contentsNSW CSG Industry Caught In Paradox: Santos
Land access is critical to providing gas companies with the scientific data to ensure aquifer protection and service a gas demand that is set to triple in the next 10 years, Santos' Eastern Australia Vice President James Baulderstone told the Australia Gas Conference in Sydney on 31 October.
The CSG industry is still in its infancy in NSW, with a State Parliamentary Inquiry into its effects – though this has not stopped hundreds of millions of dollars of investment into CSG in NSW, by Santos and Dart Energy especially.
CSG companies are being attacked for lack of transparency, not dealing with landholders properly and endangering aquifers as the industry proliferates in both NSW and Queensland. Yet without accessing the land they can't get the data to ensure CSG operations do not harm aquifers.
Using an example of a Santos exploration test well currently operating in the Gunnedah region developed with full agreement of the local landholder, Baulderstone said the well enables the company to obtain important scientific information on the underground aquifer system and any possible interconnections, water quality and quantity, gas composition and permeability data.
"All of this information is being provided to the various government regulatory bodies and also independent reviews such as the Namoi Water Catchment study currently underway", he said.
"I want to stress – that without obtaining this information, Santos is unable to provide the necessary scientific rigor to demonstrate to the community that future commercial gas development could be done without harming the region's precious water resources and what the surface development plan would look like.
"On one hand the anti-CSG lobby and politicians friendly to their cause challenge our industry to prove that it can operate safely and sustainably, and on the other hand they are now attempting to stop the very work that is required to establish this fact.
"I would like to again reiterate that Santos will undertake no development in NSW that has the risk of damaging the underground aquifer system or is not able to co-exist with traditional land use. We will continue to seek constructive dialogue and reasonable engagement from all interested groups to collectively work towards this end."
Once its $924 MM takeover of Eastern Star Gas is completed in December 2011, Santos, which has supplied around 20% of eastern Australia's gas demand for over 40 years will gain control of NSW's largest CSG reserve, with 1216 PJ of 2P reserves and 2238 PJ of 3P reserves.
He said Santos has over 10,000 PJ of gas, a base from which it plans to "accelerate production". He predicts eastern Australia's gas demand will triple over the next 10 years with expanding power generation needs and demand from at
least five LNG trains already under construction in Queensland. These already-sanctioned five trains, and more that are planned, represent a "quantum change" in eastern Australian gas demand, he said.
While he said many of the concerns raised about CSG are "false or exaggerated", he conceded that the concerns about the impact of CSG on traditional agriculture and the impacts of both the quality and quantity of water available for other uses are genuine.
While subsurface material is the property of the state, Baulderstone said Santos only operates on land it is welcome on. The company had thus far signed about 520 agreements with about 200 landholders in the Surat Basin.
Baulderstone confirmed that Santos had invested $1.5 B to date in NSW and plans on spending a further $500 MM over the next three years in drilling an additional 50 exploration test wells.
"The information generated by these wells will provide the rigorous scientific data to support our current modelling that a commercial development can be done safely, environmentally sustainably and in beneficial co-existence with current land use", he said.
He said that even if the development of Santos' CSG business in NSW was a third of the size of its Queensland project, $2 B would be added to NSW State revenues with the creation of over a 1000 direct jobs.
There would also be a flow-on impact of this investment, creating thousands of additional associated jobs within the community and other industries, he said, with the majority of this investment and jobs to be in regional and rural areas.
Baulderstone's talk came days before Independent MP Tony Windsor made his support for the Federal Government's
controversial mining tax conditional on the government agreeing to use hundreds of millions of dollars raised by that tax to fund bioregional assessments of CSG's impact and the Commonwealth taking greater control of the industry. This included flagging the possibility of it taking over State leases – which experts say will be a constitutional nightmare and assumes the states aren't already doing their job properly.
During the same week, the Nationals launched their CSG 'blueprint', which also warned against Windsor's proposed changes, saying that such amendments to the Environmental Protection and Biodiversity Act would be "too broad in
scope and likely to impose yet more red tape and bureaucracy on landowners". The Australian Farmers Federation also rejected Windsor's proposed federal gas takeover but supported the Independent's calls for a scientific fund to study CSG's impacts.
The Nationals said that, managed properly, CSG has the potential to "revitalise parts of regional Australia, delivering a new economic boom", but could be a social and environmental "disaster" if poorly managed. CSG must stay away from
residential areas, Nationals' federal leader Warren Truss said, while prime agricultural land must be protected from activities that destroy its capacity to deliver food security.
In its submission to the NSW Parliamentary Inquiry into CSG, Santos said the surface footprint of CSG extraction is small and temporary. During construction phase, well construction normally requires one hectare for approximately one year, then decreases to approximately 25 m by 25 m, or 0.07 ha for theirproductive life of approximately 20 years. At the end of their productive life, they are plugged with cement and the land is rehabilitated, in accordance with government approvals, guidelines and regulations, with no surface impact remaining.
Surface well facilities on Santos projects are generally spaced at one every 200 to 300 ha of surface, dependant on the
characteristics.
Adding to the company's drive to inform the corporate world as well as the public of its side of the CSG debate, Santos Chief Executive David Knox told the Australian Institute of Company Directors on 3 November 2011 that he found it
ironic that it is because CSG can co-exist with agriculture that there is even a debate about this issue.
He said the effect of their CSG operations on aquifer levels has been minimal to non-existent. For example, in 14 years of commercial CSG production in the Fairview field there has been no change in aquifer levels.
In November, Santos also launched a Water Portal which makes all the company's Surat and Bowen basins' water testing results available for public viewing. He noted that in Queensland, the company is actually topping up aquifers.
As part of an initiative with URS and CSIRO to supplement Roma's water supplies, Santos is set to inject around 10 ML of treated CSG water per day into the aquifer. In total, it will supply the equivalent of more than 50 years worth of water
consumption to the town. Knox said it is also likely to lead to an improvement in the quality of Roma's water supply.
Knox said that over the past 100 years, groundwater pressure in the Gubberamunda sandstone aquifer has been declining due to urban, industrial and stock watering usage.
Addressing the American Chamber of Commerce in Australia (AMCHAM) in August 2011 in Sydney, Knox said Santos has made significant investments in reverse osmosis water treatment to ensure water produced can be beneficially used.
"For example, we are using water from our gas production to recharge the Roma aquifer in a project with the CSIRO. We are also using treated water from our operations to irrigate millions of indigenous eucalypts and for forage crops", he said.
Santos took on critics of CSG in September 2011 by showcasing its Mount Hope Station Irrigation Pilot Project in Queensland, which Santos is conducting with the station's landowners Leon and Ree Price (pictured), that will see a state-of-the-art pivot irrigation system use treated CSG water to irrigate high protein forage crops.
