What is the cost of coal seam gas?

Coal seam gas well in NSW (Source: www.csg.nsw.gov.au)

Coal seam gas: natural occurring gas found in underground coals seams, trapped by water and ground pressure.

Fracking: the process creating hydraulic fractures in rock through the use of a pressurised liquid. It is typically undertaken to extract gas or petroleum through the injection of a water/sand/chemical mixture (typically between 3-12 additive chemicals) into a bore at high pressures to create small fractures, allowing fluids (such as gas) to migrate to the bore. It is used to extract gas from shale formations as well as coal seams.

How fracking works (Source: www.australiangeographic.com.au)

In 2011 the Federal Government approved three major coal seam gas projects in Queensland worth $66 billion.  These three projects alone will see drilling of more than 18,000 bores over the next decades, under numerous management rules and conditions set down by both state and federal governments.

The extraction of coal seam gas (particularly methane) through fracking is currently a highly controversial issue, both inside and outside of Australia, and there are a number of conflicting opinions which make the issue very complicated.  While resource companies and the energy sector are generally supportive of the extraction of coal seam gas, in what some might see as an unlikely union, environmental groups and some farmers and residents are calling for a moratorium on the industry, largely due to common concerns for land and water resources.  The Federal Government’s expert scientific panel has also raised the alarm about the cumulative impact of Queensland’s coal-seam gas developments on groundwater supplies.

The numerous social and environmental concerns have resulted in the  development of an anti-coal seam gas movement which has seen recent protests in Queensland. These concerns include:

• decreasing groundwater quality – due to cross-contamination with hydraulic fracturing chemicals and leaking methane
• decreasing groundwater levels – impacts on water supplies for farmers & ecosystems
• land subsidence over large areas, affecting surface water systems, ecosystems, irrigation and grazing lands
• health risks associated with use of chemical mixtures in groundwater
• health risks associated with deteriorating air quality

No Fracking Way (Source: theconversion.com)

Unsurprisingly, coal seam gas extraction has generated intense media coverage in recent years. ABC’s Four Corners program Gas Leak! highlighted concerns surrounding the approval and monitoring processes of state governments for coal seam gas developments in Queensland and New South Wales.  A 2010 documentary, ‘Gasland‘, focuses on the impacts on communities of extracting natural gas in shale deposits through fracking in the United States and was nominated for an Academy Award.

Even political hopeful and eccentric businessman Clive Palmer has weighed in on the matter, expressing his stance against the development of the coal seam gas industry due to a concern for community wellbeing, environmental impacts and landholder rights.

On the other hand, others would argue that the looming energy crisis in New South Wales and the reliance on cheap gas in countries including Britain and the United States requires the development of coal seam and shale gas sources through fracking.  British Primer Minister David Cameron has previously taken to Twitter and written in The Daily Telegraph to state that the country should accept fracking due to its provision of cheap energy and creation of jobs.

In addition, the use of gas instead of coal as an energy source is considered by some as a way of reducing carbon emissions and providing cleaner energy. A lifecycle comparison of greenhouse gas emissions of Australian liquefied natural gas (LNG) derived from coal seam gas (CSG) and Australian black coal, from extraction and processing in Australia to combustion in China for power generation, was commissioned by the Australian Petroleum Production and Exploration Association (APPEA) in 2011. The study found that CSG/LNG is significantly less emissions intensive for most existing, commonly employed end-user combustion technologies and for most of the life cycle scenarios considered. For the export situation considered, most emissions from coal (94%) were expected to result from combustion in China, whereas extraction and processing in Australia accounts for only 2.7%. For coal seam gas the respective figures were found to be 74% and 22%. However, some debate around the report’s true reflection of emissions of gas-based power plants and the reliance on ‘out of date’ assumptions has also been flagged by the not-for-profit organisation Beyond Zero Emissions. A discussion paper on the estimation and reporting of fugitive greenhouse gas emissions was published in May this year as part of stakeholder consultation on proposed amendments relating to Coal Seam Gas under the National Greenhouse and Energy Reporting Measurement Determination.

A number of studies have also been undertaken to better understand the impacts of coal seam and shale gas production and fracking.

A recently released independent study of the atmosphere of a coal seam gas field near Tara, Queensland, has shown evidence of widespread releases of methane and carbon dioxide at levels significantly higher than those outside the fields. Health concerns of residents living nearby were raised when numerous health complaints, including headaches, eye irritation, nosebleeds and skin rashes were reported in the two years following the start of coal seam gas activity in the area.  However, the investigation was unable to determine whether health effects reported by the community were linked to exposure to gas activities.  A major flaw in the investigation was the lack of comprehensive and independent environmental monitoring, and only recently has there been a government recommendation that a strategic ambient air monitoring program be established.

Tara coal seam gas wells (Source: www.bze.org.au)

While the CSIRO rejects claims that its studies have shown that groundwater is safe with coal seam gas, as claimed in an APPEA television commercial last year, it has been stated on public record that coal seam gas extraction is likely to pose a ‘low risk’ to groundwater quality through contamination. It has also indicated that groundwater levels will fall as a consequence of coal seam gas extraction, and that it will continue to undertake research to better understand the impacts of coal seam gas extraction on groundwater quality and quantity.

Dr John Williams, a member of the influential Wentworth Group of Concerned Scientists and former head of CSIRO Land and Water says the combined impacts of multiple major projects isn’t being addressed and may lead to ‘death by a thousand cuts’, and existing knowledge about groundwater systems, such as the Great Artesian Basin, are not being brought together with the possible impacts of mining.

Bore water flows from the Great Artesian Basin in Thargomindah, outback Queensland
(Source: http://www.abc.net.au/environment/articles/2011/03/22/3169602.htm)

New technology is currently being developed to preview the long-term effects of activities such as coal seam gas mining on aquifers. A centrifuge developed at the University of New South Wales is being used to study the movement of water and contaminants through clay layers to determine how much water or contaminant will move into, or out of an aquifer once disturbed by drilling or pumping bores.++

Other costs associated with the coal seam gas industry in the US have come to light in a report recently released by industry market research firm The Freedonia Group. The report predicts a $13 billion US demand for water treatment equipment in the US by 2017 as a result of the expected rise in treatment requirements for water produced in the process of oil and natural gas extraction in response to new US EPA regulations for hydraulic fracturing. In addition, water recycling and re-use is expected to increase to satisfy the expansion of hydraulic fracturing activities. Whether this trend will occur in Australia remains to be seen.

The recent intense interest and commissioning of studies on the advantages and impacts of coal seam gas extraction highlights the fact that agreement on the costs and benefits of this energy source and its production is still very much up in the air.  Until it can more accurately be determined, it ‘seams’ that caution and a move towards greater Federal Government control over coal seam gas mining projects under the EPBC Act, currently largely in the hands of the states, is the safer way forward.

As more coal seam gas projects are approved by government, it may not be until they have been in operation for some time that we will understand their true benefits and costs.