QRC Submission
Submission to the Senate Select Committee on Unconventional Gas Mining 14 March 2016
Table of Contents ble of contents
EXECUTIVE SUMMARY ...... 3 INTRODUCTION AND GAS RESOURCES ...... 6
THE QUEENSLAND RESOURCES COUNCIL ...... 6 QUEENSLAND’S HISTORY OF GAS PRODUCTION ...... 6 BACKGROUND – QUEENSLAND’S GAS RESOURCES ...... 9 GAS PROJECTS IN QUEENSLAND ...... 14 THE ROLE OF GAS IN A CARBON CONSTRAINED FUTURE ...... 16 QUEENSLAND - THE LEADER IN AUSTRALIA’S ENERGY SUPPLY ...... 18 THE ECONOMIC CONTRIBUTION OF NATURAL GAS TO QUEENSLAND ...... 20
WHAT IS THE ECONOMIC CONTRIBUTION OF THE GAS INDUSTRY TO QUEENSLAND? ...... 20 SOCIOECONOMIC BENEFITS OF NATURAL GAS ...... 21 THE SURAT BASIN – A CASE STUDY OF REGIONAL DEVELOPMENT ...... 22 THE OPPORTUNITIES THAT GAS BRINGS TO REGIONAL QUEENSLAND ...... 23 QUEENSLAND’S TRACK RECORD OF CO-EXISTENCE ...... 28 ROBUST AND RELIABLE REGULATORY FRAMEWORK ...... 32
QUEENSLAND’S REGULATORY FRAMEWORK – FIT FOR PURPOSE ...... 32 ATTACHMENT ONE: QUEENSLAND’S LNG PROJECTS ...... 35
LNG – A THREE-STEP PROCESS ...... 35 QCLNG ...... 35 APLNG ...... 36 GLNG ...... 36 ATTACHMENT TWO: QUEENSLAND’S WORLD-CLASS ENVIRONMENTAL REGLATORY FRAMEWORK ...... 38
QUEENSLAND’S ENVIRONMENTAL REGULATORY FRAMEWORK ...... 38 BEYOND COMPLIANCE – CASE STUDIES ...... 43 HEALTH AND SAFETY...... 45
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Executive summary
The Queensland gas industry’s growth over the past decade is unprecedented, and while the capital investment phase is winding down, onshore gas production will continue to generate significant economic activity and royalties for the state.
Queensland’s gas industry is a vital employment pillar, providing regional jobs across construction, fabrication and operations. And perhaps lesser known is the contribution natural gas has made to upskilling Queenslanders to build and manage a globally significant industry.
It will be recorded in the history of this country that the creation of the onshore gas industry in Queensland was the largest concentration of private capital in Australia’s history. With the best part of a $70 billion investment it is - in today’s dollars - the equivalent of three Snowy Mountain Schemes.
It is worth remembering that the Snowy Mountain Scheme was rated as one of civil engineering’s wonders of the modern world when it commenced in 1967. Importantly, the scheme also was the catalyst for the establishment of SMEC, a global consulting firm which grew out of the expertise built up at the Snowy Mountain Authority (SMA). This huge LNG investment in Queensland has built a world-class capacity and left Queensland with a legacy of a deep pool of engineering and consulting expertise. Queensland now has an opportunity to similarly leverage future exports from the concentration of world class construction expertise that natural gas has brought to Queensland.
Queensland’s brand new export industry – the first in the world to source its gas for export from coal seams – took less than seven years from first approval applications through to the delivery of the first shipment of gas from QGC’s Curtis Island plant on 30 December 2014. Now all three plants, the Santos-led GLNG plant and APLNG plant have all celebrated their first shipments.
When completed in coming months, the three Curtis Island projects at Gladstone will be able to process up to 24 million tonnes of LNG per annum. To put this into greater context, Curtis Island is larger than the Gorgon project off Western Australia, which at 15.6 million tonnes per annum, currently holds the title of largest single resource development in Australia’s history.
Presently, global energy markets are no place for faint hearts. The world is awash with cheap energy in all its forms, partly as a direct result of the new technologies enabling the commercialisation of unconventional oil and gas – just as we have seen in Queensland with coal and in the United States with shale. Low spot prices for gas and coal have primed a deliberately misleading campaign by green activists to say the world is turning its back on fossil fuels, when the latest International Energy Agency(or IEA) World Energy Outlook confirms the opposite.
The IEA’s report confirms gas is well placed to expand its role in the global energy mix. In fact, gas is forecast to remain the fastest growing fossil fuel at 1.4 percent per annum out to 2040. The 2016 BP Energy Outlook report was even more bullish, forecasting natural gas as the world’s fastest growing traditional fuel with consumption increasing by 1.8percent a year to 2035.
Our neighbours in Asia will be increasingly important customers for Queensland’s gas industry.
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According to the IEA, demand for natural gas in the region is set to skyrocket by 160 percent. The BP Energy Outlook forecasts that China and India alone will drive more than 30 percent of the growth in global gas demand. The IEA is forecasting an annual demand growth of 40 million tonnes of LNG out to 2040. In the Queensland context, that represents about twice the capacity of Curtis Island when all six LNG trains have been commissioned.
Currently, Queensland’s gas industry makes up 7 percent of the state’s gross regional product. That is, $22.1 billion dollars injected into the economy. The industry provides 5 percent of the state’s employment, with a wages bill of nearly $1 billion.
Last financial year, the gas industry spent $9.6 billion on local goods and services with more than 3,500 businesses and provided community contributions to nearly 200 community organisations.
According to treasury estimates, by 2017-18 those big gas projects will be delivering some serious royalty revenue – of the order of half a billion dollars – to fund state government service delivery.
You will never hear from green activists an acknowledgement that Queensland’s extraordinary natural endowment of mineral and petroleum wealth actually belongs to all Queensland. The beneficiaries of Queensland’s gas industry are everyday Queenslanders. These are the Queenslanders who enjoy the luxury of lights at night time, hot showers and cold beer at Sunday barbeques. The Queenslanders who travel down well-maintained roads, receive quality hospital care and access to free schooling thanks to gas royalties paid to state. Queenslanders who own or work in local businesses and are able to enjoy the fruits of gas sector spending.
Queensland’s land access laws strike a fair balance. A balance between providing the community the benefits from development of the state’s resource wealth, and respecting the rights of farmers to keep running their businesses.
No one is saying that companies should have the right to place gas wells and associated infrastructure where it suits them. And it’s just not about gas. Farmers should have the right to determine who can come onto their land and when, whether they be in search of gas, minerals or coal and that is exactly what our current land access laws deliver.
Resource companies are required by law to understand a farmer’s business and how they might affect that business before they enter the land. Resources companies are required by law to meet farmers’ reasonable valuation, legal and accounting costs. They are required by law to arrange compensation for any impacts on the farmer’s business, which both parties must agree to before any impacts occur.
In Queensland more than 5,000 conduct and compensation agreements have been struck since the Land Access Framework was put into effect in 2010. Under these agreements farmers have negotiated compensation agreements totalling hundreds of millions of dollars. There are hundreds of success stories of farmers working with gas companies to supplement their incomes and minimise the impacts on their day-to-day activities.
Recent editions of Queensland Country Life have featured advertising for grazing properties for sale, which feature that the property comes with “gas well income”.
The reality is that current land access laws provide landholders the opportunity to negotiate
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terms that can ensure farms either operate at the same, but more likely, at an improved output. These negotiations can be difficult and complex for the farmers involved, but at a time of widespread drought and soft prices at the farm gate, income from hosting gas infrastructure is playing a role in helping these communities ride out the drought.
Negotiation isn’t always easy, but it is in the best interest of all Queensland citizens. If the green activists truly had the farmer’s interests at heart, they would identify ways in which the land access laws could be improved, or finding ways in which farmers could negotiate the best agreement for their business. This is what the real representatives of farmers like AgForce, QFF and Cotton Australia do every day.
It’s time that politicians had the courage to explain these facts to the public. To turn the land access laws on their head would be a recipe for driving resource investment from our state, and from the nation.
QRC welcomes the establishment of the Senate Select Committee Inquiry into so-called unconventional gas mining. The Inquiry is an opportunity to present all the facts about the social, environmental and economic performance of the Queensland gas industry. Given the weight of facts, QRC expects the Senate Committee to confirm the findings of those many other independent reports into natural gas that have preceded it.
QRC wholly supports the submission made by the Australian Petroleum Production and Exploration Association (APPEA). The many case studies and myth busters through fact and credible research APPEA have pulled together is testament to the wealth of information available on the industry, the opportunity it presents and its proven track record in building a sustainable industry that is well regulated.
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Introduction and gas resources
THE QUEENSLAND RESOURCES COUNCIL The Queensland Resources Council (QRC) welcomes the opportunity to provide a submission to the Senate Select Committee on Unconventional Gas Mining. From here on in this submission, the misnomer, ‘unconventional gas’ and ‘unconventional gas mining’ (sic) will be termed as natural gas and natural gas production.
QRC is the peak representative organisation of the Queensland minerals and energy sector. QRC’s membership encompasses minerals and energy exploration, production, and processing companies, and associated service companies. The QRC works on behalf of members to ensure Queensland’s resources are developed profitably and competitively, in a socially and environmentally sustainable way.
QRC’s membership encompasses a number of companies operating in Queensland’s onshore gas industry, including all the proponents of Liquid Natural Gas (LNG) export facilities. While natural gas members are also members of the peak national body for the oil and gas sector, the Australian Petroleum Production and Exploration Association (APPEA), QRC’s membership base is broader than APPEA and encompasses many of the professional and technical service companies that contract to the onshore gas industry in Queensland.
The QRC was formed in 1991 as the Queensland Mining Council with the merger of the Queensland Chamber of Mines and the Queensland Coal Association. Oil and gas have been at the heart of the Queensland Chamber of Mines, its successor the Queensland Mining Council, and thereafter the rebranded Queensland Resources Council for many decades.
QUEENSLAND’S HISTORY OF GAS PRODUCTION QRC is proud to represent the resources industry in Queensland. Queensland has always had an active resources industry dating back to the 1860s. During the 1800’s Queensland’s predominant mining operations included the coal mines of Ipswich, gold mining in several centres including Gympie and Georgetown and tin mining in Stanthorpe. The mining sector continued to grow with the opening up of several coal mines to power electricity generation plants, such as Collinsville. The magnificent lead, silver and zinc orebody at Mount Isa was discovered in 1923.
