*O

August

2o-2:,2olt

The Weekend Australian Financial Review www.afr.com

Pers ective

k from fiction
The coal seam gas sector has attracted such passion that it is often difficult to establish the truth.
GeoffWinestock
Coal seam gas could be about to suffer the s"rne fate as the live cattle

dugin the past fewyears but approvals have been issued for another 15,000. One riskis that the wells will be
2700 wells have been

QGC

managingdirector

Catherine Tanna. Photo Eddie Safarik

designed poor and

gas

might

uade.
The industypromises 18,)0 jobs and at least $45 billion of invesnent

in regionalAustalia, but ugly television images of tap water that cnbe lit andwamings of ecological catasophe have whipped up an unusual alliarce ofgreens and Nationals bent on slowing or even

killingit
Queensland Premier Anna Bligh this week announced a ban on new coal seam sas wells aound tolvns -tr'tfrpopaUons over 1000. NSW
has announced a

six-month moratorium on new exploration

permits, while protesters have picketed a coal seam gas conference inSydney. Top executives from Austaliar companies Santos andAGL and
fr om

Group's QGC, Arrow Energy, owned by Shell and Peo China- are so worried they ooped to Canberra for a recent Senate rual aftis comrnittee inquiry, but they received

multibillion- dolla multinational jointventrues - BG

hostile reception. Committee chairman and Liberal senator BiIl Heffeman grilled managing director of QGC and
a

Reserve Bark boad

member

Catherine Tanna In chaacteristic style, Heffernan lectured her about the risks her company posed to

prine agricultural land. "My

concem is about the interception between coal sern gas and Mother Eattr." He then dismissed her with a personal jibe: "It is David and
Goliath. Thark you for your evidence today. I hope you get your

sneakup tlrough or around the pipe. The industy admits that of its 2700 wells, a recent audit showed about five had leaks that corld support a flane. AFour rnerc program in February showed gas bubbling up from aound a disused QGCwellin the Condanine region. QGC admits the leakwas aproblem ard should have been plugged earlier but says itwas never a major risk The concenation of methane was at least l0 times too thin to ignite in the air. The industry says it basically comes down to designingwells proper and it is being tarredwith the same bnsh as the shale gas industry in the US; espedlally since the airing of the documentary Gasland, which higtrtighted shoddy practices. Gas industry figures point out that in the I980s and '90s US shale gas miners were ofrered atax breakbased onthe number of wells they drilled, which encouraged irresponsible drilling. Operators here saytheyhave an incentireto produce sound, effcient wells. Another set of risks involves what to do with the water that comes to the suface with the gas. The water is usually salty and carinot simply be poured back into a rirr. NSWbased Dat Enerry says that NSW coal seams are much less wet than those in the Suat Basin in Queensland so thewater problem is muchsmaller. In most cases, via a process called reverse osmosis, wtrich is essentially desalination, the water is purified and some of it is refined to a quality that can be used for irrigating farrr land or even watering cattle. Ross Dunn, commrnications director for the Australian Ptroleum Production and Ergloration Association
(APPEA),

,lmage problems

besetting the industry are huge and t clearly fears that the idea will take root that it is ignoring popular
concerns. lt is also too easy to raise a fear campaign among farmers.
requires it for the shale gas indusry where the gas-rich rockis much deeper and harder. But in Austalia, it has been used for only about 5 per cent of wells, although that figure will rise as more hard-to-get-atwells are exploited. Sometimes this process of pumpingwater into the well can lead to a blow-out somewhere else. Tere ae also concems thatthe chemicals used in fracking might be particular nasty. Australiabans the use of BT a toxic chemical agent used in the US, but checks attwo wells foundtaces of BTEK The indusfrysays benzine, the keyingredient of BT occus natrually in some coal seams. The indusuyresponse is thatin most cases fracking occurs hundreds of metres belowthe suface ard the fracking solution is either sucked back up the pipe or contained inside the sane impermeable rocklayers of shale and claywtrich enclose the coal seam. Anyfracking chemicals that remain below ae filtered throughhundreds of metes of rock before they go anywhere. Companies also point out that

Sucking it up
Example of how a coal soam g woll works* Variable-speed electric motor with pump drive assembly is mounted on wellhd.
WAITR

