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HYDRAULIC FRACTURING RESEARCH STUDY

Why is EPA Studying Hydrautic Fracturing?Natural gas plays a key role in our nation,s cleanenergy future and hydraulic fracturíng is one way ofaccessing this vital resource. Over the past fewyears, the use of hydraulic fracturing for gasextraction has increased and has expanded over awider diversity of geographic regions and geologicformations. lt is projected that shale gas willcomprise over 20% of the total U.S; gas supply by2020. Given this expansion and increasing concerns,EPA announced in March 20 j.0 that it will study thepotential adverse impact that hydraulic fracturingmay have on drinking water.

EPA has sought advice regarding the potential scopeof the study plan from EpA's Science Advisory Board(SAB) Environmental Engineering Committee, anindependent, external federal advisory committee.The SAB's input will help ensure that a soundscientific approach is used to develop the study plan.

During this summer, EpA will conduct a series ofmeetings to receive broad, balanced input on thestudy plan from stakeholders in key regions affectedby hydraulic fracturing.

EPA will use the results from the study to helpevaluate potential risks associated with hydraulicfracturing in an effort to protect America,scommunities and resources.

What is Hydraulic Fracturing?Hydraulic fracturing is a well stimulation processused to maximize the extraction of undergroundresources - oil, natural gas and geothermal energy.The hydraulic frocturing process includes theacquisition of source water, well construction, wellstimulation, and waste disposal.

U.S. Environmental Protection AgencyOffice of Research and Development

Fracturs Stage8

Hydrau lic fractu ri ng involves the pressurizedinjection of fluids commonly made up of water andchemical additives into a geologic formation. Thepressure exceeds the rock strength and the fluidopens or enlarges fractures in the rock. As theformation is fractured, a "propping agent," such assand or ceramic beads, is pumped into the fracturesto keep them from closing as the pumping pressureis released. The fracturing fluids (water andchemical additives) are then returned back to thesurface. Natural gas will flow from pores andfractures in the rock into the well for subsequentextraction.

Wells used for hydraulic fracturing are drilledvertically, vertically and horizontally, or directionally(Figure 1 depicts vertical and horizontal drilling).Wells may extend to depths greater than 8000 feetor less than 1000 feet, and horizontal sections of a

well may extend several thousands of feet awayfrom the production pad on the surface.

What is the Gonnection Between Water andHydraulic Fracturing?Water is needed during the process, and it is a

central component ofthe waste products. Potential¡mpacts to drinking water supplies have beensuggested from many recent reports.

Fracturing fluids can be up to 99% water. Thevolume of water needed for hydraulic fracturingvaries by site and type of formation. Fifty thousandto 350,000 gallons of water may be required tofracture one well in a coalbed formation while twoto five million gallons of water may be necessary tofracture one horizontal well in a shale formation.Water used for fracturing fluids is acquired fromsurface water or groundwater in the local area.

Wastewaters from the hydraulic fracturing processmay be disposed in several ways. For example, theflowback water following fracturing may be returnedunderground using a permitted undergroundinjection well, discharged to surface waters aftertreatment to remove contaminants, or applied toland surfaces. Not all fracturing fluids injected intothe geologic formation during hydraulic fracturingare recovered. Estimates of the fluids recoveredrange from t5-8O% of the volume injecteddepending on the site. Some companies reuseflowback to hydraulically fracture more than one

U.S. Environmental Protection AgencyOffìce of Research and Development

well as a way of conserving water and recycling thefluids.

Public concerns have focused recently on theimpacts of the hydraulic fracturing process used

during natural gas production from shale andcoalbed methane formations.

Potential risks to surface and underground sourcesof drinking water might occur at various points in thehydraulic fracturing process. The likelihood of thoserisks causing drinking water contamination will be

evaluated during the EPA hydraulic fracturing study.Contaminants of concern to drinking water includefracturing fluid chemicals and degradation productsand naturally occurring materials in the geologic

formation (e.g. metals, radionuclides) that are

mobilized and brought to the surface during thehyd raulic fracturing process.