Natural gas has had a similar history in Queensland, Roma has a long association with natural gas following the discovery of gas while drilling for water on Hospital Hill in 1900. The gas was used to light street lamps throughout the town. Australia’s first commercial gas project was the connection of the old Roma Power Station to local natural gas supplies1. On a commercial scale, explorers in Roma were proving up reserves for a decade since the early 1950’s.2 The Queensland government opened the first commercial and domestic natural gas
1 http://www.maranoa.qld.gov.au/natural-gas 2 Australian Associated Oilfields had been exploring and proving natural gas deposits some distance to the north- west around Roma (1952 – 1961).
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pipeline in a capital city – the 435 km Roma to Brisbane Pipeline – in 1969. This achievement was described as ‘A triumph for Queensland’.
Then Queensland Premier Joh Bjelke-Petersen opens the Roma Brisbane Gas Pipeline, March 1969.3
The major commercial customer of this natural gas was the fertiliser industry, which supported Queensland’s impressive agricultural industry, especially in the rich black soils north west of Toowoomba. The historic Roma to Brisbane pipeline is still supplying Brisbane homes and businesses with essential access to natural gas.
Natural gas is transported from the field to market by pipelines. There are five major natural gas pipelines in Queensland, the:
1. South West Queensland Pipeline (SWQP), running from Ballera to Wallumbilla (Roma) (937km) 2. Carpentaria Gas Pipeline (CGP), running from Ballera to Mount Isa (840km) 3. Roma to Brisbane Pipeline (RBP), running from Wallumbilla (Roma) to Brisbane (438km) 4. Queensland Gas Pipeline (QGP), running from Wallumbilla (Roma) to Gladstone and Rockhampton (627km) 5. North Queensland Gas Pipeline (NQGP), running from Moranbah to Townsville (392km).
These pipelines directly service large industrial customers and gas-fired generators. They also provide gas for localised distribution networks in and around Queensland cities and major regional centres.
In addition, the Queensland-South Australia-New South Wales pipeline link (QSN Link) between Ballera and Moomba was commissioned in 2009 and links the first four pipelines above to pipeline systems in the interconnected eastern gas market (New South Wales, Victoria, South Australia, Tasmania and the Australian Capital Territory)4.
3 Picture taken from the article titled ‘The Roma to Brisbane Natural Gas Pipeline – 1969’. Available at http://pipeliner.com.au/news/the_roma_to_brisbane_natural_gas_pipeline_-_1969/043171/ 4 https://www.business.qld.gov.au/industry/energy/gas/gas-overview/gas-transmission-distribution
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There are four other natural gas pipelines in Queensland, all supplying critical fuel to Queensland homes and businesses across the state. Feeding each of those pipelines are hundreds of natural gas wells across the State. The locations will be explored further in this submission.
Source: DNRM (2015a), Queensland’s petroleum and coal seam gas 2013–14
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Queensland’s natural gas industry has been at the forefront of the industrial and agricultural industry in Queensland. Today, Queensland’s natural gas industry continues to provide a low cost and efficient fuel to Queensland businesses and homes, as well as other capital cities in Australia and across the world.
BACKGROUND – QUEENSLAND’S GAS RESOURCES What is natural gas? It is easy to get confused by the number of different names to describe the gas resources in Australia. In a nutshell, it is all a petroleum product. Petroleum is formed by the decomposition of plant and animal material washed down with sediments to lake and ocean floors. Over millions of years the organic matter becomes trapped by layers of sediment deposited on top and the matter gradually becomes buried deeper in the earth's crust.5 There are two types of petroleum products – conventional and unconventional petroleum resources. Unconventional petroleum resources can either be in the form of oil or gas and Australia has both. Australia does have large reserves of unconventional gas resources that are typically one of the following: Shale gas, extracted from shale formations; Tight gas, extracted from sandstones of low porosity and permeability; and Coal bed methane or coal seam gas, extracted from coal formations.6
To date, the main natural gas resource in Queensland is the gas extracted from coal formations.
5 Oresome Resources factsheet ‘Petroleum’. Available at http://www.oresomeresources.com/resources_view/resource/fact_sheet_petroleum/section/resources/parent/ener gy/category/gas 6 ‘Petroleum Law in Australia’ (2013) Hunter and Chandler. 181.
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In 2005, the then Premier, Peter Beattie, recognised the potential for natural gas as a low-emission fuel to generate electricity by introducing the 13 percent gas scheme. The scheme aimed to increase diversity in Queensland’s electricity generation mix. An unforseen, but welcome response to the government’s new scheme was an increase of gas exploration and production in the state, particularly natural gas extracted from coal.
This increase in natural gas production has ensured the National Gas Market has a reliable supply of gas for domestic users across the east coast of Australia and importantly has provided much needed low-cost fuel to local manufacturers. Natural gas is mainly methane – a colourless and odourless gas. CSG is typically attached by adsorption to the coal matrix, and is held in the coal by the pressure of formation water in the coal cleats and fractures7. It is typically 90to 98 percent methane (CH4) with small amounts of other hydrocarbons, nitrogen and carbon dioxide (CO2). Queensland’s natural gas from coal is almost pure methane, typically over 97 percent CH4.8
How is natural gas extracted? Conventional gas is obtained from reservoirs that largely consist of porous sandstone formations capped by impermeable rock, with the gas trapped by buoyancy. The gas can often move to the surface through the gas wells without the need to pump9.
7 http://www.gisera.org.au/publications/factsheets/what-is-csg.pdf 8 http://www.aplng.com.au/home/what-coal-seam-gas 9 http://www.gisera.org.au/publications/factsheets/what-is-csg.pdf
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Unconventional gas is generally produced from complex geological systems that prevent or significantly limit the migration of gas and require innovative technological solutions for extraction. The difference between conventional and unconventional gas is the geology of the reservoirs from which they are produced. There are several types of unconventional gas such as CSG, shale gas and tight gas.
Coal seam gas (CSG) is produced by the drilling of wells from the surface into the coal seam. To extract the gas, wells about the diameter of a dinner plate are drilled down, through the geographic layers into the coal seams. After the hole is drilled to the required depth, steel casing is installed and cement is pumped to fill the space between the casing and the well bore. When the cement hardens it provides a barrier between the extraction process and outlying areas10. Horizontal drilling occurs at deep levels underground and reduces the number of visible vertical wells located above ground11 .
Schematic diagram of coal seam gas extraction process12.
Movement of the gas to the surface through wells normally requires extraction of formation water from the coal cleats and fractures. This reduces the pressure within the coal seam, allowing methane to be released from the coal matrix13. As water production declines, gas production increases14.
10 http://www.aplng.com.au/about-project/how-csg-produced 11 http://www.resourcesandenergy.nsw.gov.au/landholders-and-community/coal-seam-gas/the-facts /how-is-coal-seam-gas-extracted 12 Page 2, http://www.gisera.org.au/publications/factsheets/what-is-csg.pdf 13 http://www.gisera.org.au/publications/factsheets/what-is-csg.pdf 14 http://www.oresomeresources.com/media/flash/interactives/low_emission_energy_future/pdf /3_Coal_Seam_Gas.pdf
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At the surface, the CSG, water and other impurities are separated. The gas from several wells is collected and passed to a central compressor station, where it is added to a pipeline network for delivery to users. Gas used locally does not need compression15.
How much natural gas does Queensland have? Australia in general and Queensland in particular has large reserves of coal seam gas. The known reserves keep growing because the more you look the more you tend to find. Proven and probable reserves comprise 28,000 PJ. That’s enough to meet Queensland’s existing electricity needs for about 50 years.
The possible reserves may be as great as 300,000 PJ. That’s enough to meet all of Queensland’s current electricity generation needs for 500 years, or those of Australia for about 120 years16.
Where is unconventional gas and how is it extracted? How is it different from US shale gas? Some of the information being presented about the US gas industry through movies, websites and social media concerns shale gas, not coal seam gas. While both are classified as ‘unconventional’ gas resources, the geology is very different and the extraction processes also differ. Shale gas wells are generally a lot deeper, with all the wells requiring hydraulic fracturing which is often more extensive than the process required for CSG. Coal seam gas is mostly methane and has far more simplified drilling, production, storage and treatment processes than shale gas, which generally results in the production of some higher order complex hydrocarbons, including light oils17.
What is Liquified Natural Gas? Not to be confused with LPG (Liquefied Petroleum Gas), which we most commonly associate with barbeque gas bottles, LNG (Liquefied Natural Gas) is natural gas, the same gas that we might have piped into our homes, to power our stoves or gas heaters. LNG is predominantly composed of methane, whereas LPG is a petroleum derivative. LNG is an odourless, colourless, non-toxic, non-corrosive substance. It is predominantly composed of methane and is a natural gas that becomes a liquid when cooled to approximately -160°C. As a liquid, it is 600 times more dense than natural gas, therefore liquefying natural gas makes it much easier to transport as it takes up far less volume.
What is natural gas used for? One of natural gas’s main uses in Australia is for domestic electricity generation for homes and business. It is a flexible energy source that can be used to generate electricy or direct fuel for heating and cooking.
15 http://www.oresomeresources.com/media/flash/interactives/low_emission_energy_future/pdf /3_Coal_Seam_Gas.pdf
16 http://www.gisera.org.au/publications/faq/faq-csg-general.pdf 17 http://www.aplng.com.au/home/what-coal-seam-gas
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One of Australia’s most wide held uses for natural gas is for the Aussie barbeque. The factories that produce steel (for cars and other materials), chemicals, paper, rubber, plastic and paints rely on gas.
Source: www.qrc.org.au
Source: https://www.dnrm.qld.gov.au/__data/assets/pdf_file/0008/333926/petroleum-gas-supply-chain.pdf
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GAS PROJECTS IN QUEENSLAND Queensland has three LNG plants on Curtis Island in Gladstone, which chill methane produced from coal seams down to -1610C, to the point at which it becomes a liquid18. Liquid methane is far more dense than the gas, so it contains 600 times more energy per unit volume.
Queensland has delivered 25 million tonnes of export LNG capacity in just seven years. The investment required to deliver Queensland’s LNG export capacity has been unprecedented. Origin Energy’s Grant King estimates that the when the three projects in Queensland were at their peak, they were spending around $40,000 every minute, over a two-year period19. The Snowy Mountains Hydro-electric Scheme is rightly regarded as one of Australia’s signature engineering projects. In today’s dollars, the investment in the three Queensland LNG projects is three times that of the Snowy Mountains project. And of course, that project was executed over 25 years.
This huge LNG investment in Queensland has built a world-class capacity and left Queensland with a legacy of a deep pool of engineering and consulting expertise.
Queensland’s export gas industry A snapshot of Queensland’s three LNG plants20
Project Queensland Curtis Gladstone LNG Australia Pacific LNG LNG The world’s first CSG- Piping CSG from AP LNG is the largest LNG project inland Queensland LNG project for export Commissioned in: 2014 2015 2015 Capacity: 8.5 mtpa 7.8 mtpa 9 mtpa Capital cost: $23.7 billion $21.6 billion $24.7 billion Location: Curtis Island, Curtis Island, Curtis Island, Gladstone Gladstone Gladstone Partners: BG Group, CNOOC Santos, Petronas, Origin Energy, Total, Kogas ConocoPhillips, Sinopec
Queensland’s domestic gas industry Gas is a vital energy source for Queensland's industrial and manufacturing sectors and will play a significant role in the state's continued economic and regional development. It is also used in electricity generation.
Queensland's gas customer base is dominated by large industrial and mining operations (around 70 percent of Queensland demand). There are approximately 187,000 residential customers who use gas primarily for cooking and hot water21.
18 http://www.appea.com.au/oil-gas-explained/oil-and-gas/what-is-liquefied-natural-gas-lng/ 19 https://www.originenergy.com.au/content/dam/origin/about/investors-media/presentations/ceda-brisbane- grant-king.pdf 20 http://www.appea.com.au/oil-gas-explained/operation/australian-lng-projects/ 21 https://www.dews.qld.gov.au/gas/regulation/market
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Queensland's gas consumption has risen significantly since 2004. We currently consume around 280 petajoules per year, up from around 221 petajoules in 2011. There are about 187,000 natural gas residential and small commercial users (i.e. those using less than 1 terajoule of gas a year) in Queensland, most of which are in Brisbane. Residential and small- scale commercial use of gas accounts for nearly 3 percent of consumption. This is significantly lower than in the southern states due to Queensland's warmer climate and resulting lack of gas use for heating purposes.
Large industrial customers are located in regional centres such as Gladstone, Townsville and Mount Isa, as well as Brisbane. Electricity generation, fertiliser production and mineral processing accounts for the balance (97%) of Queensland's gas consumption22.
Electricity generation from gas A number of Queensland power stations generate electricity using natural gas as fuel. Queensland's current fleet of gas-fired generators include23:
Swanbank E: a 385 megawatt (MW) gas-fired generator located near Ipswich, in South East Queensland Townsville Power Station: a 247MW gas-fired generator at Yabulu, north of Townsville Braemar Power Station: a 504MW gas-fired generator at Wambo, north-east of Dalby Braemar 2 Power Station: a 519MW gas-fired generator located next to the Braemar Power Station at Wambo, north-east of Dalby Condamine Power Station: a 144MW gas-fired generator at Miles Darling Downs Power Station: a 644MW gas-fired generator located 40km west of Dalby Yarwun Power Station: a 160MW gas-fired generator located 10km north-west of Gladstone. Roma Power Station: a 80MW gas-fired generator located at Roma Barcaldine Power Station: a 55MW gas-fired generator located at Barcaldine Oakey Power Station: a 282MW gas-fired generator located in Oakey.
22 https://www.business.qld.gov.au/industry/energy/gas/gas-overview/gas-retail-competition 23 https://www.business.qld.gov.au/industry/energy/gas/gas-overview/electricity-generation-gas
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Queensland’s Natural Gas: Fuel for Heavy Transport and Machinery A 15-year, $200 million, supply agreement was signed between BOC and QGC in 2014. BOC has built a micro-LNG plant next to QGC’s Condamine Power Station near Miles in the Surat basin. The plant, which will run 24 hours a day, 7 days a week, will produce up to 50 tonnes of LNG per day from coal seam gas for supply into the domestic market. This is the equivalent of 70,000 litres of conventional diesel per day1. Mine Energy Solutions (MES) have developed High Density Natural Gas (HDCNG™) to displace imported diesel as the dominant fuel for heavy machinery. MES have applied cutting edge engine and fuel management technology to convert a Caterpillar 3516B engine to dual fuel and enable up to 95% displacement of diesel fuel with natural gas over a full range of operating conditions. HDCNG™ is natural gas compressed, transported, stored and dispensed at pressures in excess of 350 bar (5,076 psi). It has approximately twice the energy density of conventional CNG and approximately 65% the energy density of LNG. The engine technology is innovative, can be retro-fitted to existing mine fleets including dozers, wheel loaders and diesel shovels and integrated seamlessly with existing manned vehicles or autonomous mining machinery In addition to the ability to reduce fuel costs, MES also reduces carbon dioxide emissions by up to 25%, and significantly cuts particulate and noxious emissions.
THE ROLE OF GAS IN A CARBON CONSTRAINED FUTURE Natural gas can help reduce greenhouse emissions in Australia and in LNG export markets. Renewable energy sources, such as solar power and wind power, are intermittent – they cannot provide continuous power generation. Renewable energy must be combined with forms of baseload power (continuous power generation) and peaking power (which can be brought online quickly in times of high demand)24. Gas is suitable for both baseload and peaking power, and it produces lower greenhouse gas emissions than conventional coal-fired power (generally about 30-50% lower)25 As an example, ConocoPhillips cite five studies which show the lifecycle emissions of gas fired power at an average of around 550 gCO2e / kWh as compared with baseload coal at around 1,100 gCO2e / kWh26. However, the development of high efficiency advanced coal fired power (ultra super critical and advanced ultra super critical) is now delivering coal-fired performance at around 750 gCO2e / kWh, reducing the margin to around 25%27.
24 http://www.energyresourceinformationcentre.org.au/natural-gas/benefits-of-natural-gas/ 25 http://www.appea.com.au/industry-in-depth/policy/greenhouse/how-natural-gas-can-minimise-greenhouse- emissions/ 26 https://media.gractions.com/42CB6D290A2886ED85EE255E6055C4175C16870F/d9d5089a-bc2c-4daa-abd0- ba6ade5ea7ce.pdf 27 Page 12, https://www.iea.org/publications/insights/insightpublications/21stCenturyCoal_FINAL_WEB.pdf
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Natural gas as an energy source Natural gas extracted from coal seams can offer a number of benefits as an energy source28: natural gas typically burns more efficiently than coal or oil and can emit less greenhouse gas at the points of extraction and combustion natural gas has a role in supporting the journey towards lower or zero emission renewable energy sources natural gas has direct use for a range of purposes such as heating and for powering fast-response, electricity-generating turbines Australia has abundant resources of natural gas gas can be piped to a liquefied natural gas (LNG) plant where it can be processed into LNG for export the CSG export trade provides jobs and revenue to Australia.
28 http://www.gisera.org.au/publications/factsheets/predicting-impacts.pdf
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Queensland as the leader in Australia’s energy supply
Australia's natural gas consumption is predicted to significantly increase as Australia transitions to a lower carbon economy through greater use of gas for electricity generation purposes, as well as rising energy demands associated with increased population and economic growth29.
Queensland was the state to first to produce commercial oil, the first to find natural gas and the first to supply a capital city with natural gas by pipeline. It has Australia's largest onshore oil field at Jackson. It was also the first state to use a form of hydro-electric power at Thargomindah when water pressure from a well sunk into the Great Artesian Basin was harnessed to generate electric power30. Queensland was the first in the world to produce LNG from coal seam gas.
“With gas projects blocked, NSW is now in the embarrassing position of having to import 95 percent of its gas from interstate.” Des Houghton, Courier Mail, 8 August 201531
“Gas flows on the Moomba-to-Sydney gas pipeline, which has supplied NSW with gas since 1976, reversed in December for the first time” Matt Chambers, The Australian, 9 February 201632
“In 2012, the head of a major Australian gas retailer famously referred to the planned Queensland coal seam gas export projects as “a giant vacuum cleaner for the East Coast gas market”. This vacuum has now been switched on – and it’s sweeping up gas not just from coal seam gas producers, but conventional gas producers too.” Tim Forcey, Energy Advisor, Melbourne Energy Institute, University of Melbourne33.
The debate over the availability and price of gas in NSW focusses on two key facts that – (a) there is almost no gas production in NSW due to restrictions on production of gas and (b) that existing long term supply contracts expire in 2016. A March 2014 AGL working paper, modelled the issue in exhaustive detail before concluding:
“…the most obvious policy response that Federal and State Governments should focus on is to remove non-scientific and therefore unnecessary regulatory and policy barriers to natural gas exploration and field development.” “Moratoriums and arbitrary setback zones – which can be traced back at least as far as 2010 – and uncertainty over how new regulatory frameworks will be implemented even at the time of writing, have collectively taken their toll”. Paul Simshauser and Tim Nelson, Solving for ‘x’ – the New South Wales Gas Supply Cliff, AGL Applied Economic and Policy Research Working Paper No.40 34
29 http://www.gisera.org.au/ 30 https://en.wikipedia.org/wiki/Energy_in_Queensland 31 http://www.couriermail.com.au/news/opinion/opinion-how-weak-governments-the-energy-giants-shock-jocks- and-greenies-have-duped-us-on-gas-prices/news-story/b9b2da0ffc01d1fa50d82a7c3bfc970b 32 http://www.businessspectator.com.au/news/2016/2/9/resources-and-energy/gladstone-demand-draws-nsw-gas 33 https://theconversation.com/heading-north-how-the-export-boom-is-shaking-up-australias-gas-market-52963 34 Page 32, http://aglblog.com.au/wp-content/uploads/2014/03/No.40-Solving-for-X-FINAL.pdf
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The AGL paper forecasts that aggregate demand for natural gas will increase three-fold over the period 2013-2016. Almost simultaneously, a non-trivial quantity of existing domestic gas contracts currently supplying NSW will mature. Much of that gas has been recontracted to LNG producers in Queensland – thus creating a gas supply cliff in NSW35.
