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Presentation CSG Forum – Desert Channels & RAPAD Barcaldine – Sat 21 April 2012 Longreach – Sun 22 April 2012.

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Presentation on theme: "Presentation CSG Forum – Desert Channels & RAPAD Barcaldine – Sat 21 April 2012 Longreach – Sun 22 April 2012."— Presentation transcript:

1 Presentation CSG Forum – Desert Channels & RAPAD Barcaldine – Sat 21 April 2012 Longreach – Sun 22 April 2012

2 Contents Who we are and where we operate What we do What is coal seam gas What is exploration and production Brief outline of the water baseline study What lies in the future

3 The basin forum - Who we are The forum is an informal group of coal seam gas exploration companies which formed about 18 months ago Each has petroleum exploration tenements in the Galilee Basin There are eight founding companies An additional two companies have joined the group Initially the group formed to jointly fund a baseline water assessment

4 Membership 1.AGL Energy Ltd 2.Blue Energy Limited 3.Comet Ridge Limited 4.Exoma Energy Limited 5.Galilee Energy Limited 6.Origin Energy Limited 7.Queensland Energy Resources Limited 8.WestSide Corporation Limited 9.Resolve Geo Pty Ltd 10.Pangaea Galilee Pty Ltd

5 Where we are – the Galilee Basin

6 What we do The group has commissioned RPS to undertake a Baseline Water Study of the Galilee Basin Once complete the group will review further options for increasing the shared knowledge on water Increasingly the group is also engaging with stakeholders such as RAPAD, MITEZ and AgForce

7 What is coal seam gas? Coal seam gas is natural gas, used by power stations, industry and consumers throughout the state Coal seam gas is dominantly methane [CH 4 ] The gas is adsorbed onto coal surfaces and held in place by hydrostatic pressure Gas comes to the surface once that hydrostatic pressure is released by producing water

8 Over 95% of the gas produced in Queensland is coal seam gas [730 TJ total, of which 690 TJ is CSG] Queensland gas consumption is approximately 650 TJ/day Comprising about 50% power generation, 40% major industrial use and 10% retail consumption CSG comprises about 30% of total Eastern Australian gas production What is coal seam gas (contd)?

9 The State Government releases land for competitive bids under the petroleum legislation These bids are assessed based on the suitability of the proposed work program and the capability of the applicant The successful tenderer must then apply for environmental approvals prior to the grant of the exploration tenure The proposed work program must be completed by the company in accordance with prescribed conditions How do companies obtain tenure?

10 What is exploration? Each company is currently undertaking exploration, which may involve drilling and seismic The purpose of exploration is to confirm the presence of coal, the quality of the coal and the gas it contains, and to expand our understanding of the basin This includes our understanding of the hydrogeology of the basin Initial drilling will not be focussed on producing any water or gas to the surface When exploration results are encouraging, appraisal programs, which may include pilot wells, are undertaken to obtain further information on production potential

11 What is appraisal? Preliminary exploration is followed by the appraisal stage of exploration This activity continues to occur on the exploration tenure For coal seam gas explorers, appraisal generally involves drilling additional wells to commence a pilot production test Only one project is currently undertaking appraisal activity in the Galilee Basin During pilot production, water is pumped to the surface to reduce the hydrostatic pressure which holds the gas onto the coal surface During this phase, important information which will inform future development is obtained on: – water quality and quantity and – gas producibility

12 It is not possible for a company to gain the necessary certification of reserves for a production lease without undertaking pilot tests on the exploration tenure Following this activity a company would hope to have sufficient information to meet the requirements of a production tenure application (petroleum lease) Production cannot occur except on a Petroleum Lease This process requires significant additional environmental approvals prior to the grant of the petroleum lease What is production?

13 Future development ? Depends on the results of exploration and testing Would require significant supporting infrastructure, including pipelines, compressor stations, water handling facilities Would require upgrading of exploration permits to production permits Would require significant environmental approvals We want to achieve a development framework that can benefit the community as well as achieve individual company goals

14 PROVEN POSSIBLEPROBABLE PROSPECTIVE RESOURCE CONTINGENT RESOURCE Geological review Core-holes Geological review Seismic surveys (Volumetrics?) Core-holes (Gas in place?) Core-holes Pilot wells (Gas & water productivity?) Development wells Field development Exploration Phase Production Source APPEA CSG Reserve Development – Key Steps

15 Ecology: CSG and the Land CSG Then CSG Now The Berwyndale field in the Surat Basin has been developed more recently, and demonstrates how CSG proponents work closely with landholders to optimise the layout of infrastructure to minimise the impact on their farm productivity. Lauren field in the Surat Basin was developed the way it was, during the drought years, in a manner that fitted both the landholder and the CSG company at the time. Source APPEA