REFERENCES:

http://www.epa gov/ogwdw000/uic/wells_hydrof rac.html

http://www.epa.gov/safewater/uic/wells_coalbedmethanestudy.html

EPA is interested in receiving comments on the proposed

hydraulic fracturing research study. Please submit yourcomments to EPA at hydraulic.fracturing@epa.gov, orsend written comments to Jill Dean, 1200 Pennsylvania

Ave. NW, Mailcode 4606M, Washington, DC 20460.

EPA/600/F-10/002 June2010

COVER STORY - COAI SEAM GAS

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Wä*å+ïrir#"n',Hägas reserve is being explored and clevel-oped, quickly emerging as the newest bigresource market for the country.

Coal has a long history in Australiaand historicall¡ some underground coalmines have had to deal with the dangerof the methane generated and storedwithin the matrix of a coal seam. Foilow-ing developments in the US and Canada,however, energy companies are realisingthe potential to tap into this methane.

The fo¡mer Queensland Departmentof Employment, Economic Developmentand Innovation explained that from 2000onwards, the coal measures i¡ the Walloonsubgroup ofthe Surat Basin in southernQueensland became the focus for emerg-ing coal seam gas companies, when it wasrealised that "an analogy existed with thelower ranked coals in the powder Rive¡Basin in the US which was producingcommercial quantities of gas'i

The success of the eueensland GasCompany (QGC) Argyle I well in 2000demonstrated that the Surat Basin couldbecome a significant coal seam gas pro-

crvrL ENG|NEERS AUSTRAL|A I ApRtL 20l 1

ducer. Extensive exploration and develop-ment activity culminated with productioncommencing in early 2006.

In NSW, AGLs Camden Gas Projectstarted producing comnrercial quantitiesof coal seam gas in 2001, and currentlysupplies 60lo of the NSW gas market from130 gas wells tapped into the Sydney Basin,

The,A.ustralian Petroleum P¡oductionand Exploration Association (AppEA)chief executive Belinda Robinson said:'As an end-use product, coal seam gas isthe same as conventional natural gas andcan be used for the same purposes suchas electricity generation and in natural gasappliances, such as heaters and stoves."

With governments encouraging a

transition from coal to gas it is envisaged that gas has an important role toplay around the wo¡ld, particularly onetransitioning to a low carbon economy.The US Department of Energy explaìnedthat CO, emissions from gas-fired plantsare reduced relative to those producedby burning coal given the same poweroutput "because of the higher heatcontent of natural gas, the iower carbonintensity of gas relative to coal, and thehigher overail effìciency ofthe Igas-fìred]

GeoscienceAustal¡a's mapínd¡cat¡ng themajor coal basinsarcund the country,

GFAPHIC:G¡oscrence Ausrmu¿ 201 1

plant relative to a coal-fired plant'i Forexample, plant operator and Queenslandelectricity generator CSEnergy said itsgas-fired Swanbank E produces 50%o lessgreenhouse gas emissions than the averagecoal-fired plant.

Where is coal seam gas found?Geoscience Australia said Australia hassignifìcant coal seam gas resources, mahlyassociated with the major coal basins ofeastern Australia.

The Australian Mines Atlas (wwwaustralianminesatlas.gov.au) said coalseam gas was initially sought within thePermian coal seams of the Bowen andSydney Basins. Howevet since the early2000s exploration has targeted the rela-tively shallow depths of the lower rankcoal seams of the furassic-age Surat andClarence-Moreton Basins in Queenslandand NSW Coal seam gas exploration isalso under way in Victoria, Tasmania,South Australia, and Western Australia.

"Economic demonstrated resorlrcesare estimated to be 16,590p], but totaldemonstrated resources exceed 46,590p1.Total identified resources ofcoai seam gasare estimated to be around l6g,600pJj'

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GRAPHIC:G:oscreruce Ausrmu¡ 20'1 I

Geoscience Australia said.

ABARE's latest long-term predictionsaid gas consumption in Australia isprojected to increase by 3.4o/o per annumto reach 2575P1 in 2029130. Iis share ofprimary energy consumption is projectedto rise to 33o/o in 2029130.

Lucas, a company that specialises inengineering infrastructure and drillingservices to the coal and oil and gas sectors,said: "Most of Australia's coal seam gas isin NSW and Queensland. With the gasreservoirs of the Cooper Basin in SouthAustralia now declining, the east coastofthe country has been looking for newsources, and coal seam gas is meetingthat demand."

