Public Consultation Submission – First Exposure Draft of the National Harmonised
Regulatory Framework for Coal Seam Gas.
This table provides a template for stakeholders to make comments on the Draft National
Harmonised Regulatory Framework for Coal Seam Gas.
Name and Position:
Address:
Telephone/Fax:
Email address:
Organisation authorised level:
Confidentiality of submission:
Anne Ernst – Health, Safety, Environment and
Community Manager, Carbon Energy (Operations)
Pty Ltd
PO Box 2118, Toowong DC Queensland, 4066
07-3337 9940 (Telephone)
aernst@carbonenergy.com.au
General Manager Technical Services
Not confidential
Stakeholder Comments:
Draft National Harmonised Regulatory Framework
Part 1 – Preface
Comment
Part 2 – Executive Summary
Comment
Chapter 1 – Towards Sustainability and Co-existence
Comment
Carbon Energy (Operations) Pty Ltd (Carbon Energy) operates a trial Underground Coal
Gasification (UCG) plant at Bloodwood Creek in the Surat Basin, under its Mineral
Development Licence (MDL) 374, and Petroleum Facilities Licence (PFL) 6. A decision by the
government is expected to be made UCG industry policy in Queensland in the near future.
As acknowledged in the Draft National Harmonised Regulatory Framework for Coal Seam Gas
2012, the coal seam gas process involves extraction of huge volumes of groundwater at the
surface.
Conversely, the UCG process requires that water pressure remains in the coal adjacent to the
underground gasification reactor, where the coal is gasified in-situ to produce syngas.
Whilst CSG processes remove most of the water from the coal in order to release the
methane gas, UCG requires that the water remains in the coal both to provide water to
produce steam for the gasification process and to provide the hydrostatic pressure to contain
UCG by-products. UCG reactors are operated at a pressure below the surrounding hydrostatic
pressure to protect groundwater quality, by ensuring that regional groundwater always flows
towards the UCG reactor.
Any regulatory framework that embraces the principle of co-existence must take into account
the clear fact that the water pressure impacts of CSG extend laterally beyond the boundaries
of the CSG tenures to impact on (among others) UCG companies operating legitimately
within the boundaries for their tenure. It is distinctly anomalous for any petroleum, gas or
mining industry to adversely impact beyond the buffer zone of its tenement.
Both the Multiple Land Use Framework and the draft Regulatory Framework commit to
maximising the use of resources and to merit-based land access that provides certainty for
industry. UCG can deliver multiple benefits to the economy and local communities that need
to be recognised:

the UCG process economically extracts and transforms the energy contained in poor
quality and/or deep coal resources and coal seams with unfavourable geology or for
other reasons may be difficult or uneconomical to mine, without the use of the more
expensive and hazardous conventional mining methods

it is estimated that more than 135,000 PJ of energy generating more than $42billion in
royalties could be economically recovered by UCG in Queensland that could not be
recovered economically by other mining industries – this compares to the currently
identified 33,001 PJ of CSG reserves in Queensland (DEEDI, 2012 quoted in Australian Gas
Resources 2012, Department of Resources, Energy and Tourism)

UCG can deliver 20 times more energy from the same resource than is possible with
coal seam gas, which extracts gas from between the pores of the coal seam

more coal is recovered using UCG technology (60% of the resource) than conventional
coal mining (46% of the resource) because UCG gasifies the entire coal seam and
avoids resource losses in coal extraction and processing

there are multiple uses for UCG syngas, including:
o electricity generation
o liquid fuel production (including gasoline, diesel, jet fuel, naphtha and blend
stocks)
o chemical feedstock, for example, fertilisers, lubricants, waxes and plastics
o hydrogen gas
o feedstock for pipeline quality synthetic natural gas or LNG
o industrial heating, for example, for use in boilers
o direct reduced iron (DRI)
o potential for enhanced oil or methane recovery by injection of CO2 stripped
through the UCG process.

the costs of production of UCG syngas and downstream products is lower, translating
into relatively lower pricing for the gas and downstream products including electricity
and liquid fuels:
o capital and operating costs are lower than in conventional mining, natural gas
and coal seam gas (e.g., no surface gasifier is required and UCG syngas can be
piped directly to the end-user reducing the need for rail and road
infrastructure)
o combined cycle gas turbine power plants can be switched from natural gas to
cheaper UCG product gas
o fewer processes and hence lower costs for manufacture of high quality
chemicals such as ammonia

Carbon Energy’s technology is a significant advance in UCG reactor design and can be
operated with controlled environmental impacts

The technology has a much smaller environmental footprint than coal seam gas and
conventional mining, including the inherent capacity for future carbon capture and
storage