---)

toldthe Senate inquiryhe

bonus."
The debate about coal seam gas

would be happy to drink it after

it

will certainlast for decades. The

industry admits it has a lot to leam. Australia Pacific LN a joint venhrre between Conoco, Origin and Sinopec, has just contributed $14 rnillion to a joint venture with the CSIRO toprovidewtrat it claims will be independeht reseach on the issues aound coal seam gas. Some of the debateis aboutthe rules on how much compensation and notice farmers should receive when mining companies dig wells and build pipelines on thei land. Heffernan says farrners have no way of knowing whether mining company workers are ot smokers or engineers orwhat". This time he was not referring to the Greens. Butthe longer-term issueis the question of howmuch envionmental damage the coal searn gas industywill do. What are
the risks? Coal sern gas wells ae like oil or

had been desalinated. But across south-east Queensland storage dams are nowfillingwith the

Surface conductor (steol) passes through topsoil into solid sandstone. lt is drilled first and cemented into place to provide a stable foundation for subsequent drilling (by preventing the hole from collapsing.) Surface casing (steel) pass through the entire Pilliga sandstone layer. lt is cemented into place so that good quality water from the Pilliga cannot drain away, and to ensure poor quality water from dper layers cannot enter the Pilliga. Production casing (steel) runs all the way from the surface to the target coal seam. lt is cemented into. place and further ensures that water cannot move from one layer of the earth to another layer. Shaft drivon pump is used

brinyresidue from desal that is unfit to dink and some fear might leak into the surroundingfarmland. fite
Queensland govemment recently banned simply letting the brine evaporate and then nucking away the residue salt crystals. Instead, companies saytheyare looking at reinjecting the water back into the water table or tuming it into valuable indusrial chemicals. Simon Gossman, ground water management coordinator for Arrow Enerry, which is still dwelopingits

uyingto

theyhave afinancial interest in reduce fractures shooting gas or injected fracking solutions

outside the coal seam because it means losing the gas that flows back up the pipeline. Glenn Walker, theme leader of the CSIRO's "Water

multibillion-dolla inveshent
project, told the Senate inquiry the company's fall-back option would be to pipe or tuck the water to a waste management facility, but it was still working on the problem. "We have abase case solution and we ae working on coming up with a
more public acceptable solution." The quality of surface water is part of the problem raised bythe higtrly

for a healthy couny''flagship program, says he sees the risks that ftacking chemicals will spread into the environment as minor. "In most cases, it would be avery small risk of that happening," Walker says.
The industryalso says the

to pump water from the

well. Gas flows up through the well to the surface.

volumes andrisls of chemicals involved ae much lower thar ftom pesticides and fertilisers common in agricultural practices. Yet thee are risks, especially
rvhere coal seams ae close

to

natural gas wells. Apipe about 30 centimeteswide is sunk 100 meEes to 1500 mees downuntiliteaches a coal seam, which is a flat pancake
of

rockAmixtre

of gas

andwateris

tapped inside the seam. When the

pipe is stuck into fhe seam, the intemal pressure pushes the oil and gas mixture to the surface. Up at the
top, the mixis separated andthe gas is pumped away down a pipeline to end users. It is not a new technology and indeed it has been operating in
10 years,

contentious issue of hydraulic fracturing or "fracking1. Th Greens hate it and "Frack off" has become a bumper sticker. The basic idea is that some coal seams ae so tight that they will not yield up their gas. So companies inject a mixture ofwater and sand

Ihe well extends below

the production casing throug the target coal seam into the rock ('basemsnt') bolow the
coal. Water and gas flow from the target coal into . the well. fltlater from the target coal seam contains around l% dissolved solids and, with processing, is suitable for agricultural or other uses.
'BamDle
is from

with

.
t,

a few chemicals added to loosen the seam and allowthe gas ard water out. The gritty sand leaves gaps for the gas and water to flow

Arstalia for about

but the

out.
The technique is not neu and is widelyused in the US, which
e Pilliga rgion

.huge expansion of the industryhas suddenly worried people. About

SOURCE: APPEA

.'^...

sensitive aquifers. In one case, QGC fracked a fairly shallowwell in the Springbok basin which locals say opened up a hole which is dnining water out of the irrigation aquifer into the adjacent coal sean. QGC denies this happened to any significant extent and it has already stopped the e:erimental mine and is plugging it. Still, companies are clearly on the backfoot over the practice. Arrowhas Proqrised not do use fracking in e:rploration wells. The one really confusing and imponderable risk ftom the whole process is the claimthat allthewater being taken out of the coal seams will deplete the crucial Great