Gas’s role in supplying Queensland electricity The Queensland Productivity Commission’s draft report (February 2016) provides a good overview of Queensland’s role in providing energy to the rest of Australia, historically through exports of electricity and gas. Electricity flows between Queensland and New South Wales via the large-capacity Queensland - New South Wales Interconnector (QNI) and the smaller Terranora interconnector.
Queensland is part of the National Electricity Market (NEM). In 2013–14, Queensland’s electricity generation mix was 73 percent black coal; 22 percent gas; and 5 percent renewable generation. Queensland has an oversupply of generation capacity and no new capacity is required until at least 2021–22. However, new renewable capacity is being developed to meet the renewable energy target (RET)36.
Specifically, around 250 MW of additional wind capacity by 2021–22 and about 250 MW of additional large scale solar capacity is projected to be introduced in response to various forms of assistance from the Australian Renewables Energy Agency, Clean Energy Finance Corporation and state government policies. This additional renewable generation will have an impact on the profitability of the Queensland Government's coal-fired generators37.
Queensland’s annual average wholesale energy costs increased from the third lowest in the NEM in 2010–11 to the highest in 2014–15. This increase occurred despite the surplus capacity. It may have been driven by a number of factors including new demand from the LNG sector, rising fuel costs, interconnector constraints, and market concentration38.
In 2014, around five percent of the sent out generation in Queensland was from renewable energy sources. Renewable generation continues to be a more expensive form of electricity generation due to its higher capital expenditure costs and lower generation efficiencies, compared to the traditional coal and gas-fired generation options. Implementation of policies aimed at supporting the uptake of renewable generation has added costs to electricity prices39.
35 Page 1, http://aglblog.com.au/wp-content/uploads/2014/03/No.40-Solving-for-X-FINAL.pdf 36 Page ix, Electricity Pricing Inquiry, Queensland productivity Commission, http://www.qpc.qld.gov.au/files/uploads/2016/02/EPI-DRAFT-REPORT-Final.pdf 37 Page 39, Electricity Pricing Inquiry, Queensland productivity Commission, http://www.qpc.qld.gov.au/files/uploads/2016/02/EPI-DRAFT-REPORT-Final.pdf 38 Page 37. Electricity Pricing Inquiry, Queensland productivity Commission, http://www.qpc.qld.gov.au/files/uploads/2016/02/EPI-DRAFT-REPORT-Final.pdf 39 Page 52, Electricity Pricing Inquiry, Queensland productivity Commission, http://www.qpc.qld.gov.au/files/uploads/2016/02/EPI-DRAFT-REPORT-Final.pdf
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Economic contribution of natural gas to Queensland WHAT IS THE ECONOMIC CONTRIBUTION OF THE GAS INDUSTRY TO QUEENSLAND? Each year the QRC releases annual economic contribution data which tracks the resource industry’s spending at the postcode level. The headline figures for 2014-15 are that the industry’s direct spending, and the flow on benefits from that spending, underpin one in six Queensland jobs and one in five dollars of spending in Queensland. More than 24,000 Queensland businesses benefit from supply contracts with the sector and almost 1,000 Queensland community organisations receive a direct contribution from resource companies.
QRC’s unique spending data is modelled by commodity group. The gas sector findings reveal the sector alone accounts for 5% of total Queensland employment and 7% of Gross Regional Product (GRP). The direct economic impact (primary data provided by members) equates to $10.6 billion spent on goods and services procured in Queensland from 3,587 local businesses and $5.3 billion in wages paid to more than 5,268 full time employees living in Queensland. The 2014-15 gas sector fact sheet is available at https://www.qrc.org.au/_dbase_upl/OilandGas_Queensland.pdf
The following chart demonstrates the significant increase in direct expenditure by the Queensland gas sector over the period 2011-15 with a peak in goods and services procurement above $12 billion in 2013-14. This high annual expenditure translates to broad financial and economic benefits to thousands of regional Queensland businesses.
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Source: https://www.qrc.org.au/_dbase_upl/OilandGas_Queensland.pdf
SOCIOECONOMIC BENEFITS OF NATURAL GAS In 2015, the Commonwealth Office of the Chief Economist reviewed the socioeconomic impacts of coal seam gas in Queensland40. The report concluded that it found that the economic impacts of gas development are consistent with other natural resource developments, with net positive impacts on employment, income, output, and government revenue. Broader community impacts, including social, demographic, and health outcomes, differ from other developments as a result of the geospatial dispersion of gas activities and uncertainties about potential environmental impacts.
The gas industry is bringing infrastructure and investment to several rural and regional districts, providing new jobs and strengthening and diversifying regional economies.
40 http://www.industry.gov.au/Office-of-the-Chief-Economist/Publications/Pages/Coal-Seam-Gas.aspx
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A 2013 study by KPMG shows that resources developments are not only making regions more prosperous, but also making their communities more stable and socially sustainable.
The study compiles key standard-of-living measures and basic demographic profiles of Australia’s nine main resources regions. It was undertaken for APPEA41 and the Minerals Council of Australia.
It is clear that resources developments are driving these regions’ economies. KPMG found that in the five years to 2011, the number of people employed in the resources sector across the sampled regions grew by 13,810 – or 50%. The number employed in all industries – including resources – grew by just 14%.
In that same period, the population of Australia’s resources regions had grown at 1.5% per year. This was the same as the national average but greater than the 0.8% for regional Australia more generally.
THE SURAT BASIN – A CASE STUDY OF REGIONAL DEVELOPMENT Queensland’s Surat Basin – the region with the most coal seam gas industry activity – is an interesting example.
In the Surat between 2006 and 2011:
the population increased by 3.2% the total number of dwellings increased by 8% students finishing Year 12 increased by 4.3% residents with tertiary degrees increased by 2%.
Despite the rise in population, the unemployment rate remained stable at about 4% – well below the Australian and Queensland averages.
The number of residents at the same address that they were living in five years previously increased by 3.3%. So despite an influx of new workers, there are strong indications that locals no longer have to leave the region to find work.
Over the five year period of the study, the retail trade sector has overtaken healthcare and social assistance as the region’s largest industry of employment. This rebuts claims that money being made in the region is not being spent there.
These figures indicate that the resources sector – which in this case is mostly the CSG industry – is making the Surat region more prosperous, stable and sustainable.
41 http://www.appea.com.au/industry-in-depth/technical-information/co-existence-and-health/onshore-gas-and- regional-development-in-queensland/
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THE SOCIAL AND LOCAL BUSINESS OPPORTUNITIES THAT GAS BRINGS TO REGIONAL QUEENSLAND Queensland’s coal seam gas (CSG) industry has been working with its communities since commercial production began in 1996.
Recognising its role as a long-term neighbour to many regional Queensland communities, the industry has made significant investments in establishing and maintaining its social licence to operate. Working alongside state and local governments, community organisations and landholders, Queensland’s CSG-LNG companies have actively identified areas of need and established social investment programs that both mitigate project impacts and ensure there are positive community legacies.
In Australian jurisdictions, there is strong industry support for the role of a ‘social licence to operate’, which is operating in a manner that aligns with community expectations and acknowledges that businesses have a shared responsibility with government (and, more broadly, with society) to help build strong and sustainable communities.
Queensland’s CSG-LNG companies have invested significantly in improving the social outcomes across:
- Health and Safety, through programs like the industry funded Surat Gas Industry Aeromedical Service - Education, through scholarship programs and the industry-funded Department of Education STEM program - Environment, through research partnerships that will help industry and landholders collectively understand the impacts that the industry has on the geology and innovative ways to significantly reduce these impacts.
Social issues The Gas Industry Social & Environmental Research Alliance (GISERA) have invested more than $14 million over the next five years to research the environmental, social and economic impacts of the natural gas industry.
In Australia, a number of significant CSG fields underlie agricultural land and will draw upon existing infrastructure and social services as well as investing in and upgrading infrastructure and services. Social impacts from CSG developments are likely to flow from:
the access and use of land and water resources competing demands placed on human capital and social infrastructure challenges to existing rural community amenities and ways of life.
GISERA’s research shows that gas companies recognise their role in regional communities extends beyond providing employment and local trade. Companies often choose to be
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involved to varying degrees in the provision of community facilities and services. Further, in the interest of workforce attraction, companies may choose to assist in delivering a higher level of service provision in areas of traditional government responsibility42.
Gas companies recognise the importance of working with the community and other stakeholders to support the liveability of the regional communities. Many communities have benefitted significantly from income, investment and employment The mix of positive and negative impacts from a new industry will ebb and flow through time. GISERA note that the many of the negative benefits may be concentrated locally, whereas the substantial benefits tend to accrue at regional scale43.
Case study – Arrow Energy and Road Safety
Road safety is a key industry issue, and young driver development has been identified by the Queensland Police Service (QPS) as a key area of focus in reducing youth-related road incidents in regional Queensland. A risk is the difficulty attaining the mandated 100 log book hours required in Queensland to attain a driver’s licence.
The award-winning Braking the Cycle program is a partnership between the QPS and Arrow Energy to assist disadvantaged youth establish safe driving practices when attaining a licence with supervised driving practice under the guidance of a community volunteer.
The program also addresses a significant skills and training barrier by recognising that attaining a driver’s licence is fundamental to accessing the employment and labour market. Assisting disadvantaged youths to attain their driver’s licence safely will assist them in finding local employment opportunities.
The program has been running in Dalby and Moranbah since 2013 and has currently assisted more than 50 young people attain their driver’s licence and has been acknowledged by the QPS as contributing to a 20 percent reduction in youth-related
road incidents in the Dalby region.
Partnering with communities and local business The QRC is an active participant in promoting local business engagement in the resources sector supply chain. QRC has a role in administering the Queensland Resources and Energy Sector Code of Practice for Local Content (2013) which is an industry-led, voluntary code with a rigorous reporting component. The code is underpinned by a shared responsibility framework bringing together QRC, the resources sector, government and suppliers to improve local content outcomes for Queensland.
