Tuesday, 5 February 2013

No longer such a gas - Part 3

This comprehensive report has been written by Sandi Keane available in its full length at independentaustralia  and presented at this site in an abridged three parts.
Many of the areas slated for CSG production are directly above the Great Artesian Basin, one of the world’s largest natural underground water reservoirs covering about 22 per cent of Australia’s land mass.
Dr Vincent Post is a hydrogeologist and chief investigator at the National Centre for Groundwater Research and Training. He warns that water levels may not be renewable — a key argument by the anti-CSG farming lobby.
Political critics are also rallying around residential landholder rights, rising gas prices, scarcity of supply and health concerns from fugitive methane emissions.
The CSG Golden Goose – which was supposed to herald a new energy source for the domestic market as well as a lucrative export opportunity – has, unfortunately, taken flight to distant shores where LNG sales return fatter profits. Unsurprisingly, the Australian Energy Regulator’s report in December that LNG exports will drastically increase domestic gas prices, brought little cheer at Christmas.
With gas prices predicted to double due to dwindling supplies, angry voters will be joining beleaguered manufacturers and farmers in demanding government action.
In New South Wales, where current supplies of CSG from Queensland will soon be hoovered up by the huge LNG plants at Gladstone, panic has set in. According to an Australian Financial Review report, AGL’s solution to the crisis is expansion of their Camden operation into residential areas.
Horrified Camden residents faced with the prospect of the land under their homes honeycombed by hundreds of gas wells will get little sympathy from the federal government or opposition. Both endorse massive expansion of the CSG industry as the key to price and supply problems as outlined in the Energy White Paper.
Beyond the issues of water and food security, landholder rights and rising gas prices, health concerns about methane emissions have highlighted the huge experiment that is being played out on the Australian public.
Reports suggesting a tax bill that could run into billions of dollars through carbon tax liabilities for “fugitive” emissions will send further ripples through an already nervous share market.
With one contentious issue after another lining up like dominoes, this year’s Federal election is shaping up as a potential game-changer.

Previous related discussions



  1. Interesting about the expected increase in domestic gas prices. The series of articles is interesting and seems to have been well researched, Dale. There are a lot of question marks surrounding the LNG/ CSG export industry and I imagine it is like how a lot of people feel about nuclear energy - "sounds good in theory provided it's not in my back yard or suburb.."

  2. I would encourage viewers of this discussion to follow the link to the National Centre for Groundwater Research and Training
    There are a lot of resourses on this web site, there is also listed training days.
    One page of interest to this discussion is on Aquifers and Aquitards

  3. Nuclear energy and methane / NG? Both good IMHO. The reason that industrial buyers of NG (and household customers, like me) are now getting very nervous about forward availability and prices is all because of emerging reports on how new export pre - sales / contracts are mopping up product; hardly a sign that export markets for our gas are under a cloud? Check out recent international reports from miners and petroleum product producers concerning their great fears re growing risks in Africa. And the ME, central and south America are hardly stable sources, so our industry isn't dead yet.

    Our governments, both federal and state, will have to absolutely get on with proper, long - term solutions for the real issues concerning farmers, and energy companies. They won't be resolved by lobbyists from either side. Personally, I consider the mess associated with dredging, and the operation of both existing and new industrial complexes under construction in Gladstone to be a separate issue. Whether suddenly (and dramatically) a new multi - government / industry epiphany resulted in a total change of planning, aimed now at making internal Australian utilisation and upgrading of NG the basis for planning, rather than export, the issues confounding (many) farmers would remain the same. Actually they might be worse, as there could be many more pipelines, but the issues of whether aquifer degradation / depletion etc will occur, or be effectively safeguarded, would be the same. But timeframes would change enormously, and claims relating to broken government commitments would be ginormous, to put it mildly.

    Cheers al

    1. Al, I have something that contradicts your comment that "hardly a sign that export markets for our gas are under a cloud"
      From the Financial Times the article Japan’s Tepco signs gas deal with US
      The US is producing that much gas that it has now entred into the export market. Japan's largest utility company Tokyo Electric Power has signed a large contract to buy US gas at a price less than a quarter of what gas has been selling for in SE Asia.
      This could be a game changer for the viability of Australian LNG exports.
      If CSG companies are forced onto a market at a lower return & if I'm correct in that royalities are determined after costs are taken out, then the State Govt's may loose out in a big way over the royalities they believe will cover budget black holes.

