Home' Australian Resources and Investment : September 2009 Contents AUSTRALIAN RESOURCES & INVESTMENT • SEPTEMBER 2009 • 47
Other QGC fields, Bellevue, Lauren and Codie near Berwyndale South are
in the development stage. Additional exploration and appraisal work will
be undertaken in connection with BG s planned LNG export facility in
Arrow Energy has three CSG fields in production - Kogan North,
Daandine and Tipton West, with all production dedicated to electricity
production. Kogan North is a 50/50 joint venture with the government
owned corporation CS Energy, while the Shell Group has a 30% interest
in all of Arrow s projects through the Shell-Arrow alliance. At December
31, 2008, Daandine, Kogan North and Tipton West have 2P reserves of
148PJ, 84PJ and 565PJ respectively (RLMS, 2009). Arrow has several
additional projects in development, including Dundee, Stratheden,
Longswamp and Meenawarra.
Elsewhere within the "Walloon Fairway", more development will
occur as projects are undertaken by Santos (Coxen Creek), Origin
(Talinga) and the BG Group through their takeovers of Sunshine Gas Ltd
(Lacerta and Polaris) and Pure Energy Resources Ltd (Cameron).
Other sedimentary basins in Queensland have attracted CSG
exploration. They include the Permian-Triassic Galilee Basin, the
Mesozoic Eromanga, Ipswich, Clarence-Moreton, Maryborough, Styx and
the coastal Tertiary Coastal Basins. None have achieved commercial
success to date.
In New South Wales, the Gloucester, Gunnedah, Sydney and
Clarence-Moreton Basins are being actively explored for CSG. Commercial
production has only been achieved in the Sydney Basin although there
are projects with certified reserves in the remaining basins. In Victoria,
results of CSG exploration have been disappointing, while in Tasmania,
coals with promising permeability have so far had gas contents deemed
insufficient for pilot production. In South Australia, coals of the
Arckaringa Basin are being investigated for their underground coal
gasification (UCG) potential.
PRODUCTION AND RESERVES
CSG production in eastern Australia began 13 years ago and has
increased rapidly since 2000, with production doubling in 2008 (Figure
4). The eastern Australian market for gas at the end of 2008 is
estimated to be 670PJ per year (RLMS, 2009) with CSG accounting for
about 25% of gas sold in this market. In eastern Queensland,
production is estimated at 164PJ per year, with an additional 27PJ
piped to the Mount Isa region from the southwest of the State (RLMS,
2009). Estimated daily CSG production from all Queensland fields during
2008 is 443TJ, with 15TJ per day produced by the Camden Project
southwest of Sydney (RLMS, 2009).
Figure 2 shows the size and distribution of independently audited
proven (1P) and probable reserves (2P). These totaled 28,251PJ at
December 31, 2008, with CSG comprising 17,011PJ or 60.2% of that
total (RLMS, 2009). Currently reported reserves of individual CSG fields
have been presented previously. Five groups, Origin/Conoco Phillips,
Santos/Petronas, Arrow/Shell and the BG Group held over 80% of the
certified 2P reserves (Figure 3) at the end of 2008. Since that date
further industry consolidation has seen Pure Energy Resources Ltd
acquired by the BG Group and Beach Petroleum Ltd s interests bought by
Arrow Energy. RLMS (2009) estimates that 2P reserves will exceed
25,000PJ by the end of 2010 as 3P (proven, probable and possible) now
estimated at 40,490PJ, are converted to 2P. Four groups, Origin/Conoco
Phillips, Santos/Petronas, Arrow/LNG/Shell and the BG Group through
their wholly owned subsidiary QGC LNG Pty Ltd have proposals to
produce liquefied natural gas (LNG) for export via the Central
Queensland port of Gladstone. All of these may not proceed in their
current form for a variety of reasons. Already LNG projects proposed by
Sunshine Gas and Sojiitz and the Impel LNG are uncertain. However,
drilling and development activities undertaken in connection with LNG
projects will substantially increase CSG reserves.
The pace of CSG development is accelerating and in the next year new
Queensland production is anticipated from the Bellevue, Coxen Creek,
Lacerta, Stratheden and Talinga CSG fields in the Surat Basin. In New
South Wales, the Casino project in the Clarence-Moreton Basin and the
Narrabri project in the Gunnedah Basin could be in production. New
pipelines are planned to link Wallumbilla with Newcastle and Casino to
Brisbane, thereby opening greater opportunities for CSG development in
New South Wales.