UCG can provide regional employment opportunities and flow-on economic and social
benefits to local communities.
With the extraction of large volumes of groundwater associated with CSG extraction, these
companies impact significantly beyond the boundaries of their tenements, in the same areas
where UCG can extract valuable and otherwise stranded coal resources and add significant
value to the economy and local communities. The regulatory framework must include policies
that can enable commercial certainty for UCG and other industries that rely on the
groundwater to underpin the viability of their businesses. It is clear that traditional “make
good” compensatory arrangements will not work.
The draft Policy Framework emphasises ongoing monitoring and water accounting. Whilst
these are important aspects of the Policy, a stronger stance is needed on the replenishment
of the groundwater by the CSG companies. At the very least, the Policy Framework should
dictate that CSG companies should provide for a buffer around their operations of sufficient
width to reduce the groundwater pressure (level) impacts of their operations on UCG.
Chapter 2 – Applying Leading Practices
Comment
Chapter 3 – Well Integrity
Comment
Chapter 4 – Water Management and Monitoring
Comment
The Policy Framework discusses the Queensland approach to management of CSG
groundwater extraction, which is based on a flawed report (the Surat Underground Water
Impact Report). That report is flawed because:

The Surat Basin report did not consider co-existence with UCG or any other industry, but
focused on the impacts of CSG water extraction on private bore water supply, and on “make
good” compensation arrangements.

The Surat Underground Water Impact Report is based on a MODFLOW hydrology analysis of
the Bowen, Surat and Condamine River Basins using 19 layers for the stratigraphy with broad
unit cells size of 1.5km square. Each layer corresponds to a major stratigraphic unit and can
be up to 500m thick. Hydraulic properties are generalised for each layer. The only data
provided is a table with the range and median value of horizontal conductivity values for each
unit. It reports a detailed sub-model with cell size of 250m was carried out for a small area
near Tipton. This model may have provided a more accurate picture of the groundwater
impacts, but no results have been provided separately in the draft Report.

Recharge rates and flow velocities in the Report are expressed in broad terms, with the
recharge rate to aquifers reported in the range 1-30mm per year (with a median of 2.8mm),
and flow velocity in aquifers estimated at 1-5m per year. Recharge of water to coal seams is
based on 50% coming from overlying and underlying aquifers, without any supporting data.

Recovery in affected aquifers post CSG, in the absence of water reinjection, is estimatein the
Report to reach 50% in 30-80 years. This is again a broad generalization for recharge over the
entire Surat Basin. It is particularly misleading in relation to the Macalister Coal Seam, which
is a confined aquifer in the Walloon Coal Measures where Carbon Energy operates its UCG
process. Further, the Bloodwood Creek coal deposit (where Carbon Energy operates) is
lenticular, with coals seams thinning dramatically at the edges. This further reduces capacity
for regional recharge to re-pressurise seams throughout the Basin.

The model in the Report shows a drawdown in the Bloodwood Creek area of 100-200m,
based on a target optimal drawdown of water pressure to 35-40m above the top coal seam.
From the model in the Surat Underground Water Impact Report, the prediction of the
drawdown field around Bloodwood Creek is that virtually all of the water pressure cover over
the Macalister will be removed if the CSG industry continues to expand at the rate forecast in
the Report.

Using the recharge rates and flow velocities in the Report, if movement horizontally through
the strata from the intake proceeds, at best, at 5m per year, recharge from Macalister Seam
outcrops 20km from Bloodwood Creek will take 4,000 years to reach Carbon Energy’s
Bloodwood Creek site. Although pressure effects will move at a different rates to water
transport, the isolated nature of individual coal lenses within low permeability strata in the
Walloon Coal Measures will result in much slower recharge rates than will occur in the major
sandstone aquifers. Even with half the recharge water provided from nearby strata, if that
assumption is correct, this suggests that a 30-80 years return to pre-CSG conditions is a gross
underestimation with natural recharge.
The Policy Framework discusses the management or disposal of CSG co-produced water,
including reinjection into the same aquifers. Reinjection into the same aquifers would not
make sense to a CSG operator, at least whilst they are operating in that aquifer, because they
need the pressure to remain low for the gas to be released. Currently Carbon Energy
operates within the same coal seams as CSG in the Surat Basin, i.e. the Macalister Coal Seam
in the Walloon Coal Measures.
Carbon Energy agrees with the preferred approach expressed in the draft National Policy
Framework, which would be based on a water licence. However, this does not fully address
the issue with the impacts of CSG on UCG. To achieve co-existence of these two industries,
the policy framework must also include other measures including but not limited to the
establishment of buffers as discussed previously.
NOTE: The UCG process does consume a small amount of groundwater in the process and
also produces some water at the surface, but volumes are insignificant when compared to
CSG, at approximately 0.5 ML per month (0.017 ML per day) for one UCG panel operation
compared to 0.4 ML to 0.8 ML per day 9reducing over time to 0.1 ML per day) for one CSG
well in the Surat Basin (quoted from the Draft National Harmonised Regulatory Framework
for CSG).
Chapter 5 – Hydraulic Fracturing
Comment
Chapter 6 – Chemical Use
Comment
Other issues
Comment