Kay Park Well at AGL's Camden Gas Project
About Natural Coal Seam Gas
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.
AGL’s gas operations team uses various techniques to increase the flow of gas from its wells, including the techniques of horizontal drilling, under reaming, and fracture stimulation. By increasing the rate of production for each well, these techniques allow AGL to minimise the number of surface locations required.
Why is CSG important to NSW?
In NSW, more than 95% of the state’s gas requirements are met by importing gas from other states. This means that NSW is not in a position of strength when it comes to the question of security of gas supply.
This position will become untenable in the next few years. This is because many long term gas contracts are set to expire and gas suppliers are likely to be attracted to the higher prices which will be paid to send gas to the various LNG export projects now being established. This means, quite simply, that NSW could be left with critical gas supply shortages.
However, there are hundreds of years worth of natural gas trapped in coal seams in NSW. The CSG industry can play a major role in securing energy supplies for NSW.
Safety and Sustainability
Safety and Sustainability is a core AGL Value. AGL is committed to the health and safety of its people, the communities in which we operate and to the protection of the environment.
All AGL employees, contractors and service providers must comply with our safety standards. Operational and well safety are no exceptions to our stringent focus, and we closely monitor and maintain all facilities.
Since 2006, AGL has published an annual sustainability report so that our stakeholders can gain an understanding of the social, environmental and economic challenges and opportunities that face the organisation and the industry, and the steps we are taking to address these responsibly to enhance the long-term value of our business.
AGL’s sustainability performance has been recognised domestically and internationally by independent experts. In fact, we are the only Australian energy company on the Dow Jones Sustainability World Index.
You can learn more about our report here.
Land Access
Most of AGL’s operations occur on land owned by others. AGL has an entire team dedicated to maintaining good relationships with these landholders.
AGL does not enter land without the owner’s permission. While AGL does have compensation principles in place, we evaluate each situation on a case-by-case basis, and we deliver appropriate compensation payments.
Currently, AGL pays:
- Initial disturbance cost;
- Document preparation fee upon signing access agreement;
- Percentage of land value for infrastructure; and
- Ongoing rental for use of land area impacted.
AGL also commits to:
- Comply with any special entry requirements;
- Mimimise disturbance to people, property, flora, fauna, livestock, soil, vegetation and water;
- Drive only on established or agreed tracks and roads;
- Leave gates as found or as instructed; and
- Obtain the prior consent of the landholder if any fences, fixtures, machinery or equipment on the land need to be temporarily relocated to carry out the investigations and surveys and reinstate such items without unnecessary delay.
We treat the land and the landowner with the courtesy and respect AGL knows each landowner deserves.
Coexistence
Many myths and outright untruths are spread about CSG. One of the most common misstatements is that establishing a CSG industry will somehow crowd out or sterilise other useful land uses.
This is wrong.
In fact, CSG can comfortably co-exist with other land uses and users. The Camden Gas Project in south western Sydney has been operating alongside a range of other land uses, including equine, residential and agricultural, for more than a decade.
In the Hunter, AGL operates CSG exploration activities near wine-producing grape vines. In fact, in July 2009, AGL purchased the Spring Mountain vineyard in Broke as part of the Hunter Gas Project CSG exploration program to demonstrate that gas exploration and extraction can successfully co-exist with vineyards. AGL conducts its exploration in consultation with renowned winemaker Brian McGuigan to ensure that exploration operates in harmony with a high quality grape growing vineyard that produces about 300 tonnes per annum of white wine grapes for winemaking.
AGL's CSG business operates with a low visual profile and a minimal suface footprint. Once a well has been drilled and natural gas production begins, it is often difficult to see the operating well in a field.
Water Management
During the CSG extraction process, water is produced from the micro-fractures and pore spaces of the coal seams. These seams are typically 200 metres to 1,000 metres below the surface. When it is pumped to the surface, this water is generally referred to as produced water, associated water or extracted water. Studies have shown that this water is tens of thousands of years old, unlike water located in the shallow aquifers used by agriculture which typically has an age less than 10 years.
There is no evidence that shallow aquifers will drain during CSG production. There are many low permeability rocks located above the coal seams that are not disturbed by the CSG drilling or extraction process and shallow water resources are effectively separated from deeper groundwater found in the coal seams.
All gas wells drilled by AGL are fully cased and pressure cemented when drilled to ensure that all aquifers are sealed off and do not leak groundwater upwards or downwards.
AGL also installs a range of groundwater monitoring networks to monitor both water levels and water quality in our project areas.
A recent update on AGL’s water studies, presented by AGL’s Manager Hydrogeology, John Ross, can be viewed here.
Hydraulic Fracturing
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 programs.
Typically these coal seams are hundreds of metres deep and physically separated from surface groundwater by impermeable layers of rock. The CSG production process ensures that the beneficial upper aquifers are isolated from the coal seams far below the surface.
Regulation and Legislation
The exploration and production of CSG is a highly regulated industry. To gain approval for its projects, AGL must obtain approval from many governmental agencies and comply with both Commonwealth and State legislation. AGL seeks to exceed these requirements in all of its operations.
The construction and operation of a CSG project is primarily regulated by the following legislation:
All AGL gas projects must undergo a rigid Environmental Assessment process. An Environmental Assessment is a formal submission to the Department of Planning. It is the Government’s way of assessing the project to ensure it meets strict NSW Government standards and that it will not have significant environmental impacts.
An Environmental Assessment is made up of:
- A formal description of the project
- An assessment of the likely effects of the project on the physical, social and economic environment
- Identification of measures to be implemented to mitigate impacts
- An evaluation of alternatives and justification for the project
- An assessment of the cumulative impacts of the project
- Specialist studies undertaken to address a range of environmental issues associated with the proposed works, including an assessment of noise, hazard and risk.
AGL's current CSG Project Environmental Assessments are available in full on our websites.
In April 2010, the NSW Government (http://www.planning.nsw.gov.au) called for input into its strategy for the CSG industry. AGL has called for greater community consultation requirements, stronger water management regulations and a code of conduct to set minimum industry standards for CSG projects in New South Wales.
AGL’s complete submission can be read here.
For additional industry information, visit the links below:
Learn more about AGL’s projects by visiting our project websites below: