CSG’s substantial contribution to economic and regional development is expected to grow strongly over the next decade.

Australia’s CSG supplies already make a significant contribution to powering industries and households. CSG already comprises about 90 per cent of Queensland’s gas production and the industry is forecast to become a substantial contributor to NSW energy production. CSG companies are undertaking appraisal and early-stage development work in several traditional coal-mining regions of NSW, as well as in the Gunnedah and Clarence-Moreton basins in northern NSW.

LNG

CSG also promises to underpin a valuable new export sector in Queensland – four liquefied natural gas (LNG) projects based on CSG are planned for development in Queensland. These projects will pipe the gas from the CSG fields of inland Queensland to the port city of Gladstone. Plants at Gladstone will chill CSG to -161°C, liquefying the gas so that it contracts to fill just one six-hundredth of the space occupied by its gaseous form. The LNG can then be exported to Asian markets by purpose-built tankers.

The Queensland Government expects these projects will create around 18,000 jobs, increase State Domestic Product by 1%, and generate around $1 billion per annum in state revenue.

There are four major Queensland CSG-LNG projects at various stages of development. Three of these schemes - Queensland Curtis LNG, Gladstone LNG and Australia Pacific LBG - are under construction. A final investment decision has not yet been made for the Arrow LNG project, but its proponents are actively developing gas fields and pipelines and are marketing their gas to potential buyers.

Fraccing is a well established, tightly regulated technology that has been used safely for 65 years in more than 2 million wells worldwide.

Hydraulic fracturing or “fraccing” is the stimulation of fractures in a rock layer in order to increase the flow of gas or other substances.

In CSG production, hydraulic fracturing or “fraccing” is sometimes used to improve the flow of gas. This technology has been safely used to enhance oil and gas recovery for many decades and is now used in about 90 per cent of new US gas wells. Other industries also use fraccing - artificial geothermal energy production relies on fraccing and even water bores are sometimes fracced to increase water production.

A fraccing fluid is pumped down the well at high pressure to produce tiny cracks in the coal seam (or other reservoir). “Proppants” such as sand or tiny ceramic beads are used to hold the fissures open and improve the flow of gas or oil. Fraccing fluid is typically more than 99% water and sand with a very small amount of chemicals included.

In the US, BTEX chemicals (benzene, tolulene, ethylbenzene and xylenes) have been used in fraccing fluids. But these chemicals are not used in Australian fraccing operations. Indeed Queensland has banned the use of BTEX chemicals in fraccing.

Chemicals used in Australian fraccing operations include sodium hypochlorite and hydrochloric acid (both used in swimming pools), cellulose (used to make paper), acetic acid (the active part of vinegar) and small amounts of disinfectants.

                     Components of a typical fraccing fluid

While the proppants remain behind in the coal seams, the vast bulk of fraccing fluid is brought back to the surface. Given the nature and dilution of chemicals used in Australian operations, fraccing does not impair water quality. Indeed, even in the US where stronger chemicals have been used, government studies have repeatedly shown fraccing has not affected water quality.

The Queensland CSG industry is governed by stringent water management regulations and legislation designed to safeguard landholders’ water supplies.

The CSG industry will have little impact on the Great Artesian Basin as a whole or the aquifers relied on by agriculture, according to an independent study conducted by the University of Southern Queensland.

Queensland's Department of Environment and Resource Management has produced a short video on the Great Artesian Basin and protecting water supplies.

The Great Artesian Basin

The Great Artesian Basin covers more than 70 per cent of Queensland and about one-fifth of Australia’s landmass. It contains several layers of sandstone alternating with layers of mud, siltstone and rocks. The water is held in the sandstone and there are three or four main aquifer systems within the Great Artesian Basin.

Water held in the Great Artesian Basin totals about 65 million gigalitres – equivalent to about 130,000 Sydney Harbours. Total water extraction by CSG in the Surat Basin portion of the Great Artesian Basin is estimated at at about 75GL a year. Other areas of CSG production will have considerably lower water production than the Surat.

CSG producers are required to make good any impact on water supply.

Gas is held in coal seams by burial pressure and water. When water is pumped out of the coal seam, total pressure falls and the gas begins to be released. Generally, gas production cannot begin until dewatering of a coal seam has begun.