16 Cultural Heritage We have a Cultural Heritage Duty of Care under the Aboriginal Cultural Heritage Act 2003 Each CSG company works with local Cultural Heritage or Native Title groups (as appropriate) in relation to ensuring no Cultural Heritage harm in relation to our activities Source AGL

17 Area (000 sq km) Gross Farm Product* ($Bn) Petroleum Wells A Case Study: Wells and Agriculture can co-exist *Source: ABS State and Terr Stat Indicators for 2009/10; 2009 Texas Agriculture Statistics, USDA Source APPEA QldNSWTexas 1, , ,556

18 What is the Galilee Basin? The Galilee Basin is a geological basin comprised of Permian- Triassic aged sediments It is overlain by a younger geological basin, the Eromanga Basin The Great Artesian Basin is a hydrogeological basin which includes the Eromanga Basin and the highest aquifer within the Galilee Basin (Clematis Sandstone)

19 The Great Artesian Basin Source: DERM Queensland Source: Galilee Energy

20 RL R L Mackunda Fm Winton Fm Allaru ms Wallumbilla Fm Cadna-Owie Fm Hooray ss Birkhead Fm Westbourne Fm Adori ss Hutton ss Moolayember Fm Clematis ss Dunda beds Rewan Fm Betts Creek Beds Colinlea ss Aramac coal measures Jochmus Fm Jericho Fm Koburra TroughManeroo Platform Eromanga Basin Galilee Basin * Source: Adapted from RPS Water Study Source Galilee Energy Stratigraphic relationship

21 Many misleading usage estimates reported in media. Actual industry average CSG water production estimate for the Surat Basin projects is 75,000 ML/year. Estimated Total GAB Use CSG Water Production Annual GAB Recharge Current Surat Basin Groundwater Use Surat Basin Surface Water UseTypical APLNG Water Production Average Water Production for CSG Industry in Surat Source APPEA

22 The coal targets in the Galilee Basin are stratigraphically much lower than the commonly used aquifers Galilee Basin coal formations are generally not used as aquifers We have a sound understanding of the geometry of the basin Further exploration (seismic and drilling) will continue to add to basin understanding Some Key Points

23 Our target compared to many water bores Source Exoma Energy

24 Source WestSide Corporation Well completion schematic

25 Potential Impact of Hydraulic Fracturing Activities Hydraulic Fracture Stimulation is a carefully designed, closely monitored and a highly regulated activity. Fracs designed to be contained to coal measures Vertical growth is confined by mudstones Normally coals are significantly deeper than aquifers Fracture propagation assessment undertaken with microseismic monitoring Gel Frac – Water Guar Gum, common household chemicals and sand Water frac – water, salt, sand Frac fluids recovered (& monitored) and collected in tanks or lined ponds. Source Origin Energy

26 Well construction key points Well construction is robust and is subject to regulation Wells are specifically designed to isolate the aquifers; we have no interest in producing water from any formation other than the coal itself In November the Government issued a Code of Practice for Constructing and Abandoning CSG wells

27 Individual water quality information interpreted Definition of hydrogeology of Eromanga and Galilee Basin sediments in the study area Identification of data gaps Identification of key monitoring bore locations The study will be released in May/June It will form the basis for continued monitoring, exploration and modelling Where the baseline study is up to

28 Precautionary Regulation and Science to Manage Impacts Project approval subject to extensive state and federal conditioning Both levels of conditioning have live operational feedback through mandatory reporting Ongoing federal oversight subject to independent review by DSEWPaC CCS Water Monitoring and Management expert review panel and Independent Expert Scientific Committee on Coal Seam Gas and Large Coal Mining Development Industry has initiated multiple high level research alliances to ensure access to independent national expertise: Gas Industry Social and Environmental Research Alliance (GISERA) – CSIRO Centre of Coal Seam Gas – University of Queensland Industry / Altimera / AGOS partnership – land surface movements University of New South Wales – centrifuge permeameter laboratory Source Origin Energy

29 Summary While the issues of water management in the Great Artesian Basin have been long understood, the level of science and regulation brought to bear in response to Coal Seam Gas is unprecedented. Both industry and independent analyses have concluded that the impacts are manageable, and relatively small compared to existing use and natural processes. Source Origin Energy

30 Closing CSG is transforming Australia – cleaner and abundant energy source – national scale economic impact 21st century technology – low environmental impact – global centre of excellence in Australia Community will share the benefits – relationships built on respect, trust and honest engagement Source APPEA

31 Example: Production near Moura Example: Pilot well near Glenaras

32 Thank you Example seismic Example drilling rig for exploration


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