Recognition of the size of the CSG resources in Queensland has
attracted the attention of major international oil and gas industry
companies such as Conoco Phillips, PETRONAS and Shell as well as the
BG Group. Prior to that local companies were examining the feasibility
of LNG production with a view to obtaining prices for gas that were
more aligned to the prevailing world oil price. Gas used for electric
generation is low by world standards as CSG in eastern Australia is in
competition with coal as a fuel source and only gained market entry as
a result of the introduction of greenhouse gas reduction initiatives in
Proposals for export of LNG have gained momentum with the entry
of the major companies mentioned above. CSG has not been utilised on
such a scale and significant challenges lie ahead. Approximately 65 PJ
of raw CSG has to be produced to provide 1 million tones of LNG for
export (Baker and Slater, in press). The smallest proposal, that of the
Arrow led group, envisages an LNG plant at Gladstone producing 1.5
million (MM) tonnes per year. Origin-Phillips, Santos-PETRONAS and the
BG Group all plan separate, larger, notional 3.5 million tonne per year
processing trains in Gladstone. Baker and Slater (in press) estimate that
LNG production of 40MM tonnes per year would require the drilling of
about 20,000 wells per year over a 20 year period. Not all LNG projects
will proceed as planned for commercial and logistic reasons. Also
governmental approval and environmental requirements will have to be
addressed. Notwithstanding these issues, the CSG industry stands to
grow enormously in the coming few years.
1. Baker, G. and Slater, S., 2008, Coal Seam Gas, an increasingly significant source of natural
gas in Eastern Australia: PESA EABS III Symposium, Sydney, September 14-17, 378-391.
2. Baker, G. L. and Slater, S. M., (in press), Coal Seam Gas -- an increasingly significant source
of natural gas in Eastern Australia: APPEA Journal, 48.
3. Davies, N. and Day, R. W., 2006, Replicating the US Coal Seam success in Queensland,
Australia: Expanded Abstract: Abstracts volume, AAPG International Conference and
Exhibition, Perth, Australia, November 2006.
4. Day R. W., Prefontaine, R. F., Bubendorfer, P. A. J., Oberhardt, M. H., Pinder,B. J., Holden, D.
J. and Gunness, R. A.,2006, Discovery and Development of the Kogan North and Tipton West
Coal Seam Gas (CSG) Fields, Surat Basin, Southeast Queensland: APPEA Journal, 46, 367-381.
5. Draper, J. J. and Boreham, C. J., 2006, Geological controls on exploitable coal seam gas
distribution in Queensland: APPEA Journal, 46, 343 -- 366.
6. Matthew, D. and Hogarth, G., 2003, Joint Case Study: CH4 and Enertrade, The Townsville
Power Station success story -- working together to extract and transmit CSM while reducing
greenhouse impact: Proceedings, National CSM -- CMM Summit.
7. Pinetown, K. L., Faiz, M. M., Saghafi, A., Stalker, L. and van Holst, J., 2008, Coal Seam Gas
distribution in the Hunter Coalfield, Sydney Basin: In Blevin, J. E., Bradshaw, B. E.and
Uruski, C., 2008, Eastern Australian Basins Symposium III: Petroleum Exploration Society of
Australia, Special Publication, CD-ROM.
8. Queensland Government, 2008, Queensland coal seam gas water management policy.
Department of Infrastructure and Planning, 20 October 2008.
9. Riley, M. J., 2004, The rise and rise of Coal Seam Gas in the Bowen Basin: APPEA Journal, 44,
10. RLMS, 2009, Eastern Australia.-Upstream Gas Report. Report on developments in eastern
Australia in the upstream natural gas industry for the period 30 September 2008 to 31
December 2008. RLMS, Brisbane January 2009.
The author is indebted to Graeme Baker and Sue Slater for making
available the paper which they are to present at the APPEA Conference
in June 2009. Ms Vanessa White kindly organised the figures in
The author has been an active participant in the development of
the CSG industry. He became a Director of Arrow Energy NL in 1998 soon
after the formation of that company and saw it move from fledgling
explorer to significant player in the industry. In 2006 he resigned from
Arrow and became Chairman of Pure Energy Resources Ltd until this
company s success led to its acquisition by the BG group in March 2009.
This report has been reproduced with kind permission of
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