The Queensland gas companies are active participants in local content policy development, with APLNG, GLNG, QCLNG and Arrow Energy being companies that have adopted the Code.
42 http://www.gisera.org.au/publications/factsheets/predicting-impacts.pdf 43 http://www.gisera.org.au/publications/factsheets/predicting-impacts.pdf
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A key component of the Code is an annual reporting requirement which reveals the expenditure of the gas sector by postcode. From this analysis QRC can determine the total goods and services purchased by the Queensland gas sector amounted to $14.7 billion in the last financial year, of which two-thirds was procured in Queensland and 98% was procured from Australian businesses as shown in the table below.
Table 1: 2014-15 Queensland gas sector procurement ($ millions)
In providing an explanation for the expenditure on overseas products the gas companies explained that this expenditure related to specialised products or services that was not available from Australian businesses.
Case study – Arrow Energy Community Care Services
After school hours care is a vital element to many working families (both within the CSG industry and the wider community) and, through a partnership between Moranbah State High School and Arrow Energy, families in Moranbah are now able to access this
important service through the Bright Kids program.
The partnership between Arrow Energy, Moranbah State High School and Simply Sunshine
Day Care was established in 2013 and was designed to meet the severe shortage of after-school hours care in Moranbah.
The program is being delivered under Moranbah State High School’s M-STEP program that seeks partnerships across a range of industries to ensure students are best placed to secure work, an apprenticeship or further study after graduating.
Twenty students in years 11 and 12 studying for an Education certificate gain valuable hands-on experience working in the Bright Kids after-school care program, while those studying the Business Support module assist through administration, marketing and
management of the program.
The now self-sustaining program delivers a small profit for the school’s P&C committee
and the program was a finalist in the 2014 Department of Education Showcase Awards for excellence in Industry or Community Partnerships.
QRC also acknowledges the great work being done in rural and remote Queensland on cardiovascular health through the Heart of Australia program run by local Brisbane Cardiologist Dr Rolf Gomes and Arrow Energy. For more on this program please refer to the APPEA submission (page 57).
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For a list of industry community investments, please see page 73 of the APPEA submission.
The Queensland Minerals and Energy Academy The Queensland Minerals and Energy Academy (QMEA) is a decade long industry led partnership between the Queensland resources sector represented by QRC and successive Queensland governments. Commencing with 18 regional schools the Academy has now grown to 35 schools and includes a number of schools in the downstream and upstream processing areas of the gas industry.
The success of this partnership is exemplified in the QMEA/LNG Secondary Schools Partnership Program based in Gladstone which is now in its fifth year of operation. This regional initiative represents a collaboration amongst QMEA, Australia Pacific LNG (APLNG), Gladstone LNG (GLNG) and Queensland Gas Company (QGC) and the four major secondary schools in Gladstone; Tannum Sands, Gladstone, Toolooa State High Schools and Chanel College. The program delivered by QMEA has responded to the needs of education and industry by increasing student and teacher understanding of the technology and processes consistent with the LNG industry while developing pathways for students to move into the resources sector and other science, technology, engineering and mathematical related careers.
Partnering with indigenous communities Since the inception of the new Coal Seam Gas (CSG) projects in Queensland, proponent companies have been striving to increase levels of Indigenous participation in the industry through jobs, training and business opportunities. CSG companies’ efforts in this area are driven by their corporate social responsibility aspirations, commitments contained in native title agreements with Traditional Owners, and a recognition of the strong business case for greater local Indigenous participation in the workforce and supply chains. QGC, Origin and Arrow, and major contractors such as Thiess, all have Reconciliation Action Plans that spell out commitments to respect Aboriginal and Torres Strait Islander culture and provide economic opportunities.
During the construction of the projects, CSG companies have built strong partnerships with local Traditional Owners through the process of managing and protecting cultural heritage. The companies have supported the development of Indigenous businesses to obtain work in their project supply chains, in areas such as cleaning, weed washdown, land management and civil construction. By working with major contractors such as Bechtel, which constructed the three LNG facilities near Gladstone, CSG companies have facilitated hundreds of employment outcomes for Indigenous workers. For example, during the construction of the QCLNG Project, QGC and its major contractors were successful in growing the number of Indigenous employees from 63 in 2011 to 358 by March 2015.
Since 2007, the QRC has been driving the Indigenous participation agenda in partnership with resource companies and government under the Memorandum of Understanding to Increase Indigenous Participation in the Queensland Resources Sector. Under this MoU, QRC and the Queensland Government fund a partnership process for industry and government stakeholders to collaborate and share best practice while striving towards greater Indigenous job, training and business outcomes across the industry as a whole. Coal Seam Gas companies have been active participants in recent years, collaborating to improve company processes for recruitment and retention of Indigenous workers, and supporting Indigenous businesses. A notable example of improved practice is the development of more
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sophisticated contracting models requiring contractors to prepare enforceable Indigenous Participation Plans, which is becoming standard practice within CSG companies. A recent example of collaboration under the MoU process is the co-funding by two CSG companies of a governance capacity-building program for Traditional Owner groups who have native title agreements with resource companies. All CSG companies share the desire to create a legacy of improved social and economic circumstances for Aboriginal and Torres Strait Islander people as a result of their participation in the industry.
Indigenous scholarship program Arrow’s ‘Go further’ Indigenous university scholarships program will have provided $1million over four years to Indigenous students by the end of this year.
Arrow launched the scholarship program in 2012 to support better educational outcomes for Aboriginal and Torres Strait Islander students.
Increasing participation in higher education is one of the key factors in closing the gap for young people in Indigenous communities. The scholarships are a complete educational package that also includes mentoring, tutoring and peer support networks so students have the best support to achieve their goals.
Some achievements through the program include a student from Warwick in south-west Queensland, who was inspired to become a paramedic after witnessing his father receive life-saving care, completed his Bachelor of Paramedic Science at Queensland University of Technology and plans to go on to study medicine; and another regional student who has just completed her Bachelor Degree and Graduate Diploma of Medical Sonographer through Central Queensland University.
Arrow is providing $250,000 for 2016 (the fourth year of the program) to support scholarships for Indigenous students at Queensland University of Technology, Griffith University, University of Queensland, University of Southern Queensland, Central Queensland University and James Cook University . Scholarships are valued at $10,000 per year for full-time students and $5,000 per year for part-time students and are open to students in any program.
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Queensland’s existing track record of co-existence between resources and agriculture
How is coexistence managed? QRC believes there are already appropriate legal mechanisms in place to ensure the rights of landholders are protected through a framework that encourages consultation, understanding of both businesses – the farming and the resources business and how impacts can be minimised. QRC also believes landholders should have an opportunity to negotiate conduct and compensation based on impacts. The Queensland approach is to work together to maximise benefits for landholders, to minimise the impacts and to make good, (which is to say to compensate), for any remaining impacts. QRC believes this system strikes the right balance.
Queensland is one State at the centre of the coexistence debate. In 2010 the Queensland Government responded to landholder concerns with the increase of gas exploration in the Surat Basin through the establishment of the Land Access Framework. Landholders were concerned because this was an area which had not previously seen much exploration activity, so the industry was unfamiliar. Also exploration was starting to occur in areas of mixed farming and irrigated cropping areas, where the landholdings were smaller, so more landholders were covered by these exploration programs. Finally, gas exploration tenures by their nature are much larger than coal tenures, so you had a relatively large number of landholders affected.
As the resources below the ground belong to the Crown (or the State), the Land Access Framework implemented in 2010 provided for the following: A requirement for a conduct and compensation agreement (CCA) to be agreed before access to land could occur – so there is an upfront agreement; A new dispute resolution mechanism, culminating in the Land Court; and Legislated heads of compensation – including accounting, legal and valuation costs.
Under the previous LNP Government in Queensland the new Regional Planning Interests Act was introduced. This relatively new piece of legislation provides for landholder ‘consent’ for certain resources activities to take place in areas that have been identified in the regional plan (for example the Darling Downs Regional Plan) as either Priority Agricultural Areas (or Strategic Cropping Land) or Priority Living Areas or Strategic Environmental Areas.
Through the Regional Planning Interests Act and the Land Access Framework, QRC feels there is significant landholder legal protection. In fact, the two legal frameworks now in place are already somewhat duplicative.
Queensland’s land access process has been in place for a number of years and most stakeholders can see that it works. It’s not perfect, but there are over 5,000 agreements in place and only a small handful have required a dispute process or resorted to litigation in the Land Court. Since October 2010 there have been 16 cases related to minerals and coal and
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only 2 cases for gas.44 That’s a total of 18 disputes over almost 5 years or approximately 0.03 percent of cases.
In the Queensland Gasfields Commission 2014-15 Annual Report, the Chairman was supportive of the progress the industry has made over the years in reaching coexistence with landholders. He said –
“With the expansion of the onshore gas industry’s footprint across regional Queensland, some 2,200 landholders now have conduct and compensation agreements in place with one or more operators. While this business to business relationship still faces challenges and opportunities, landholders coexisting with the onshore gas industry have, collectively, been compensated in excess of $200 m in the five years to 2015 – money that has been re-invested in rural businesses and regional economies across Queensland.”45
Working with the agriculture industry The Agforce Landholder CSG Support Project began in 2011 and has provided support to over 5,000 landholders. The project provides valuable information and guidance at no cost to landholders or other interested community members on how to negotiate with resource companies and achieve coexistence through working with the company to minimise impacts and get the most benefit to increase productivity of the farm.
Agforce is the peak agricultural body in Queensland representing beef, sheep and grain producers. The Agforce Landholder CSG Support Project began as an initiative funded by the Queensland Government and it has since grown to become a joint initiative between AgForce Projects (AgForward), the Queensland Government (Department of Agriculture and Fisheries and the Department of Natural Resources and Mines), the Australian Petroleum Production and Exploration Association (APPEA), QRC and the Gasfields Commission Queensland (GFC).
Last year the Landholder CSG Support Project delivered 38 workshops and six technical field days which included topics such as groundwater, biosecurity and advanced negotiations.
