Coal seam gas gains trac­tion in en­ergy mix

The Weekend Australian - Review - - Clean Energy - Robin Bromby

JUST a decade or so ago, coal seam gas was seen as a niche in­dus­try, some­thing that — if it proved vi­able — might top up Aus­tralia’s en­ergy mix. Look at it now. Coal seam gas, the clean form of en­ergy also known as coalbed meth­ane gas, is to be cooled to pro­vide feed­stock for a new liq­ue­fied gas in­dus­try in Queens­land. Its im­pact on elec­tric­ity gen­er­a­tion there will be con­sid­er­able.

Aus­tralia may not be the big­gest player in the coal seam gas busi­ness, but it is cer­tainly one of the most spir­ited and ad­vanced. Not only has Aus­tralia’s de­vel­op­ment of coal seam gas soared but the sec­tor is now mov­ing into down­stream ap­pli­ca­tions of this clean en­ergy source.

For years it was known only as an oil and con­ven­tional gas ex­plorer and pro­ducer, but San­tos has rein­vented it­self to now be one of the big coal seam gas play­ers. Ear­lier this month, it let the first en­gi­neer­ing con­tracts for its pro­posed $ 7.7 bil­lion Gladstone LNG plant which will process and cool the coal seam gas into the liq­ue­fied prod­uct for ex­port to Ja­pan, China and South Korea.

San­tos has a large coal seam gas foot­print in the Su­rat/ Bowen basins. Last year it bud­geted $ 150 mil­lion to ex­plo­ration. . It has the pro­duc­ing Sco­tia coal seam field and the LNG plant will source most of its gas from coal seams at the Fairview project lo­cated north of Roma.

There are three other projects an­nounced for Gladstone that plan to pro­duce LNG from coal seam gas.

Two lo­cally listed com­pa­nies, Ar­row En­ergy and Liq­ue­fied Nat­u­ral Gas, have one of those projects. In late March, the two com­pa­nies signed an agree­ment to search for CSG- LNG projects in Queens­land, NSW and South- East Asia. This comes on top of their agree­ment to build what they call the Fish­er­man’s Land­ing LNG project in Gladstone us­ing coal seam gas from Ar­row’s ex­ist­ing ten­e­ments.

Sun­shine Gas has just raised $ 44 mil­lion to com­mer­cialise its Lac­erta coal seam gas project north of Roma and will make a de­ci­sion on its Gladstone LNG plant by the end of this year.

The fourth player is Queens­land Gas, which, with Lon­don- listed gas gi­ant BG Group, is plan­ning to build a ‘‘ world scale LNG plant’’ at Gladstone us­ing coal seam gas. Queens­land Gas will sup­ply 190 peta­joules a year from its ten­e­ments in the Su­rat Basin to feed the plant.

Queens­land Gas has also just moved to in­crease its in­ter­est in coal seam gas in Queens­land by pur­chas­ing a 7 per cent stake in Vic­to­ria Pe­tro­leum, which is a part­ner with Bow En­ergy in the Don Juan coalbed meth­ane hunt lo­cated next to Sun­shine’s Lac­erta field.

Over­seas play­ers are now eye­ing the area. One is In­dia’s Petronet LNG, which says it would be in­ter­ested in ac­quir­ing CSG projects to put its foot on re­sources of be­tween 7 tril­lion and 15 tril­lion cu­bic feet with stakes any­where be­tween 5 per cent and 10 per cent in in­di­vid­ual projects.

But NSW might also be a great ben­e­fi­ciary of the coal seam gas riches of the Bowen Basin. A Hunter Val­ley busi­ness­man has put to­gether a con­sor­tium to build a 820km- long pipe­line from Roma into New­cas­tle, with the po­ten­tial for towns along its route to tap the gas.

Not that the search for coal seam gas re­serves in NSW is slack­en­ing in any way.

The coal seams of the Illawarra re­gion are seen as a source of enough gas to sup­port a small, peak- load power sta­tion for the re­gion.

In an­other de­vel­op­ment, one of the state’s big­gest play­ers, East­ern Star Gas, an­nounced it was launch­ing what it claimed to be the NSW’s largest ever coal seam gas ap­praisal pro­gram in part­ner­ship with Hous­ton- based Gas­tar Ex­plo­ration near Narrabri. East­ern Star needs to lift its re­source to fill its po­ten­tial sales com­mit­ments into the Syd­ney- New­cas­tle mar­ket and also for power gen­er­a­tion.

The other play­ers in­clude Met­gasco, whose project is lo­cated 70km south of Coolan­gatta. The com­pany has signed a deal to sup­ply the BP re­fin­ery in Bris­bane, whose present sole source of gas comes in on the Roma to Bris­bane pipe­line.

One of the lesser known coal seam gas play­ers is A J Lu­cas which is listed on the Aus­tralian Se­cu­ri­ties Ex­change in­dus­trial board. The com­pany owns 70 per cent of a coal seam gas in Glouces­ter Basin ( just 100km from Syd­ney) as well as hold­ing a 15 per cent stake in Syd­ney Gas, which has a large coal seam po­si­tion around the NSW cap­i­tal.

New ar­eas are be­ing opened up to coal seam gas ex­plo­ration. One such area is South Aus­tralia’s Ar­ckaringa Basin, which runs south­ward from Ood­na­datta al­most as far as Tar­coola, the junc­tion of the Trans Aus­tralia and Dar­win rail­ways.

No seis­mic work has been done in this basin since the 1980s. Now Sapex, which listed last year, is pick­ing up on work car­ried out by San­tos and Delhi Pe­tro­leum. It had shown the po­ten­tial for coal seam gas and con­ven­tional gas as well as oil. The ju­nior has also brought on board the NSW coal seam gas spe­cial­ist East­ern Star Gas, to help get work rolling.

Sapex says in two ex­plo­ration li­cence ar­eas there is po­ten­tial for 5.7 bil­lion tonnes of sub- bi­tu­mi­nous coal, ca­pa­ble of yield­ing as much as 3 tril­lion cu­bic feet of gas.

Rein­ven­tion: San­tos’s CSG project

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