CSG Forum Desert Channels & RAPAD Barcaldine Sat 21 April 2012 - - PowerPoint PPT Presentation

Presentation

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

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

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

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

Where we are – the Galilee Basin

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

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 [CH4]
• 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

• 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 (cont’d)?

• 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?

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
• r gas to the surface
• When exploration results are encouraging, appraisal

programs, which may include pilot wells, are undertaken to

• btain further information on production potential

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

• 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?

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

PROVEN POSSIBLE PROBABLE 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

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

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

Area (‘000 sq km) Gross Farm Product* ($Bn) Petroleum Wells

A Case Study: Wells and Agriculture can co-exist

*Source: ABS 1367.0 State and Terr Stat Indicators for 2009/10; 2009 Texas Agriculture Statistics, USDA

Source APPEA

Qld NSW Texas 1,731 9.1 7,000 802 8.3 249 696 9.7 218,556

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)

The Great Artesian Basin

Source: DERM Queensland

Source: Galilee Energy

R L

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 Trough Maneroo Platform

Eromanga Basin Galilee Basin

* Source: Adapted from RPS Water Study Source Galilee Energy

Stratigraphic relationship

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 Use Typical APLNG Water Production Average Water Production for CSG Industry in Surat

Source APPEA

• 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

Our target compared to many water bores

Source Exoma Energy

Source WestSide Corporation

Well completion schematic

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

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

• 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

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

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

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

Example: Production near Moura Example: Pilot well near Glenaras

Thank you

Example seismic Example drilling rig for exploration