The Queensland government said it hasAustralia's largest onshore reserves ofcoalseam gas in the Bowen and Surat Basins,"enough to adequately supply growingdomestic demand and LNG export oppor-tunities and ensure the long-term supplyof competitively-priced gas in Australia'l

From these two basins alone, some$66 billion of coal seam gas projects havenow been approved and are currentlybeing developed. The three LNG projectproposals that have cleared Queensland

and federal approval processes are:. The APLNG project, a 50:50 joint

venture between Origin Energy andConocoPhillips, worrh $35 billion.

. The Gladstone LNG (GLNG) project,backed by Santos, Pet¡onas, Total andKogas, worth $16 billion.

. The Queensland Curtis LNG project,backed by BG Group and QueenslandGas Company (QGC), worth $ I 5 billion.

Land access

Thousands of exploration and produc-tion wells are being drilled up and downthe east coast of Australia in search ofcoal seam gas, which lies in geologicalstructures beneath land privately ownedby landholders and farmers. It is the ac-cess to this energy source that has beencausing much of the community concern.

Queensland government advicestates: "Natural resources, includingunderground resources such as coal,petroleum or coal seam gas, are ownedby the people of Queensland and arenot the property of individuals or com-panies. The Queensland governmentmanages these resources for the benefitof all Queenslanders."

COAL SEAM GAS - COVER STORY

In Queensland, coal seam gas produc-tion companies are granted an authorityto prospect (ATP) by the state ministerfor mines and energþ across any landidentified as potentially holding energyreserves. The area authorised under someATPs can be as large as 7500km'z. A com-pany granted an ATP is allowed to access

any prope¡ty within the area.

While a company holding an ATP isallowed to explore and produce resourcesfrom ar.ry private land, the Queenslandgovernment has made it clear that af-fected lanclholders are entitled to k¡owwhat activities are being undertaken,have input and receive compensation forthose activities.

In NSW the process is simila¡, thoughNSW Industry and Investment stated thatan exploration licence "does not entitlethe holder to enter any ofthe lands in thea¡ea covered by the licence without a prioraccess arrangement with the landholder".

New land access laws came into effectin Queensland on 29 October 2010 forthe petroleum and gas, greenhouse gas

and geothermal energy sectors. A keyfeature of these laws is the requirementfor the resources sector to comply with

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COVER STORY. COAI sEAü GAS

a single Land Access Code. The laws aimto ensure that landholders \4/ill be fairlycompensated for activities on their landand that companies must take steps tominimise impacts on the existing landand business operations.

However, this isrft enough for someactive landholders, who don't wantresowce companies on thei¡ land. Lastmonth, the Western Downs Alliancethreatened to blockade eGC fromaccessing a number of properties sur-rounding the Tara estate, The alliancesaid: "The blockade will last as longas QGC attempts to continue with thepipeline which theywant to build to linkwith several gas wells inside the estate.,'

On the Wdstern Downs Alliance website,the group vwote that for the diverse com-munities that occupy the Darling Downs"this industry and its associated pollutionhas the potential to severely damage thelong-term, and in tnany cas€s even theshort-ærm viability of these cornmunities,l

On Monday 2l February ABCI's FourCorners journalist Matthew Carney re-ported from this and other communitiesin Queensland and NSW that are beingaffected by the rapidly gowing industry.Farmers told of thei¡ feelings of "violationand frustration; thei¡ belief that they arelosing control of thei¡ properties and theirability to plan for the future:

"Imaþe you are running a successfulfarming operation; then one day a manfrom the gas company arrives with newsthat a coal seam gas field Iies beneathyour feet. From there th¡ee wells are sunk,then another lS. And then a proposal foranother 30, turning your property into athriviog gas field, whìle threatening theviabiìity of the working farmi'.ABCI saidin its promotion of the program. ,,Down

the road, the neighbour sells afte¡ 48 wellsare sunk into his property''

On the program, a farmer told Carney:"It's really frustrating. We have taken onexEa debt to fund our farming business andwe are powerless to stop people accessingit and abusing itl'

Coal seam gas exploration and produc-tion companies try to alleviate this withextensive communíty consultation andthe establishment of community liaisoncommittees, The resource companies saythe two can coexist,

ln February, the Queensland govern-ment also established an LNG specificdeparEnent (Jng.industrf.qld.gov.au). Theunit will deliver regionally-coordinatedcompliance and monitoring, and mediatein complaint resolution.