Landholder feedback from the workshops:
“Good reinforcer for me. Practical advice is appreciated”. Injune CSG session March 2015
“The key to any negotiations is knowledge, planning and knowing where to contact sources of assistance and this is what these workshops give us”. Taroom CSG session
“Good information. Great forum to discuss with landholders who have experience with the processes”. Injune CSG session August 2015
“Am happier and more confident than before but there are still a lot of questions and concerns (unknown future) and we need more information as it comes”. Chinchilla CSG session October 2015
44 Data provided on request to QRC by the Department of Natural Resources and Mines. 45 http://www.parliament.qld.gov.au/documents/TableOffice/TabledPapers/2015/5515T1146.pdf
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The Queensland Gasfields Commission
As well as the appropriate legal protections already in place, Queensland has a very effective Gasfields Commission which is an independent statutory body with powers to review legislation and regulation; obtain and disseminate factual information; advise on coexistence issues; convene parties to resolve issues; and make recommendations to government and industry. They have proven over and over again that they are a trusted source of information, advice and leadership.
Recently the Gasfield’s Commission released on their website a series of landholder real life examples of their dealings with resource companies. Not all of them are glowing examples of coexistence, however this open forum of sharing experiences through the Commission and the Agforce Landholder CSG Support project provides the industry and other landholders with valuable insight of how it can work and how it isn’t working and needs to be improved.
QRC would encourage further investigation by the Inquiry on these real life stories available on the Gasfield’s Commission website.
Real examples of coexistence
Working to reduce impact on the land Three innovative drilling technologies – pad, pitless and deviated drilling – have been successfully trailed at Arrow Energy’s Theten to demonstrate how the footprint of CSG infrastructure on landowner properties can be reduced.
In the pad drilling trial, multiple deviated wells were drilled from one surface location, demonstrating that up to eight wells can be concentrated on one pad, covering on average 200m x 100m. This allows greater distance between well pads (up to 1.5km), and reduces Arrow’s operational footprint by 50 percent compared with a single well grid layout.
In the pitless drilling trial, wells were drilled without open pits: drilling waste was stored in a portable, temporary tank as opposed to a pit dug in the ground. When drilling finished, the tank and waste were removed from the area which significantly reduced operational impact.
In the deviated drilling trial, wells were drilled at an angle of greater than 60 degrees as opposed to a traditional vertical well drilled at zero degrees. The benefit of deviated drilling is the ability to minimise operational footprint on the surface, while still accessing coals seams below cropping land.
Providing water to Condamine farmers One recent example that was highlighted in the local news was the benefits provided to landholders around Condamine in the Surat Basin that are irrigating dryland country for the first time from extra water desalinated and distributed from the region's coal seam gas (CSG) industry. The Local agronomist Nikolauz Fritz said –
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‘the extra water has really ramped up agricultural production in the area. He says it has increased cotton, grains and even lucerne farming in the district …it shows what water can do.46
The APPEA submission also provides a real life example where CSG water is being used to grow crops (see page 60 of the APPEA submission).
Partnering in growing local businesses Another example is the coexistence arrangement between Surat Basin landholder Peter Thompson and Origin Energy. Peter Thompson has spoken out many times about he has turned what some people believe a negative into a positive for his family and his business. In an article in the Australian in October 2013, Mr Thompson says –
‘CSG is a window in time that is creating an opportunity to rejuvenate agriculture - you can look at it that way rather than put your head in the sand and wish it would go away.’ He then goes on to say that ‘The compensation frees up the operation to make a farm more efficient and so many people against it don't realise that.’
Mr Thompson has said it wasn’t easy in the beginning, however the money he is earning for the 40 gas wells on his 7500ha property is being poured back into the region. He was able to employ two young families, update farming equipment, purchase a neighbouring property and fund a new scheme to attract young people back to the land.47
Regional Mayor welcome the development and employment opportunities Mayor of Western Downs (Surat Basin) - “ industry had spent millions of dollars upgrading local infrastructure and, for some primary producers, providing an alternative income.
"I know some landowners who are receiving up to $150,000 a year in royalties," Cr Brown said.
46 http://www.gasfieldscommissionqld.org.au/news-and-media/landholders-benefit-with-treated-groundwater-from- gas-industry.html 47 http://www.theaustralian.com.au/national-affairs/good-times-flow-from-well-of-discontent/story-fnaxx2sv- 1226747210575
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Robust and Reliable Regulatory Framework
QUEENSLAND’S REGULATORY FRAMEWORK – FIT FOR PURPOSE The Queensland Government’s website seems to place real emphasis on CSG regulation as almost an end in itself. In describing the safeguards for CSG it says: “This has resulted in some of the toughest regulations, frameworks and approval conditions for resource projects that: deliver safe and high standards of environmental responsibility protect water supplies protect farming land provide fair conditions for landholders and establish strict compliance regimes.”
No doubt this regulatory focus reflects a degree of community disquiet around CSG operations and the speed with which the industry has grown in Queensland. Activist groups justify their calls for a moratorium on industry activity by seeking to paint CSG as an industry of environmental vandals who largely operate in a regulatory vacuum. In this often a highly- charged public debate, the vast array of regulations applied to CSG can be seen as a reassuring safety net.
QRC expects that the Inquiry may receive submissions that make a range of assertions about the nature of regulation for the CSG industry. A recent article quotes NSW’s Chief Scientist and Engineer, Professor Mary O’Kane who conducted a technical review of CSG:
“CSG is a complex issue which has proven divisive chiefly because of the emotive nature of the community concerns”, and Professor O’Kane also notes that: “...misinformation is fuelling many CSG concerns”.
To illustrate the extreme polarisation of the CSG debate in NSW, the same article contrasts the CSG industry’s view, (quoting QGC’s then Managing Director, Derek Fisher):
“This is probably the most regulated industry in Australia and has had so much light shone on it that it’s sunburnt – but this has not been enough for our critics”,
with the views of Lock the Gate President, Drew Hutton who boldly asserts:
“There’s no political will to exercise the full regulatory requirement... This is a self-regulated industry”.
QRC is confident that the facts will amply demonstrate that Queensland’s CSG industry is far from self-regulated. It is important that the Inquiry understand the emotive aspects of public debate against which many of Queensland’s regulations have been developed.
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How do Queensland’s laws and regulations measure up? Acknowledgment of Queensland’s world-class regulation of the onshore gas industry is featured in the IEA’s 2015 World Energy Outlook Report48. The report builds on the IEA’s earlier 2012 work, Golden Rules for a Golden Age of Gas49. The New York Times editorial described the IAE’s work as: “Golden Rules for a Golden Age of Gas,” from the Paris-based International Energy Agency… should be required reading for regulators and the industry — and for anyone who cares about energy, the environment and climate change.”50
Rule one says the IEA is: ‘measure disclose and engage.’ Queensland has been well served by the creation of local consultative committees as part of the onshore gas industry’s project approval processes.
Rule two: ‘watch where you drill.’ The IEA noted that the provisions of the ‘Regional Planning Interests Bill’ create limitations around towns, strategic environmental areas and priority agricultural land. What’s more, Queensland’s overlapping tenure regime considers the geology too.
Isolating wells is listed as the third golden rule. Queensland’s regulated well completion standards, combined with structured audit and compliance activity deliver world-class standards.
The fourth rule, according to the IEA is about water, in particular, the treatment of water. The natural gas industry has relied on lower quality groundwater for water use and treats waste water to the highest possible standards before making it available for environmental flows or beneficial use such as irrigation.
Rule five: ‘minimise air emissions.’ Queensland, once more, is leading global standards. The integrity of well completion standards combined with the purity of our state’s gas reserves has resulted in reduced emissions and increasingly, coal mines are working hand-in-hand with onshore gas producers to make the best use of any methane produced.
Rule six focusses on ‘cumulative regional effects’. In this respect, Queensland is served by the Office of Groundwater Impact Assessment that carefully models groundwater and reports annually against projections.
Finally, the IEA’s seventh rule is ‘consistently high environmental performance’. Queensland’s highly adaptive management has seen highly-skilled officials develop a responsive system. Regulation is overseen by a dedicated compliance unit, with stakeholders encouraged to raise concerns through the Queensland Gasfields Commission.
The IEA report not only commends our regulations, it paints a relatively positive picture for the future prosperity of the gas sector. Queensland and Australia have all the tools we need to build a prosperous future based on the prudent development of our natural resources.
48 http://www.worldenergyoutlook.org/weo2015/ 49 http://www.worldenergyoutlook.org/goldenrules/ 50 http://www.nytimes.com/2012/06/10/opinion/sunday/natural-gas-by-the-book.html?_r=4&ref=todayspaper
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Queensland legitimately lays claim to world-class regulatory practices. We are home to a sophisticated and socially responsible natural gas industry. It is an industry increasingly well- placed to deliver long-term prosperity and growth to Queensland and Australia.
QRC offers the further detail on the regulation of the industry relating to the environment, water, health and safety and taxation in Attachment 2.
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Attachment one: Queensland’s LNG projects
LNG – A THREE-STEP PROCESS Step One: Liquefaction51 The process of turning coal seam gas (CSG) into liquefied natural gas (LNG) starts with piping the CSG to the LNG facility. On arrival at the plant, the gas is chilled to approximately -161 degrees Celsius. This involves three refrigeration circuits using propane, ethylene and methane. Each step progressively lowers the temperature of the gas until it reaches the desired temperature and turns into a product known as Liquefied Natural Gas.
Step Two: Storage The LNG is then pumped into large, insulated storage tanks, with an inner tank to keep the LNG cold, and outer walls over one metre thick. As it warms, some LNG will begin to vaporise. These vapours are captured and then returned to the chilling plant where they are re- liquefied. The LNG remains in these tanks until ready for shipment. Gas is sent to industrial and domestic users
Step Three: Transport Australia’s LNG is exported around the world, primarily to Southeast Asia and Europe, before being re-gasiffied. It travels in large, purpose built, double-hulled ships. The shipping process is safe. Across the industry, LNG ships have travelled without a major incident in port or at sea for over 50 years.
QCLNG BG Group is completing a two-train, 8.5 million tonnes per annum (mtpa) capacity liquefaction plant to produce LNG from natural gas sourced in coal seams52. The QCLNG plant is sited on a 270 hectare site on Curtis Island, near Gladstone, on the Queensland coast. The plant is expected to reach plateau production of 8 mtpa during 2016, resulting in around 120 shipments of LNG per year.
