Presentation
CSG Forum – Desert Channels & RAPAD
Barcaldine – Sat 21 April 2012
Longreach – Sun 22 April 2012
Contents
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Who we are and where we operate
What we do
What is coal seam gas
What is exploration and production
Brief outline of the water baseline study
What lies in the future
The basin forum - Who we are
• The forum is an informal group of coal seam gas exploration
companies which formed about 18 months ago
• Each has petroleum exploration tenements in the
Galilee Basin
• There are eight founding companies
• An additional two companies have joined the group
• Initially the group formed to jointly fund a baseline water
assessment
Membership
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
AGL Energy Ltd
Blue Energy Limited
Comet Ridge Limited
Exoma Energy Limited
Galilee Energy Limited
Origin Energy Limited
Queensland Energy Resources Limited
WestSide Corporation Limited
Resolve Geo Pty Ltd
Pangaea Galilee Pty Ltd
Where we are –
the Galilee Basin
What we do
• The group has commissioned RPS to undertake a
Baseline Water Study of the Galilee Basin
• Once complete the group will review further options
for increasing the shared knowledge on water
• Increasingly the group is also engaging with
stakeholders such as RAPAD, MITEZ and AgForce
What is coal seam gas?
• Coal seam gas is natural gas, used by power stations, industry
and consumers throughout the state
• Coal seam gas is dominantly methane [CH4]
• The gas is adsorbed onto coal surfaces and held in place by
hydrostatic pressure
• Gas comes to the surface once that hydrostatic pressure is
released by producing water
What is coal seam gas (cont’d)?
• Over 95% of the gas produced in Queensland is coal seam
gas [730 TJ total, of which 690 TJ is CSG]
• Queensland gas consumption is approximately 650 TJ/day
• Comprising about 50% power generation, 40% major industrial
use and 10% retail consumption
• CSG comprises about 30% of total Eastern Australian gas
production
How do companies obtain tenure?
• The State Government releases land for competitive bids
under the petroleum legislation
• These bids are assessed based on the suitability of the
proposed work program and the capability of the
applicant
• The successful tenderer must then apply for
environmental approvals prior to the grant of the
exploration tenure
• The proposed work program must be completed by the
company in accordance with prescribed conditions
What is exploration?
• Each company is currently undertaking exploration, which
may involve drilling and seismic
• The purpose of exploration is to confirm the presence of
coal, the quality of the coal and the gas it contains, and to
expand our understanding of the basin
• This includes our understanding of the hydrogeology of the
basin
• Initial drilling will not be focussed on producing any water
or gas to the surface
• When exploration results are encouraging, appraisal
programs, which may include pilot wells, are undertaken to
obtain further information on production potential
What is appraisal?
• Preliminary exploration is followed by the appraisal stage of
exploration
• This activity continues to occur on the exploration tenure
• For coal seam gas explorers, appraisal generally involves drilling
additional wells to commence a pilot production test
• Only one project is currently undertaking appraisal activity in the
Galilee Basin
• During pilot production, water is pumped to the surface to reduce
the hydrostatic pressure which holds the gas onto the coal surface
• During this phase, important information which will inform future
development is obtained on:
– water quality and quantity and
– gas producibility
What is production?
• It is not possible for a company to gain the necessary
certification of reserves for a production lease without
undertaking pilot tests on the exploration tenure
• Following this activity a company would hope to have
sufficient information to meet the requirements of a
production tenure application (petroleum lease)
• Production cannot occur except on a Petroleum Lease
• This process requires significant additional environmental
approvals prior to the grant of the petroleum lease
Future development ?
• Depends on the results of exploration and testing
• Would require significant supporting infrastructure, including
pipelines, compressor stations, water handling facilities
• Would require upgrading of exploration permits to production
permits
• Would require significant environmental approvals
• We want to achieve a development framework that can
benefit the community as well as achieve individual company
goals
CSG Reserve Development – Key Steps
Production
Exploration Phase
PROSPECTIVE
RESOURCE
 Geological
review
CONTINGENT
RESOURCE
 Core-holes
 Geological
review
 Seismic surveys
 (Volumetrics?)
POSSIBLE
 Core-holes
 (Gas in place?)
PROBABLE
 Core-holes
 Pilot wells
 (Gas & water
PROVEN
 Development wells
 Field development
productivity?)
Source APPEA
Ecology: CSG and the Land
CSG
Then
Lauren field in the Surat Basin was developed the way it was, during the drought years, in a manner that fitted
both the landholder and the CSG company at the time.
CSG
Now
The Berwyndale field in the Surat Basin has been developed more recently, and demonstrates how CSG
proponents work closely with landholders to optimise the layout of infrastructure to minimise the impact on
their farm productivity.