40 ctvìL ENG|NEERS AUSTRALTA I ApRtL 2o1 1

Also in Februar¡ then NSW ministerfor primary industries Steve Whan an-nounced the completion of a compre-hensive review of the operating charterfor Community Consultative Commit-tees (CCC) for significant mineral andpetroleum exploration projects in thestate. Whan said the reyiew was aimed atstrengthening community representâtionon these committees.

As a result, new CCCs will now in-clude up to six representatives from a

range of local communily groups, suchas the Business Chambers of Commerce;community action group/alliances; localindigenous communities; major land usergroups or associations (eg horse breeders,winegrowers); local water user associa-tions; and tourism associations.

Whan said the purpose of a CCC isto provide a forum for open discussionbetween the exploration compan¡ theappointed community representatives andrelevant government agencies.

"Ensuring the community is kept in theloop at all stages ofexploratoryactivities inthe mineral sector is crucial to achievinga successful balance between the energyneeds of the people and the interest oflocal communities at a grass roots level;"he said. "What is equally important isfostering good working relationshipsamong committee members and to actas a conduit to help the company toimprove communication, education andnotifìcation with the general communityi'

In the NSW town of Gloucester, whereAGLis proposinga coal seamgas develop-ment, the company said it was committedto establishing and maintaining opentwo-way communication with the localcommunity. AGL has engaged engineeringand environmental consulting fìrm GHDto assistwith the community consultation.

On the Queensland Curtis LNG proj-ect, QGC stated in a detailed response toFour Corners: "The Queensland CurtisLNG project has involved direct discus-sions with more than 4000 people over twoyears from 2008, and particularlyinvolvedlandholders. QGC has a continuing publicconsultation program, particularly withlandholders across Queensland CurtisLNG project tenementsl'

The company said it does not enterproperties without landholder consentandhas never taken alandholder to court.QGC said it was in continual discussionwith more than 900 landholders aboutaccess to their properties and ofthis total,currentþhad agreements with more than600 of them.

The sourceUp to 1000m beneath the land, the geo-logical structure of a coal seam can beyiewed as both a reservoir and a sourcefo¡ the economic recovery of gas.

On its website, Australian energy com-pany Santos explains that because coalhas many fractu¡es and a large internalsurface area, it can potentially hold largevolumes of gas.

In its GtrNG Environmental ImpactStatement Santos said that in some coalseams, the volume of gas adsorbed in thecoal can take up to 20 years to be releasedfrom a productive coal seam.

.A,PLNG explained in its Queensland-based project description: "The level ofgas that can be produced from a coalbed depends on the thickness of thecoal, gas content permeability and thedepth ofthe coal seam. In Australia, coalseams that can produce coal seam gas

economically are usually 200m-1000mbelow the surface."

Coal seam gas forms by either biologi-cal or thermal processes.

'During the earliest stage of coal-ification (the process that turns plants

and permeable, gas and water can flowfreely through them and up through a

production well. In some cases, this per-meability is raisedbyhydraulic fracturing,

Opening up the seamHydraulic fracturing, otherwise knownas "fraccing3 is the process of injectingliçid at high pressure into a bed of rockto increæe the geological ftacturingwithinthat layer ofrock

A more fractured rock means morepotential pathwap for liquid and gas totravel, When considering liquid and gas flowi¡r rock for indwtries such as geothermalenergy or oil and gas oploration, fraccingis used to increase the productivity of alayer ofrodc

Before desigring a fractwe treatment forawell, the fi¡st step is to measurethe proper-ties of the various rocklayers, including anycontained fluids. These properties are thenused to desþ the fractu¡e treatment. Bydesigning the fracture treatments and ac-counting for the properties ofthe sequenceofrocklayers andbymonitoring the fractu¡eduring the injection, the fracture size can be

controlled, In some cases, it is desi¡able to

COAI SEAM GAS - COVER STORY

In a hypothetical example, if a well in-tersects four seams that are each fracturedseparatel¡ then each fracture treatmentmight involve 150kL of fluid injectedover 20-25min. Each treatment wor¡ld befollowed by several hours of testing anddata collection before the next one starts.Duringthis period, pressure datawould berecorded, followed by flowingbad<the wellto relieve pressure. Most of the fluid flow-ingbackafter an injectionis the fracturingfluid originally injected. Once the well isput on production, this progressiveþ getsdiluted by formation water.