  4. I thought Dale might have posted this as a separate discussion but he's a busy man. It's all inter-related, as is the current mess in Gladstone. The gas companies put pressure on the Bligh government and the Bligh government put pressure on its senior public servants who didn't have any chance of properly studying the EIS implications. From the Courier Mail investigation series:
    PREMIER Campbell Newman said he backed calls for the Crime and Misconduct Commission to probe the former Bligh Government's approval of two of the State's biggest CSG projects.
    "It's very rare that I would every agree with anything my former opponent in City Hall days, Mr Drew Hutton, would say but on this occasion I support what he has suggested," Mr Newman said.
    He said if Mr Hutton, president of the anti-CSG group, the Lock the Gate Alliance, had not referred the matter to the CMC, he would have.
    "I believe that the companies concerned are companies that will do this right," Mr Newman said.
    "I have no concerns at this time about anything they are doing but in terms of the (approval) process and what may or may not have happened, well Drew Hutton is right to raise those concerns.
    "I share those concerns and I think the CMC should be looking at it."

    Earlier, The Courier-Mail reported that two of Queensland's largest resources projects were approved by public servants panicked by a Bligh government order to sign off on them quickly.
    Public servants at the two departments tasked with giving the official go-ahead to Queensland's new coal seam gas industry were blindsided by Bligh government demands that two of the gigantic projects be approved within weeks of each other. See


  5. And there’s more: A COAL seam gas company seeking approval for a $16 billion extraction project warned the Bligh government in 2010 it would simply walk away if it did not get approval within two months.
    A May 2010 email to then-treasurer Andrew Fraser from his director-general, Ian Fletcher, recounted the warning, made in a conversation with QGC's senior vice-president David Maxwell.
    The approval was granted weeks later.
    The revelation adds weight to claims that there was a rush to approve the projects, even though critical information was not available.
    The Courier-Mail on Monday revealed one public servant said he was given three days to draft hundreds of conditions on the QGC project.

    In the email to Mr Fraser, Mr Fletcher said he was told by Mr Maxwell there was a "drop-dead date" of June 2010 for the approval of the QGC LNG project.
    "After that customers will begin to go away and the company will not continue its investment," Mr Fletcher said.
    "One or two weeks tidying up is possible but six months or anything like it is not."
    Landowners in the Surat Basin demanded an assurance from the government that it could stop the CSG projects if they were an unacceptable risk.
    The Basin Sustainability Alliance chairman David Hamilton said his group had been saying for years that the pace of the rollout was alarming and major CSG projects were being approved when there was still a serious lack of understanding of the long-term impacts.
    The approvals process now appears to be headed to the Crime and Misconduct Commission

  6. Sad fact / reality check. If these NG projects all get closed down, Whither (as in 'where to', not dessication!) Australia? The 'Sovereign Risk' issues associated with the MRT machinations which many fear were / are going to weigh us down terribly as a base for safe investment, would amost pale into insignificance.

    A quick scan of any of the reliable financial pages will quickly show anyone that in Australia, we currently have a real dearth of locally sourced capital for major investment. As a country, we are hugely 'risk averse' at present. Many would say 'And rightly so!', but we need big investment, and export income, to keep our future dreams alive. For reasons that are discussed widely not only here, but in the media at large, farming (especially dairy and beef) is in dire need of massive, overdue support and strong planning to get back onto the sound footing on which it should be, but sadly isn't. So what else do we have to fill the cashflow gap, now and medium term? Tourism? Financial Services? Educational Services .......? All good, but we obviously need much more.

    I think there are analogies here with the Climate Change imbroglio. Those of us who are genuine anthropogenic CO2 - driven climate change sceptics get terribly, and rightly furious when The Climate Industry tries to position us as 'climate change deniers'. I am not the only one who gets very frustrated when opponents of CSG pigeonhole me as unaware / unconcerned of the genuine safety, environmental and economic issues. My position is that I firmly believe they should be dealt with openly and honestly to find workable solutions. If a CMC investigation into what may have been very dodgy dealings is necessary to fix the foundations so that development can proceed with confidence, bring it on!
    Cheers al.

  7. Sue Al but it all goes back to what I've said all along - they should have studied one proposal properly and approved it if they were satisfied if environmental concerns were properly addressed, both in the Surat/ Bowen Basin gas fields and at Gladstone. Then they should have kept a proper check to see the environmental safeguards were properly enforced and carried out an appropriate investigation if obvious evidence showed this was not the case.
    All being well with the one initial project, they should then have considered subsequent applications taking into account the liklihood of cumulative impacts on such things as water tables, bore levels, the health of Gladstone Harbour, safety and health aspects.
    Unfortunately it is now abundantly clear this was not the case, the approvals were rushed, we are seeing the results.

  8. Er, 'Sue Al" ? No, I meant "Sure Al..."


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