Source APPEA
Cultural Heritage
• We have a Cultural Heritage Duty of
Care under the Aboriginal Cultural
Heritage Act 2003
• Each CSG company works with local
Cultural Heritage or Native Title
groups (as appropriate) in relation
to ensuring no Cultural Heritage
harm in relation to our activities
Source AGL
A Case Study: Wells and Agriculture can co-exist
Area (‘000 sq km)
Gross Farm Product*
Petroleum Wells
*Source: ABS 1367.0 State and
Terr Stat Indicators for 2009/10;
2009 Texas Agriculture
Statistics, USDA
Source APPEA
($Bn)
Qld
1,731
9.1
7,000
NSW
802
8.3
249
Texas
696
9.7
218,556
What is the Galilee Basin?
• The Galilee Basin is a geological basin comprised of PermianTriassic aged sediments
• It is overlain by a younger geological basin, the Eromanga
Basin
• The Great Artesian Basin is a hydrogeological basin which
includes the Eromanga Basin and the highest aquifer within
the Galilee Basin (Clematis Sandstone)
The Great Artesian Basin
Source: Galilee Energy
Source: DERM Queensland
L
R
Winton Fm
Hutton ss
Mackunda Fm
Allaru ms
Moolayember Fm
Clematis ss
Dunda beds
Wallumbilla Fm
Cadna-Owie Fm
Hooray ss
Westbourne Fm
Adori ss
Birkhead Fm
Rewan Fm
Betts Creek Beds
Colinlea ss
Aramac coal measures
Jochmus Fm
Galilee Basin
Eromanga Basin
Stratigraphic relationship
Jericho Fm
R
L
Maneroo Platform
* Source: Adapted from RPS Water Study
Koburra Trough
Source Galilee Energy
Many misleading
usage estimates
reported in media.
Actual industry
average CSG water
production estimate
for the Surat Basin
projects is 75,000
ML/year.
Source APPEA
Average Water Production for
CSG Industry in Surat
Surat Basin Surface Water Use
Typical APLNG Water Production
Current Surat Basin Groundwater Use
Estimated Total GAB Use
Annual GAB Recharge
CSG Water Production
Some Key Points
• The coal targets in the Galilee Basin are stratigraphically much
lower than the commonly used aquifers
• Galilee Basin coal formations are generally not used as
aquifers
• We have a sound understanding of the geometry of the basin
• Further exploration (seismic and drilling) will continue to add
to basin understanding
Our target
compared to
many water bores
Source Exoma Energy
Well completion
schematic
Source WestSide Corporation
Potential Impact of Hydraulic Fracturing Activities
•
Hydraulic Fracture Stimulation is a carefully designed, closely
monitored and a highly regulated activity.
•
Fracs designed to be contained to coal measures
•
Vertical growth is confined by mudstones
•
•
Normally coals are significantly deeper than aquifers
•
Fracture propagation assessment undertaken with microseismic
monitoring
Gel Frac – Water Guar Gum, common household chemicals
and sand
Water frac – water, salt, sand
•
Frac fluids recovered (& monitored) and collected in tanks or
•
lined ponds.
Source Origin Energy
Well construction key points
• Well construction is robust and is subject to regulation
• Wells are specifically designed to isolate the aquifers; we have
no interest in producing water from any formation other than
the coal itself
• In November the Government issued a Code of Practice for
Constructing and Abandoning CSG wells
Where the baseline study is up to
• Individual water quality information interpreted
• Definition of hydrogeology of Eromanga and Galilee
Basin sediments in the study area
• Identification of data gaps
• Identification of key monitoring bore locations
• The study will be released in May/June
• It will form the basis for continued monitoring,
exploration and modelling
Precautionary Regulation and Science
to Manage Impacts
• Project approval subject to extensive state and federal conditioning
• Both levels of conditioning have ‘live’ operational feedback through mandatory
reporting
• Ongoing federal oversight subject to independent review by DSEWPaC CCS Water
Monitoring and Management expert review panel and Independent Expert
Scientific Committee on Coal Seam Gas and Large Coal Mining Development
• Industry has initiated multiple high level research alliances to ensure access to
independent national expertise:
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•
•
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Gas Industry Social and Environmental Research Alliance (GISERA) – CSIRO
Centre of Coal Seam Gas – University of Queensland
Industry / Altimera / AGOS partnership – land surface movements
University of New South Wales – centrifuge permeameter laboratory
Source Origin Energy
Summary
• While the issues of water management in the Great Artesian
Basin have been long understood, the level of science and
regulation brought to bear in response to Coal Seam Gas is
unprecedented.
• Both industry and independent analyses have concluded that
the impacts are manageable, and relatively small compared to
existing use and natural processes.
Source Origin Energy
Closing
• CSG is transforming Australia
– cleaner and abundant energy source
– national scale economic impact
• 21st century technology
– low environmental impact
– global centre of excellence in Australia
• Community will share the benefits
– relationships built on respect, trust
and honest engagement
Source APPEA
Example: Pilot well near Glenaras
Example: Production near Moura
Thank you
Example seismic
Example drilling rig for exploration