For its coal seÍrm gas exploration, Aus-tralian energycompanySantos saidituses a

specifìcallyblended fluid thatwas "99.5 1%

water andbeach sand", charged withprop-pants. In the oilfield glossary, proppantsare described as sized particles mixedwithfracturing fluid to hold fractures open aftera hydraulic ftacturing treatment. Thesecan be 'haturally occurring sand grainsor specially engineered proppants, such as

resin-coated sand orhigh-strength ceramicmaterials like sintered bauxitd:

The compounds i¡ the 0.49% of theblended fluid are not specific to the coalseírm gas industry and Santos said'theyhave many common uses such as in swim-ming pools, toothpaste, þaked goods, icecream, food additives, detergents and soap IThey include non hazardous substanceslike potassium chloride and a drilling fluidadditive of low toxicity known as FracsealFine. The materials safety data sheets(MSDS) for the compounds usedby Santos

can be found at http://www.santos.com/coal- s eam- gas/hydraulic-fr acturing.aspx

On its website Santos erçIained that tofracture a seam it injects this fluid down awell at high pressure to force passageways

ínto the coal seam. The company said ithas been using this technique for decades

in the Cooper Basin and in southwest

Queensland.Queensland minister for energy and

water utilities Stephen Robertson said: "Itis estimated that since 2000, around 5% ofcoal seam gas wells drilled in Queenslandhave been fracced, although this propor-tion is expected to increase as coal seam

gas production increasesl'CSIRO has established a branch of its

petroleum engineering team that special-

ises in hydraulic fr acturing techniques. Thehydraulic fracturing team has developed"new understanding of hydraulic fractu¡einechanics using an integrated approachbased on theo¡etical development, ex-perimental investigation and applicationof results, in partnership with industry".

into coal) biogenic methane is gener-ated as a blproduct of microbial action.Biogenic methane is generally found innear-su¡face low rank coals such as lig-nite. Thermogenic methane is generallyfound in deeper higher-rank coals. Whentemperatures exceed about 50"C due toburial, thermogenic processes begin togenerate additional methane, carbon di-oxide, nitrogen and waterj' the AustralianMines Atlas explained.

In a coal seam, the gas is adsorbed tocoal in a water saturated environment.When a potentially productive coal seamis dewatered by physical means, the pres-sure drops and the gas desorbs from thecoal and travels into the fractures (cleats)of the coal.

Origin Energy explained on its websitethat when the cleats are interconnected

have the fracture grow through more thanone coal seam in order to extract gas fromseveral seams.

In coal seam gas hydraulic fracturetreatments, one well at a time is typicallyfractured usually by several separate injec-tions targeting speci-fic seams in the well.The volume of hydraulic fracturing fluidpumped varies depending on the size offr acture required and the rock permeability.Typicall¡ the volume ranges ftom 50kL-200kL of fluid and sand.

Sometimes a small ûacture is used toconnect the wellbore to the coal (l0m-50m size), or a very small fracture mightbe formed as a wiry to measure the insitustress (lm- lOm size). In lower permeabilitycoals, the fractures are designe[ to extendfurther into the seam, around 100m-300mfrom the well.

"Most of Australio's coalseam gas îs in NSW and eueensland.Withthegas reservoirs of the Cooper Basin in South Australia now declining,

the east coast of the country has been looking for new sources, andcoal seam gas is meeting that demand."

ctvtL ENG|NEERS AUstrALtA I APRTL 2011 41

On its website CSIRO said: ..The hy-

draulic fracturing group has carried outerperimentalprograms in coal andinha¡drock that have included physical miningandmapping of the createdhydraulicfrac-ture geomeEy. The mapped fracture datawas used to studyhow hydraulic fracturesgrow through rock - induding how theyinteract with, and cross, natural fracturesl,

There has been much recent pressabout the chemical and hydrogeologicalconcems sruroundinghydraulic fr acturing.These two issues ofconcern are repeatedlycited in artides, communitymeetings andprotests around the country.

Inthe Four Corners program, concernsfocused on one fraccing exercise at a wellknown as Myrtle 3.

