two block areas) recently and its 16 exploration wells were given approval to commence (Stop CSG Illawarra, 2012). APEX has also released media/web statements to combat anti-CSG movement and assisted by Australian Petroleum and Production Exploration Association (APPEA) factual releases (APEX, 2011). APEX argues since 95% of NSW natural gas is originated from interstate, NSW should pursue to explore its own gas resources to be self sufficient (APEX, 2012). BHP Billiton has also acquired sections of future national park (Dharwal State Conservation Area) for coal seam projects in the region (Sydney Morning Herald, 2011). Energy companies are able to capitalize the mining boom in Illawarra region in past decade (2001-2011) (Wilkinson, 2011). The energy companies have great interest in coal seam gas for making greater profits while reducing their carbon footprint. Despite their efforts to assuage CSG fears, community is concerned on the water and environmental risks of CSG.
Government: State government of NSW acts as a promoter and regulator on the CSG industry in the area. In 2010, NSW’s main source of energy was from gas (74%) and at the same time, importing 95% of its natural gas from interstate (APEX, 2011). The Camden CSG site produced remainder 5-6% of NSW gas supply (Roth, 2011). This severe dependence from interstate sources makes NSW vulnerable to energy shortages as Australian gas demand goes up (APEX, 2011). In New South Wales, a motion to have moratorium on CSG projects (except Camden project) was defeated on 15th March 2012 despite over 20 000 petitioned for a moratorium (Stop CSG Illawarra, 2012). On other hand, NSW government promised to be tough on CSG licensing based on community and environmental concerns (Roth, 2011). Since CSG licenses come under Petroleum (Onshore) ACT (NSW) 1991, CSG licenses are assessed by environmental planning, protection, biodiversity and water considerations (Roth, 2011). However, environmental activists argue that Petroleum Act gives more rights for access for exploration and production while landholders aren’t protected sufficiently (Stop CSG Illawarra, 2012).
Community: There are positive and negative impacts on the industry. Illawarra region has higher unemployment rate than average NSW rate (Wilkinson, 2011). Having CSG industry opening up its presence in the region opens a job creation potential. However, many in the community have voiced concerns on the impact of the CSG industry. CSG sites are located in water catchments which feed the dams (supplying over 4 million people in NSW) and CSG poses serious risk to water quality (Stop CSG Illawarra, 2012). Majority of CSG sites are found in Special Areas (areas around catchment) in which a simple trespass can slap a huge fine (Stop CSG Illawarra, 2012). APPEA, strong supporter of CSG, did acknowledge that CSG extraction could contaminate local aquifers in NSW in varying degrees (Cubby, 2011). Moreover, CSG industry will create clash in terms of land use with farmers. Illawarra community are concerned with leaking methane as sections of Illawarra region are prone to serious bushfires previously (Stop CSG Illawarra, 2012). An American study concluded residents who stay near the CSG wellheads are more prone to acute/ chronic health problems because of air pollution from ‘fracking’ (Coal Seam Gas News, 2012).
Environmentalists: Environmentalists have also raised similar concern on the impact of ‘fracking’ on water. Besides that, they have concerns about the amount of area that will be cleared for CSG mining. In 30 seconds video ‘We Want CSG’, APPEA claims a CSG site only occupies area less than size of tennis court (We Want CSG, 2012). However, environmentalists argue that initial exploration phase require area of 40m by 40m and production phase require one hectare of land for generators, storage ponds and other facilities (Stop CSG Illawarra, 2012). Moreover, more land will be clearing for pipelines, roads and fire breaks (Stop CSG Illawarra, 2012). This means certainly destruction of large vegetation areas and its biodiversity. If climate change was the big concern for CSG industry, a National Centre of Atmospheric Research study stated the shift from coal to natural gas (CSG by-product) hardly slows down global warming on the assumption of methane leaks kept below 2.5% (Science Daily, 2011).
Challenge in CSG: Water
The biggest challenge in this industry is the consumption and impact on water supplies. Most of CSG sites are found in Great Artesian Basin and naturally, CSG are found below the water aquifers (ABC News, 2012). At the same time, CSG sites are located where many Eastern Australia farms are found. The massive water withdrawals from CSG sites will definitely affect water-dependent ecosystems (ABC News, 2012). The withdrawals too lower aquifer water levels, natural flow disruption and water contamination (Schneider, cited in Stearns et al, 2005).This will certainly affect farms viability and production in the long term.
‘Fracking’ is employed where coal is not permeable and uses sand, water and chemicals in the process (ABC News, 2012 & Australian Pacific LNG, 2011). The prime concern in ‘fracking’ is the chemicals used called BTEX. ‘Fracking’ allows BTEX to contaminate the water supplies (eventually drinking water) and known to cause from skin irritation to leukaemia (National Toxic Network (NTN), 2011).There seems to be contradiction on data on how widely ‘fracking’ is employed in CSG drilling. Queensland government argues only 8% of its CSG wells uses fracking (DERM, 2011). However, (NTN) stated in the next coming decade, 80% of all wells will use ‘fracking’ (NTN, 2011).
In terms of managing the issue of water, current management practises sometimes tackle or offer no solution to the problem. For the water usage concern, in Queensland, some companies treat the excess water (suitable for consumption) and sells indirectly to the farmers (ABC News, 2012). For the ‘fracking’ concern, CSG industries made a point that CSG wells are cased well to prevent gases or other materials entering the aquifers (We Want CSG, 2012). Queensland government stated the fracking activities are strictly monitored through independent reviews and produced a list of ‘fracking’ chemicals employed (DERM, 2011).
On other hand, the produced (filtered) water from CSG may contain methane and traces of other chemicals (Stop CSG Illawarra, 2012, NTN 2011). Sometime, the discharged water can increase dissolved solids (e.g. salt) in soil thus hampering plant nutrient uptake (Horpstead, cited Stearns et al 2005). At the national level, 2 out 23 chemicals involved in ‘fracking’ has been assessed and identities ‘fracking’ chemicals employed companies are not fully disclosed in their safety submissions (NTN, 2011).
One of the ways of improving the CSG management is to have comprehensive and independent review of this industry. This is because there seems to selective use of data both pro- and anti-CSG industry to push their cases. It should be done at national level and must involve all stakeholders in the affected areas. Secondly, Australian government must rigorous in pursuing the list of chemicals employed in ‘fracking’. Though state government do produce list of aforementioned, companies hide some of the information and the list would be incomplete. Community (i.e. farmers) and environmentalists should have the right to access a trustworthy list before making any judgements. Finally, CSG industry should be capped its growth till an independent review clears all doubts. This would definitely add pressure on the government to pursue the review.
In short, CSG industry is an emerging sector in the era of climate change. The article has discussed about the history of discovery and exploration of CSG. As the industry grew, CSG management has raised some issues involving various stakeholders. In Illawarra, the case study, stakeholders have conflicting views on benefits and costs of CSG production. It is identified that water is the biggest issue in CSG industry and current management does address the issue to a certain extent. Finally, the article discussed about what can be done to improve the CSG management.
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- Environmental groups welcome decision to halt drilling of 16 coal seam gas wells between Wollongong and Sydney (abc.net.au)
- More coal seam gas means higher, not lower, prices (abc.net.au)