LNG production from Train 1 and loading of the first LNG vessel commenced in December 2014. The first cargo departed Curtis Island in January 2015.
LNG is produced when natural gas is chilled in three successively colder refrigeration processes (propane, ethylene, methane) until it reaches a liquid state at -162°C. The process reduces the gas by around 600 times its original volume making it easier to transport economically over vast distances.
LNG is pumped into insulated tanks, each 10 storeys high, before being loaded onto specially designed LNG vessels and transported to our customer’s receiving terminals.
51 http://www.aplng.com.au/pdf/factsheets/TheLNGprocess.pdf 52 http://www.bg-group.com/files/pdf/qgc/2481_qgc-bg_ausprofile.webfinal.pdf
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A 540 kilometre, large-diameter underground pipeline network linking BG Group’s natural gas fields in the Surat Basin to the two-train LNG export facility on Curtis Island was developed as part of the QCLNG project. This comprised a 200 kilometre gas collection header and a 340 kilometre export pipeline.
For some years, QGC has met around 20% of Queensland’s annual demand of approximately 600 terra joules (TJ) of natural gas per day. Over the next few years, QGC will be ramping up production in order to keep the two trains full at Curtis Island. At plateau production, the two trains will consume around 1,200TJ per day. This is equivalent to double the entire Queensland domestic market.
APLNG Australia Pacific LNG is already the largest producer of CSG in Australia, supplying gas to power stations to produce lower emissions electricity; major industrial customers, homes and businesses in South East Queensland. The Project will see an increase in domestic gas production to further supply gas-fired power stations, major industrial customers and residents throughout Queensland.
It'll be a source of major investment through to 2020, creating around 10,000 jobs throughout the life of the Project, increasing local skills and boosting regional economies.
Importantly Queensland will have a new, long-term gas processing and export industry that generates significant benefits at regional, state and national levels. And, although LNG export is a relatively young industry in Australia, the Project is making use of the experience of ConocoPhillips as a joint venture partner who already owns and has been operating an LNG facility in Darwin since 2006.
CSG on the other hand, is not a new industry for Australia. The Project's joint venture partner, Origin, has been working in regional Queensland for nearly 30 years and in the field of CSG for close to 20 years.
The APLNG Project consists of three key parts:
1. Further development of Australia Pacific LNG's gas fields in the Surat and Bowen Basins in south-west and central Queensland. 2. Construction of a 530km gas transmission pipeline from the gas fields to an LNG facility on Curtis Island off the coast of Gladstone. 3. An LNG facility on Curtis Island off the coast of Gladstone, with the first two gas production trains processing up to 9 million tonnes per annum.
GLNG Santos GLNG is a pioneering venture that will produce natural gas from Queensland’s coal seams and convert it into liquefied natural gas (LNG) for sale to world markets53. It involves ongoing gas field development in the Surat and Bowen Basins, a 420-kilometre gas transmission pipeline, and the construction of an LNG plant on Curtis Island, near Gladstone.
53 http://www.santosglng.com/the-project.aspx
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Santos GLNG is led by Australian company Santos, in partnership with three of the world’s leading energy companies – PETRONAS from Malaysia, Total from France, and KOGAS from South Korea.
Santos GLNG is leading the way in making Australia a world-leading gas producer, and will be worth billions of dollars to the Queensland economy over many decades.
Santos has been producing natural gas in Queensland for more than 50 years and gas from coal seams for more than 16 years. Santos is working to build a future industry for Queensland, which is set to make the state one of the largest LNG exporters in the world. Over 90 percent of all gas used in households throughout Queensland comes from coal seams54.
54 http://www.santosglng.com/media/pdf5131/sg033___about_glng_fact_sheet_v5.pdf
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Attachment two: Queensland’s world-class environmental regulatory framework
The environmental regulatory framework which controls unconventional gas development in Queensland is both substantial and multifaceted due to the range of relevant international, federal, state and local regulations and policies that apply. The cornerstone of the environmental regulatory process is the environmental assessment and approval framework, which occurs in different forms through the Environmental Protection Act 1994 (Qld) and the State Development and Public Works Organisation Act 1971 (Qld) in Queensland and the Environment Protection and Biodiversity Conservation Act 1999 (Cth) at a federal level.
With respect to the management of industry’s interactions with the environment in Australia, the key regulatory mechanisms managing impacts in Queensland and across Australia are summarised below.
QUEENSLAND’S ENVIRONMENTAL REGULATORY FRAMEWORK Queensland has a comprehensive regulatory framework for ensuring a true balance of economic development and conservation of the environment for the benefit of present and future generations.
The foundation of this regulatory framework are the Environmental Impact Statement (EIS) processes under the Environmental Protection Act 1994 (Qld) (EP Act) and the State Development and Public Works Organisation Act 1971 (Qld) (SDPWO Act). This process aims to maximise the benefits of economic development for the people of Queensland and eliminate or minimise potential adverse environmental and social impacts.
Environmental Protection Act The Environmental Protection Act commenced in 1994, and is the framework for environmental protection and management in Queensland. While other Acts, such as the SDPWO Act also have environmental assessment frameworks, the EP Act deals with the largest and most diverse array of environmental assessments, from the small end of town e.g. sewerage treatment plants to mining and other industrial developments.
Every resource development in Queensland (including mining, petroleum and unconventional gas projects) requires both a tenure approval from the Department of Natural Resources and Mines, and an environmental authority. The environmental authority can be granted either by the Department of Environment and Heritage Protection (EHP) under the EP Act or conditioned by the Coordinator General under the SDPWO Act.
In order to be granted an Environmental Authority under the EP Act, a project must determine firstly the environmental values that the project may impact on, likely impacts that may arise during the course of the operations, and actions the company can take to avoid, mitigate, minimise or offset those impacts.
There are three different types of applications for a new EA; standard, variation and site- specific. ERA standards have been developed for low risk activities. An ERA standard consists of eligibility criteria and standard conditions. A standard EA application is made for eligible RAs that are subject to an ERA standard. An eligible ERA is defined in s.112 of the
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EP Act as an ERA that complies with the eligibility criteria in effect for the activity and that is not carried out as part of a coordinated project.
A variation application is made for an EA where the applicant is seeking a variation to the standard conditions and where all proposed ERAs are eligible ERAs. A site-specific application is made where any of the proposed ERAs are not eligible ERAs and the EA is to be subject to conditions which are specific to the site. Model conditions which have been developed for specific industries will be applied where appropriate and/or any other conditions which are required or considered necessary or desirable by the administering authority.
In the instance of site-specific applications (e.g. the bigger development projects e.g. greenfield mines or coal seam gas projects or new/emerging technologies) a company must go through a far lengthier process now as an Environmental Impact Statement process. The Department of Environment and Heritage Protection provides a good summary of the EIS process for major [site specific] mining and petroleum projects as:
Major mining [site specific] and petroleum projects can be required to undergo an environmental impact statement (EIS) process preceding, and additional to, the draft environmental authority stage. EHP has published trigger criteria for mining and petroleum projects that would usually be required to undertake an EIS under the Environmental Protection Act 1994.
The EIS process under the Environmental Protection Act 1994 can only be used for mining or petroleum/gas projects. … However, in certain circumstances an EIS can be required under the State Development and Public Works Organisation Act 1971… whether or not the proposed project is related to mining or petroleum or gas.
The EIS process should identify environmental values and propose corresponding environmental protection commitments. The EIS process also allows a greater level of public scrutiny. At an early stage, terms of reference are developed that provide the minimum expectations for the scope of the EIS. EHP publishes generic terms of reference to assist the development of project-specific draft terms of reference. The draft terms of reference are made available for a minimum period of 30 business days so that stakeholders and any member of the public can review the document and comment on what values, impacts and commitments should be considered in the EIS.
When the proponent has produced the EIS, it too is made available for a minimum period of 30 business days for stakeholders and the public to review the document, and to submit comments on the quality of the proponent’s assessment and commitments. In this way, everyone can have added confidence that best efforts have been made to identify all significant impacts and propose all reasonable and practicable measures to protect the environment before EHP develops the draft environmental authority.
Public notices are used to advertise the start of the public review period for each terms of reference or EIS. Public notices are placed on the EHP web site and in the Courier-Mail and newspapers circulating in the area of the proposed project site.
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Some people are also notified by mail, including: people who hold land on, or adjacent to, a proposed tenure; a registered native title body corporate or claimant, or a representative Aboriginal/Torres Strait Islander body; and the relevant local government authority.”55
Further to this, the Department of the Environment and Heritage Protection released a Regulatory Strategy in 2014 aimed at focussing on outcomes rather than prescription in regulation.56
This has been relevant to the approach taken by the Queensland Department of Environment and Heritage Protection on the reform taken to focus the Model Mining Conditions and Streamlined Model Conditions for Petroleum and Gas on outcome based conditions. Fundamentally, prescriptive process-based conditioning of development neither supports development nor effective environmental protection. The primary business of government should be ensuring that regulation operates in the ‘high-risk sphere’, and should not limit the prerogative and innovation of industry to address matters where there is low risk of significant environmental impacts.
QRC continues to support the use of the hierarchy of risk minimisation as a tried and tested mechanism to manage significant environmental impacts, and believes that any assessment and approval regulation should have this built into the framework.
State Development and Public Works Organisation Act 1971 Under the SDPWO Act, proponents of a project with one or more of the following characteristics may apply to have their project ‘declared’ a 'coordinated project' by the Coordinator-General under the SDPWO Act:
• complex approval requirements, involving local, state and federal governments; • significant environmental effects; • strategic significance to the locality, region or state, including for the infrastructure, economic and social benefits, capital investment or employment opportunities it may provide; and/or • significant infrastructure requirements.
In addition, these two Acts are supported by a range of legislation and requirements which addresses in detail the protection of specific environmental values. This regulatory framework includes the Water Act 2000 (Qld) which focuses on the management of water resources, the Nature Conservation Act 1992 (Qld) and the Vegetation Management Act 1999 (Qld).
QRC believes that the current regulatory requirements are a suitable framework for the assessment of unconventional gas development applications.