Anne Bridle, a neighbour to the prop-erty on which Myrtle 3 was drilled, askedfor the material safety data sheets for thechemicals used during the fraccing exer-cise. The ABC program said she

,hoticed

the safety data sheet forthe chemical THpSwas American, incomplete and I0 yearsout of date'ì The program said 130L ofTHPS was used in the Myrtle 3 enercise.

Visiting the Dow Chemicals ,web-site, you find that THpS is 'ã biocidecontaining the active substance tet¡akis(hydroxyrnethyl) phosphonium sulfate(THPS) ... a slimicide for gas and oilûeld applications, as well as for water-

42 ctvtL ENG|NEERS AUS]RAL|A I ApRtL 2011

treatrnent uses'i Dow Chemicals productinformation further explains: "THPS isinherently biodegradable, which suggeststhe dremical will be removed from waterand soil environments, induding biologicalwastewater treatment plants. In addition,the compound is susceptible to other deg-radation processes, including hydrolysis,photolysis, and oxidation."

In QGC's response to Four Corners,thecompany said the contractor responsiblefor hydraulic fracturing on the Myrtle 3

well advised that it was firlly compliântwith the National Indushial ChemicalsNotifi cation Assessment Scheme.

QGC stated: "QGC does not believe anyofits facilities pose an unacceptable risk tothe health and safety ofpeople or that it isoperating other than in accordance withbest industry practice. We believe that anychemicals utilised in this process, in thequantities used, are safel'

Another chemical point of contentionoften cited in articles and by the coûtmu-nity is the use of petroleum compoundscontaining benzene, toluene, ethylbenzeneand xylenes, known as BTEX, during frac-cing exercises. BTEX compounds havebeen used in overseas oil and gas opera-tions and caused particular concern dueto groundwater contamination in the US,

While Queensland minister Robertsonsaid BTEX petroleum compounds were

PHrro: WKtpEot¡/M¡epc Ssoor¡n

not used in Queensland coal seam gas

operations, the state government decided toenforce the issue and last October ba¡uredBTEX from coal seam gas operations.

Last December the NSW governmentsaid it would examine banning the use ofBTEX chemicals in situations whidr maypose a risk to groundwater.

NSW premier at the time K¡istinaKeneally said: "BTEX chemicals are notcurrently used in any hydraulic ûacturingactivities in NSW - but the idea of banningthese chemicals is certainly something weare investigatingì'

The hydrogeological concerns of frac-cing mainþ revolve around aquifer con-nectivity between beds of rock, and therisk of increased interconnectivity oncethe rock bed ofinte¡est has been fractured.

For example, the Four Corners pro-gram raised the issue surrounding thebore known as Myrtle 3, an appraisalwell to test the gas production potentialin the Walloon coal measures - arou¡d500m underground.

Describing the geologyin its responsetoFour Corners, QGC said: "The Springbokaquifer is a sandstone formation that liesslightly above the Walloons. Thickness ofthe Springbok and Walloons formationsvaries across the Surat Basin with theformations generally separated by an im-permeable layer of shale, siltstone or clayl'

Asweeping vlew of the Ddiling Downs ín central Queenslond where coo! seom gos development is under woy,

Initial tests of Myrtle 3 in 2009 indicateda low flow rate of gas from the well and

QGC decided to use hydraulic fracturingon the well to determine whether the flowrate could be enhanced. About six weeksafter the fracturing process in mid-2009,QGC's rnonitoring indicated that theWalloons and the Springbok formationswere connected where the Myrtle 3 wellhad been drilled.

However, QGC stated: "Water flowfrom the Springbok aquifer to the Myrtie3 well has been relatively minimal andmonitoring has not indicated any impacton Springbok aquifer water quality orlevels. This was not a catastrophic failurein well design or operation. It is capableof being rectified and steps are under wayto do sol'

Universily of Newcas tle Professor GarryWillgoose, who has also worked as theadviser to the Broke-Bulga CommunityConsultative Committee for the AGL coalseam gas project in the Hunter region (re-centlywound-up to be replaced by a largerregional CCC), explained on ABC localradio that the geology and hydrogeology atanylocation is unique and the productionand exploration at a¡y well needs to beexamined on a case-by-case basis,

At the surfaceAt the surface of a production well, gas

An der¡al shot of tlre gasfrelds in an area south olChlnchilla and near the

Tata res¡dent¡al estaîeîn central Queensland,

tdken in Septernber 2010.

