Natural gas is widely considered to be the cleanest and most environmentally acceptable fossil fuel. There are well understood and proven benefits of CSG vs coal in reducing greenhouse gas emissions. In fact, by some estimates, gas-fired generation emits less emissions than coal-fired generation.
AGL is 50% owner and operator of the Galilee Gas Project, which encompasses Authority to Prospect (ATP) 529P. In 2008, we acquired our interest in the tenement from Galilee Energy Ltd. Galilee Energy continues to hold the remaining 50% interest in the tenement.
Coal seam gas (CSG), is simply natural gas extracted at low pressure from coal. It is natural gas trapped in the structure of coal seams, rather than in the porous sandstone reservoirs which contain conventional natural gas.
Natural gas extraction has been part of Australia’s energy landscape for more than a century and offers Australia a low-emission alternative to coal when used to generate electricity.
Like conventional gas, CSG can be used as an energy resource domestically in household stoves, heaters and hot water systems. It is also used for a range of industrial processes and for electricity generation. The main difference between CSG and conventional gas is that conventional gas typically has a higher content of ethane, propane and butane, while CSG is mainly methane.
In homes and businesses across eastern Australia, about one-third of natural gas currently being used comes from CSG, while in Queensland it’s nearly 100%. The CSIRO has estimated eastern Australia’s CSG resources to be more than 250 trillion cubic feet, enough to power a city of 1 million people for 5000 years.
CSG will help transition Australia’s energy industry to a lower carbon emission footprint. Electricity generated from CSG produces around 50% less greenhouse emissions than conventional coal-fired electricity generation.
Formed as part of the same natural processes that produce coal over millions of years, CSG primarily consists of methane, which is an odourless and colourless gas.
CSG is found adsorbed to the surface of coal within coal seams. Underground water pressure holds the CSG within the coal’s structure. The gas can be released by drilling into the coal seam and removing water and reducing the pressure within the coal seam. This releases gas from the coal seam, and the gas then flows into wells and up to the surface to be processed and dried for sale to customers.
Early exploration in the Galilee Basin was undertaken by the Queensland Government to establish potential geological resources. That exploration identified the existence of extensive deep coal measures across a wide area.
In 1992 the Queensland Government issued an exploration permit (the original ATP 592P) to Enron Australia. Enron conducted seismic surveys and drilling across a very large area (much larger than the current ATP 592P), in partnership with Galilee Energy. On Enron's collapse the permit transferred to Galilee Energy Ltd, which undertook further drilling and conducted a pilot production test at Rodney Creek on Glenaras Station in 2004.
In late 2008, AGL drilled five pilot production wells on the Glenaras Station. In 2009, AGL built an 359ML CSG water holding dam for the anticipated water production for the pilot. Production testing started in December 2009 and is still continuing.
AGL has also acquired approximately 540km of 2D seismic data (in 2009), and drilled eleven test wells across the tenement (during 2009, 2010 and 2011). Ten of these test wells were 'coreholes', and one a stratigraphic well, to increase our understanding of the underlying geology; eight of the eleven have been plugged and abandoned while three of the coreholes drilled in 2011 were completed with steel casing and pressure cemented in place (similar to a production well) in order to be used, potentially, as a production test well. For more information see the Gas Exploration Process Fact Sheet.
There are several stages in exploring for CSG:
All exploration activities are tightly regulated by the Department of Environment and Heritage Protection (DEHP) and the Department of Natural Resources, Mines (DNRM).
Seismic exploration is a non-intrusive method which uses sound waves to create an image of the structures beneath the Earth's surface, similar to how a medical ultrasound works. Geologists and geophysicists then interpret this data for possible resources and a plan is developed for exploration drilling. More about Seismic Exploration can be found here.
Core holes and stratigraphic holes
Core holes recover rock samples from below-ground and provide stratigraphic data about an area. Scientists examine the core samples and stratigraphic data to determine the resource potential of the area. More about Core and Stratigraphic holes can be learned here.
Pilot production testing
Pilot wells are test production wells drilled to establish whether the identified gas resource in a particular area will flow from the target coal seams and at what rate. Pilot tests are designed to establish the deliverability of the gas to the surface. Monitoring is also undertaken to understand any potential impacts of production on groundwater aquifers.
Hydraulic fracturing is a tightly regulated operation that has been used safely for more than 50 years to increase the productivity of a gas well by improving the flow of gas.
The process involves pumping a fluid charged with proppants such as sand down a well at high pressure to force passage ways into the coal seam. The proppants keep the passage ways open once the pressure is released to improve the efficiency of the well.
Fraccing fluid is typically between 98-99% water and sand with a very small amount of highly diluted additives included.
The use of the so-called BTEX chemicals (benzene, toluene, ethylbenzene and xylenes) is banned in Queensland and NSW.
Most of the additives used are commonly found in domestic products such as toothpaste, baked goods, ice cream, food additives, detergents and soap.
It is important to understand that these additives are used in such tiny doses, and in such diluted forms, that AGL believes the use of these additives pose minimal or no risk to the environment or to groundwater resources. This is validated by AGL's groundwater monitoring programs.
AGL's commitment to this project is long-term. Our exploration activity is expected to continue on a similar, low level basis for at least another five to seven years before any decision is made to move to development of full scale production.
AGL's pilot production test on ATP 529P has the first gas produced within the Galilee Basin. It will be some time before we can confirm the extent of the gas resource and the viability of extraction in the area, as well as understand the sub-surface aquifers. During this period, AGL will continue to work with landowners, local suppliers and the community to ensure its operations are sympathetic to the region's farming and other land uses.
All AGL's activities are subject to tight regulation, which includes:
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