Water Act 2000 (Qld) Further to the assessment processes detailed under the EP Act and the SDPWO Act, the Water use and entitlements are already heavily regulated through Queensland
55 http://www.ehp.qld.gov.au/management/impact-assessment/eis-processes/index.html 56 https://www.ehp.qld.gov.au/management/planning-guidelines/policies/pdf/regulatory-strategy.pdf
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environmental approval processes, including the extraction of water from rivers and aquifers, incidental take from groundwater and disposal of excess water.
In Queensland, water impacts are regulated under the Water Act 2000. “The Water Act 2000 (Qld) is the primary legislation for planning, allocating and managing water in Queensland. The legislation establishes a system for the allocation and use of water within sustainable limits in Queensland and requires the development of water resource plans for river basins and aquifers.57
However there are a number of different legislative mechanisms which regulated water in Queensland. A snapshot of the legislation can be seen in the figure below.
Source: Queensland Government, Water in Queensland, 2012
The Water Act 2000 provides an exemption from the requirement to gain authorisation under that Act for watercourse diversions associated with resource activities if:
the impacts of the proposed diversion are assessed as part of a grant of an environmental authority (EA) for the activity, and the EA is granted with a condition about the diversion of the watercourse.
This streamlined approach is available for mining proponents seeking to establish a diversion on a mining lease.
Mining proponents wishing to seek approval under the Environmental Protection Act for a watercourse diversion will be required to include details of the proposed design of the diversion as a part of their application documents for the EA. Public notification of the proposal may be required and certifications by a Registered Professional Engineer of Queensland are required at various stages.
57 Queensland Government, Water in Queensland, 2012
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Model conditions for diversions are integrated with other model mining conditions. Like other conditions on an environmental authority, conditions imposed in relation to watercourse diversions must be complied with.
Commonwealth legislation Environment Protection and Biodiversity Conservation Act 1999 (Cth) The Federal Government regulation to protect the environment is specifically focused on protecting Matters of National Environmental Significance (MNES). The primary legislative instrument that gives effect to the protection of MNES is the Environmental Protection and Biodiversity Conservation Act 1999 (EPBC Act) which establishes a need for environmental assessment and approval of actions that are likely to have a significant impact on a MNES.
The nine MNES are:
world heritage properties national heritage places wetlands of international importance (listed under the Ramsar Convention) listed threatened species and ecological communities migratory species protected under international agreements Commonwealth marine areas the Great Barrier Reef Marine Park nuclear actions (including uranium mines) a water resource, in relation to coal seam gas development and large coal mining development
Under the EPBC Act, actions that have, or are likely to have, a significant impact on a matter of national environmental significance require approval from the Australian Government. The Minister will decide whether assessment and approval is required under the EPBC Act.
In addition to this process, in the context of impact to water resources, the Australian Government established the Independent Expert Scientific Committee on Coal Seam Gas and Large Coal Mining Developments (IESC) on 1 July 2012. Queensland, New South Wales, Victoria and South Australia have all signed on to the National Partnership Agreement which requires State Governments to refer CSG or coal mining developments that are likely to have a significant impact on water resources to the IESC. Under the Agreement, the States must take into account the advice of the IESC in the decision making process “in a transparent manner”58.
Section 131AB of the EPBC Act also requires the Commonwealth Environment Minister to seek the advice of the IESC in assessing large coal mining developments where the development is likely to have a significant impact on water resources.
Queensland also already has in place a protocol for referral of applications for coal seam gas and large coal mining projects which may have a significant impact on water resources to the Independent Expert Scientific Committee.59
58 http://www.federalfinancialrelations.gov.au/content/npa/environment/csg_and_lcmd/NP.pdf 59 Available at: http://www.ehp.qld.gov.au/management/impact-assessment/pdf/protocol.pdf
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BEYOND COMPLIANCE – CASE STUDIES Continuous improvement in rehabilitation techniques A QRC member had compliant waste disposal conditions under their Environmental Authority which required the company to remove all drilling wastes from site and dispose to landfills. However, changes in regulatory conditions enabled the company to apply drilling wastes directly to land. This change allowed the company to develop a series of trials testing various land spreading / application methods across broadacre pastoral lands and on well pads.
The trials conducted by the company aimed to develop a successful and repeatable method and to show the beneficial re-use of drilling muds were appropriate for use in rehabilitation of the land around a well pad. This has provided an additional source of water for the disturbed well pad site, and helps improve the rehabilitation process which in cases of disturbed agricultural land, can assist in the return to arable land.
To date, the trials have shown that the re-use of drilling wastes are beneficial for rehabilitation. Further to this, the trials have shown that when all wastes are contained and re-used within the business the waste disposal costs are more than halved.
This leading practice work has resulted in a reduction in safety risks on site, given that it has reduced the reliance on trucking the waste to landfill sites, and therefore reducing the amount of time that trucks are on road. Further to this, the improved practice has reduced waste production and has reduced the amount of waste sent to landfill, allowing the company to first reuse the product in an environmentally safe way for rehabilitation purposes.
Gas Industry Social & Environmental Research Alliance The Gas Industry Social & Environmental Research Alliance (GISERA) was formed between CSIRO and Australia Pacific LNG and now includes QGC. The aim of GISERA is ensure that their research is informed by and of benefit to the broader community and industry.
GISERA is undertaking integrated, regional, systems-based research that addresses the impacts of gas developments, drawn from an evidence-based understanding of regional processes and issues.
In the first instance GISERA is exploring issues in Queensland related to five topics:
• groundwater and surface water • biodiversity • land management • the marine environment • socio-economic impacts.
GISERA stands out from previous investments in natural gas research. Its regional and public good focus is critical, because the effects of natural gas development accumulate beyond the boundaries of permits held by any one developer. GISERA seeks to provide a whole-of- industry focus, using a multi-developer approach to research the impacts of the industry. This is crucial to providing a coherent conduit for knowledge that can inform future regulation and monitoring of natural gas developments around Australia.
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An initial investment of more than $14 million over the next five years will fund research into the socio-economic and environmental impacts of the natural gas industry. This initial focus will be directed at Queensland's CSG-LNG industry but will have potential to expand to address impacts and opportunities associated with different gas industries and geographies. GISERA is unlike previous investments in CSG because of its regional and public good role and its desire to provide a whole of industry focus.
GISERA’s research stretches across a number of areas, such as surface and groundwater management, greenhouse gas footprint and socio-economic impacts and opportunities, and includes research into agricultural land management which aims to identify landscape/development configurations that minimise disruption to farm businesses, maximise the opportunities from co-benefit from the co-location of CSG development and agriculture, and minimise the likelihood of development-based risks such as erosion and invasive pests.
Some recent examples of research conducted by GISERA include a project looking at potential soil damage and its management during CSG development.60 This project looked at the establishment of coal seam gas infrastructure will see the development of an extensive network of access tracks, pipes and thousands of wells on agricultural land, requiring the use of heavy equipment. A primary goal of rehabilitation following disturbance of this type is the return of land to its original condition. Disturbance during establishment, operation and removal of gas infrastructure will result in changes in the physical, chemical and structural properties of soil. Changes in the biological properties of soil are also anticipated (e.g. grass/weed seed banks). Designs for coal seam gas infrastructure should account for these risks and seek to minimise damage, both by avoiding damage and minimising it where it is unavoidable. Processes for rehabilitating unavoidable damage have yet to be fully described. This research will provide insight into these issues via literature review and on-farm case studies. This project found that there “the examination of soil chemical properties indicated that these were affected to a limited extent by the establishment of CSG infrastructure. However, a general requirement is for careful manipulation of sodium- rich subsoil, and avoidance of soil mixing and layer inversion.”61
Another GISERA project looked the comprehensive geochemical and isotopic characterisation of groundwater and formation water within the proposed CSG extraction area prior to development, and from there developing protocols for monitoring aquifers and formation water over the time period of extraction and post-development. Finally the project proposed a set of criteria for ongoing assessment of the monitoring program and implications for aquifer interactions. The practical aim of the project was to provide a means of monitoring the progress and impact of large scale pumping and to inform potential modification of the pumping process to minimise potential impacts on spring- fed or baseflow ecosystems.62
A full list of GISERA’s research topics are available on the website at: http://www.gisera.org.au/research/research_progress.html.
60 http://www.gisera.org.au/research/agprojects/Without-a-trace.pdf 61 Final Report: Page 8 http://gisera.org.au/publications/tech_reports_papers/GISERA-Agland-5-Final-Report- 150807.pdf 62 http://www.gisera.org.au/research/waterprojects/Geochemical-baseline-monitoring.pdf
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HEALTH AND SAFETY The Qld CSG to LNG industry is especially proactive as a collective industry body in driving and promoting its expectations and requirements for safety performance. The main Operator companies have been working together over the past 5 years on developing joint initiatives and driving better performance. It is agreed that safety is not to be used as a competitive factor, and that we all need to share and work together. An example of an initiative is the jointly funded aeromedical service in the Surat Basin, that is also used to support community requirements.
More recently the industry has independently developed an industry safety collective forum that includes the Operator companies as well as the contractor companies. The initiative is known as Safer Together, and is coordinated by not-for-profit company supported by the member fees of some 82 members, and growing. Safer Together is led by the CEOs/industry leaders of the member companies. It has a number of working groups including: Competence & Behaviour; Land Transport; Process Safety; Safety Leadership; Rig Site safety. The cross industry initiatives already released include industry light and heavy vehicle safety requirements. The objective of the Safer Together group is to work collaboratively to achieve better safety outcomes for the people who work in the industry.
The actual safety performance in the industry has improved markedly over the last 5 years, with the key performance indicators showing that the Qld CSG industry is now safer than the Australia oil and gas industry average. This is some big achievement, given the industry is relatively young, and one that the group is very proud of. The safety performance of the oil and gas industry in Australia is one of the best performing industry sectors, significantly outperforming agriculture and building construction.
All of the Operating companies vet the safety management practices and record of the companies that actually carry out the bulk of the works in the field. This is known as the pre- qualification check and is standard across the sector. All companies have regular checks in place of safety practices and compliance, as well as safety inductions and training for all personnel in the field. The regulator also carries out regular checks and audits. Any significant safety related incidents are required to be reported promptly to the regulator. Indeed the regulatory framework governing the industry is one of the strictest in the world.
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