Pnoro: AAP lr¡eae/Suppr¡eo

companies will install a well pump toextrac[ water, a gas-powered driver for thepump, a system to separate the water fromthe gas, metering facilities and a flare stack,

The separated gas and the water arethen piped to a centralised compressionandwater treatment facility. In some cases

low-to-intermediate nodal rotary screwcompressors may also be required to getthe gas from the production well to thecentral faciliry.

Water treatment and managementAs the gas is derived by completell' de-watering a coal seam, water managementis to become an important componentof the growing gas production industry,

In typical gas field set-ups it is envis-aged that the water separated at the wellhead will then be piped to a central watertreatment facility.

The Queensland Department of Minesand Energy said current analysis suggests

about I 10ML of water is produced for each

petajoule (P|) of gas, however this variesacross different basins. For example, theratio ofwater to gas produced is greaterfrom Surat Basin fields than for those inthe Bowen Basin. Also, the water produc-tion varies over time - it starts out highwhen the gas wells are brought onlineand declines over time.

The Queensland government has saidthat 3250PJla of coal seam gas would

CIVIL ENG¡NEERs AUSTRALIA I APRIL 201 1 43

COVER STORY - GOAI sEA¡I GAS

CS Ênergy said lts gos-powered Swonbonk E

Poweßtation incentrclQueenstond produces5096 less grcenhousegas emisslons thanthe avercge cool 6redpowetstotion.

PHOTO: CS ENEFGY

Wo¡k has commenced on the mojorexpansìon ofGladestone Port and

Flshermans Landing to cater forthe LNG export facilities recently

approved by the fedenl and stotegovemmenas,

PHOTO: Guærore Pom Coapomrm

be produced at fulI capacity. On simpleanalysis then, the Queensland coal seamgas industry at full capacity could expectto be dealing with up to 357.5GL/a. Forcomparison, the Victorian desalinationplant will be Australia's largest and willbe capable ofproducíng 150GL/a.

But on a podcast promoting lastmontht Coal Seam Gas Water Manage-ment conference in Brisbane, Willgoosesaid the biggest problem is getting reliableestimates of water produced by the coalseam gas extraction process.

"Right now we dont have enough infor-mation on the quantities and çnlities oftheì/\¡ater over the life time of the erctraction.

[Water management] is a suck-it-and-seeapproach which leaves the communityslightly uncomfortableJ he said.

It is a concern that is widespread,with the federal government's own WaterGroup citing significant concerns aboutthe general level of uncettainty associ-ated with the coal seam gas proposalsin the Surat Basin, and the inability ofproponents to accurately quantify theirindMdual and collective impacts overthe life oftheir projects.

The Water Group voiced the concernsin an assessment of the potential impactsof two proposed coal seam gas develop-ments in southeast Queensland. Thefederal government group said it wasconcerned about'the volume of ground-water to be coproduced with coal seamgas, particularly impacts on groundwatersystems and their structural integrit¡pressure and volume impacts on GreatArtesian Basin (GAB) aquifers; changesto the water chemistry of GAB aquifers;the very signifi.cant recovery times forgroundwater systems to return to pre-coal seam gas conditions once extractiveoperations cease; the uncertainty aroundimpacts on surface water hydrology; landsubsidence; and broader impacts on theMurray-Darling Basinl'

Last December, federal environmentminister Tony Burke released a reportinvestigating the effect ofcoal seam gas

operations in southeast Queensland onsurface and groundwater systems in theMurray Darling Basin. The study wasconducted by Professor Chris Moran,director of the Centre for Water in theMinerals Industry, part of the Universityof Queensland's Sustainable MineralsInstitute.

While easing concerns about the po-tential changes to regional groundwaterbalances in the main alluvial systems ofthispart of the Murray Darlìng Basin, saþg

ctvtL ENGTNEERS AUÍRAL|A I ApRtL 20r 1

they would be relatively minor, the reportrecommended an adaptive management

regime supported by monitoring and man-agement of groundwater systems.