Water in coal seams lies 200 metres or more below the water table. It is distinct from water found in other non-coal seam aquifers and has different properties to normal artesian water. CSG production water tends to be relatively saline (usually it is brackish, like estuarine water).

CSG production extracts water from coal seams rather than from normal aquifers. But producing water from the coal seams will change the pressure balance between water in those seams and the water in overlying and underlying aquifers. This could induce some water flows between these aquifers and the coal seams, but intervening mud and siltstone formations will impede and limit any such flows.

The distance between coal seams targeted for CSG production and overlying aquifers used for cropping and drinking water is between 200 and 800 metres. Studies are being undertaken to determine what impact, if any, CSG production will have on these aquifers. In some areas where the impact could be considerable, the uppermost coals would not be tapped for CSG production.

Interconnection between coal seams and other aquifers is often very slight. But there could be localised effects on aquifers and bores in some parts of the Surat Basin where about half of this extraction is expected to occur. In some cases, some aquifers could be depleted by 6 to 20 metres.

CSG companies are legally required to make good any depletion of bore-water that could affect landholder activities. Options include:

• Deepening a pump
• Increasing the size of a pump
• Drilling a new bore into a different aquifer
• Supplying water from a different location
• A financial arrangement.

Any measure taken to deal with the problem must be by agreement with the landholder.

In Queensland, every CSG company must also produce an Underground Water Impact Report that identifies likely impacts of its operations over the coming three years. The company is legally required to take action to deal with these projected impacts on landholders before the impacts actually occur. Government and industry will not wait to see a drop in water levels before taking action.

If a sudden change in water levels occurs, the Department of Environment and Resources Management can compel a CSG company to make good any impacts as quickly as possible. The government can also undertake work itself and bill the CSG company.

The burden of proof rests on the government and the CSG company, not the landholder. The priority is reinstating water supply in the shortest possible time.

CSG production is not expected to affect regional groundwater quality.

CSG production is not expected to have a detrimental effect on groundwater quality, including salinity. A strenuous assessment process identifies any potential for CSG activities to affect groundwater quality. Under the Environmental Protection Act, if any concerns or impacts are found, companies will be required to take action to rectify these.

Disposal and use of CSG production water

Governments and gas producers are investigating ways to treat CSG associated water and make it available to local communities.

The quality of associated water can vary greatly in different areas and different types of treatment can be required. Currently, most of this water is stored and disposed of in evaporation ponds. Governments and gas producers are investigating ways to treat the water and make it available to local communities.

Some companies are already treating their associated water by reverse osmosis and other methods so that it can be used for beneficial uses, such as:

• Stock watering
• Crop irrigation
• Tree plantations
• Augmenting town water supplies
• Aquaculture
• Industrial and manufacturing operations
• Dust suppression for construction activities

Untreated associated water also has beneficial uses, including coal washing and cooling of power stations. In some cases, it can be used for stock watering. Treated or untreated water might also be reinjected into aquifers. Research is being undertaken on this subject.

Salt

CSG companies are seeking commercial uses for salt produced from the treatment of associated water.

CSG associated water is brackish. On average, it has about a sixth the salinity of seawater, but salinity can vary between 200-10,000 milligrams per litre total dissolved solids (TDS), which compares to 35,000 mg/L TDS in sea water. Good, palatable drinking water is less than 500 mg/L TDS, although water more saline that this is still safe for human consumption and suitable for stock use.

Some associated water can be used untreated for stock water, dust suppression, coal watering or cooling of power stations. But other water will have to be treated and producing this treated water will also produce salt.

CSG producers are examining beneficial uses for produced salt, such as use in chemical industries and industrial processes. Salt can be used to make soda ash (for use in  producing glass, paper and washing powder) or caustic soda (used in producing soap and aluminium).

But if companies cannot find a commercial use for salt, they may seek environmental approval to inject it into deep underground saline aquifers. Otherwise, they could bury the salt in a purpose-built, government-approved industrial waste landfill that would be encapsulated to prevent migration of salt from the site.

Salt will not contaminate farming land or groundwater

CSG wells are cased with steel and cement to prevent contamination of aquifers. Any associated water used by landholders must meet standards in line with irrigation water standards.