Taking a look at coal seam gas

Coal seam gas exploration took place here in the Keerrong valley last year.

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• Gas wells leaking methane

Last month’s article was about Metgasco. This month we look at the other two companies currently exploring for coal seam gas in the Clarence Moreton Basin. Neither of them has yet applied for approval to produce gas in the Northern Rivers, and neither has specific approval to use hydraulic fracturing (fracking or fraccing) in their exploration wells.

Arrow Energy

Arrow is wholly owned by Shell and PetroChina. It has assets in China, India, Indonesia and Vietnam, and is already one of the biggest companies in the Queensland coal seam gas and liquefied natural gas markets. Arrow’s website says it “has five coal seam gas developments, interests in three gas-fired power stations and plans to supply a liquefied natural gas export facility in Gladstone.” It currently supplies about 20% of the Queensland market – mostly from the Surat Basin, which is just over the border from, and contiguous with, the Clarence Moreton Basin.

In NSW, Arrow holds petroleum exploration licence (PEL) 445, which runs in a horseshoe shape from west of Casino and north of Lismore down to Evans Head. It has approval to drill wells at five sites in this area. In a fact sheet on its website Arrow refers to fracking being required to assess the potential of some wells, but the Reviews of Environmental Factors for the wells in this area do not refer to fracking. It is therefore likely that the company would require additional approval should it decide to frack any wells in PEL 445.

Last year, Arrow was criticised by residents of the Keerrong valley north of Lismore for apparently failing to inform surrounding landowners before starting drilling there. The REF for this well stated that, “Where activities could affect the nearby neighbours, contact is made to inform them of the activities and short-term impacts to expect.” Some residents also expressed concerns about how “produced” or wastewater will be disposed of, what would happen if the rig area flooded, and truck movements along narrow rural roads. The company held a public meeting in Lismore last August, at which it acknowledged the communication problem.

This company has not indicated what it would do with any gas produced, should a commercially viable deposit be found in any of the wells in this area. The options include building a power station near the production wells, piping it to a power station further afield, or building a plant to turn it into liquified natural gas (LNG).

Red Sky Energy

This is a small Perth-based public company active in NSW, Queensland and the Northern Territory. It conducted an exploration program at South Grafton and Bungawalbyn Creek in 1998, 2001 and 2004. It currently holds exploration permits for several PELs between Casino and Grafton through a “tie-in” with Clarence Moreton Resources.

On its website, Red Sky talks about selling any gas eventually produced into “the emerging LNG industry in eastern Australia.” This probably means piping it to an existing or new LNG plant. There are no such plants in NSW, but two huge LNG processing and export plants have recently been approved at Gladstone.

Red Sky obtained approval in 2010 for an exploration well in PEL 457, just off the Summerland Way about 36km south of Casino, and another in PEL 479, at Yorklea, closer to Casino. Again, there is no mention of wells being fracked in the REF for these operations. The company expects so little water to be produced that it may need to use town or bore water on site. The REF also states that, after drilling has been completed, drilling fluids and produced water will either be used to irrigate adjacent pasture or “removed to a council-approved disposal site.”

More news

In December the NSW Government announced what it called “tough new rules” for coal seam gas exploration licenses. So far there is only a media release to go on, but it appears that the new rules will not involve changes to the Petroleum (Onshore) Act, which governs gas exploration and production in NSW. Instead, they will require the Department of Industry and Investment (formerly Primary Industries) to refer applications for exploration permits to two other departments (Planning and Environment, Climate Change and Water) for comments (which DII can accept or reject), and a requirement for the chemicals to be used in drilling and fracking to be listed in licence applications.

The government also announced that “work plans” detailing “environmental impacts” would now have to be made public before drilling occurs. But every application must already be accompanied by a Review of Environmental Factors, and these are readily available on the DII website.

Finally, the government announced that it “will also examine banning the use of Benzene, Toluene, Ethylbenzene and Xylene (BTEX) chemicals in situations which may pose a risk to groundwater.” There are four things to say about this. One, a promise to examine the possibility of a ban is hardly reassuring when even the Queensland Government instituted such a ban months ago, following reports of groundwater contamination in the vicinity of coal seam gas exploration wells. Two, there are other toxic chemicals used in fracking wells, and drilling fluids are used even in non-fracked wells, about which no mention is made. Three, some experts question whether BTEX and other chemicals can ever be used without posing a risk to groundwater. And four, papers released through a parliamentary call for papers by Greens MLC Cate Feahrmann last year suggest a lack of expertise within the NSW Government to properly assess the toxicity of, and risks posed by, drilling and fracking chemicals.

Arrow or Red Sky can now complete their current exploration programs without the need for additional government approvals – unless they want to frack any wells. DII can issue approval to frack without public consultation. But both companies need to comply with their permits, which are issued in accordance with their Reviews of Environmental Factors.

Should either company decide it wants to produce gas from any wells, it will have to go through a separate approval process, which will involve the public exhibition of a comprehensive environmental assessment and the opportunity for public comment.

The EDO will be holding a free public seminar on coal seam gas next Wednesday, February 2, from 6-8 pm in Room 7 at the Lismore Workers Club. EDO staff will discuss current activities in the area, the environmental impacts of coal seam gas, and landholder and community rights.

Mark Byrne is education officer at the Environmental Defender’s Office Northern Rivers. For more information, phone 6621 1113 or email mark.byrne@edo.org.au.