"The study states that transparencyof information is important to assist thecommunif, government and industry tobenefit from the frrll range of resourcesin the region. I have required the coal

seam gas companies to make public theirdetailed plans for water management andmonitoringi' Burke said.

The federal minister has also estab-

Iished an expertpaneifor advice in regard

to coal seam gas water management. Inpatticular, he said, this expert panel \a.illheþ set drawdown limits for targetedaquifers, and thresholds for which man-agement actions shouldbe initiated, suchas the repressurisation ofaquifers by suchactions as reinjection, in the event thatthresholds are exceeded.

The National Water Commissionconcurred and commissioner ChloeMunro called for industry, governmentsand planners to adopt a precautionaryand more integrated approach to manag-ing water-related impacts of coal seamgas developments.

'An adaptive and precautionary man-agement approach will ensure that as we

develop our unde¡standing ofthe indus-try's impacts on water resources, this newknowledge will be taken up in approvalprocesses and improved managementpracticesi said Munro, "We recognisethatif not adequately managed and regulated,the industry risks significant, long-termand adverse impacts on surface andgroundwater systems3'

In recognition of this concern, boththe NSW and Queensland governmentshave recently sought to strengthen theirregulation of the industry.

On 19 December, the NSW govern-ment announced that it will introducenew rules for coal seam gas explorationlicences. Signifìcant reforms were en-acted i¡ Queensland through the Waterand Other Legislation Amendment Act2010 (Qld), which commenced on IDecember 2010.

In Queensland, two parts to the reformsrelate to the extraction of groundwater.First, the amendments expand the exist-ing regulatory framewotk for managingthe impacts arising from the extractionofgroundwater on adjacent water supplybores and natural springs. This makesparticular reference to impacts on waterlevels and water quality. The second partintroduces a new regulatory framework

for managing the release of coal seam gas

water to town drinking water supplies.

So, the management of all this coalseam gas production water is seen as

the greatest challenge. The Queenslandgovernment said the primary purpose ofits iadustry water management strategywas to "ensure that salt from coal seam

gas activities does not contaminate theenvironment and to encourage benefìcialreuse of wate/'.

Willgoose said the extracted water is

typically half the salinity of seawater and

so usually requires treatment.In most of the current coal seam gas

pr oj ect Env ir o nm ental Imp act St ate m enßitis envisaged that desalination plantswillbe set up through the gas fìelds to treatthe coal seam gas production water byreverse osmosis (RO).

All companies are investigating howthey are then goingto deal with the treated

water, as well as the concentrated waste

brine. For the treated water, some are

looking at aquifer recharge byreinjection,others are looking at beneficial reuse fortown water supply or agricultural pur-poses. For the concentrated waste brine,the Queensland government has set thehierarchy of management as: 1. Reuse -chemicallyprocessing to create useable orsaleable salts/products; 2. Undergroundinjection of brine; 3. Disposal of brineinto the ocean; and 4. Solid salt disposal

into a waste disposal facility.

QGC is currently building a majorwater treatment plant near the town ofChinchilla, about 160km northwest ofToowoomba, so the treated wate¡ fromsome of its fields can be used in agri-culture and industr¡ as well as possibþsupplementing the existing town watersupply. A consortium of GE Water and

Laing O'Rourke Construction has wonthe engineering, procurement and con-struction (EPC) contract worth morethan $200 million for the Kenya WaterTreatment Plant with the capacity to treatup to l9GL/a.

Laing O'Rourke will build the plant andGE will provide technical expertise andpÌocess equipment including advancedultrafiltration, ion exchange, reverseosmosis, and brine concentration technol-ogy, as well as initial services when theplant is operating.

Laing O'Rourke infrastructure general

manager Stephen Wilson said the projectwas technically complerq involving con-struction of a central water treatmentplant and a relocatable water treatmentplant, as well as associated infrastructure.

ctvtl ENGTNEERs AUÍRAL|A I APRIL 201 1 45

COVER STORY- COAL SEAM GAs

Ptotesters blockaded Queenslond Gas Company's Kenyo gos plont neatTara in centrcl Queenslond tøst November,The protesters ore poft ofthe Lockthe Gote compaìgn objectìng to mining explorotìon compan¡es entering their lond,

Associated infrastructure will include a

33MW gas-fìred power plant to run thereverse osmosis process, and ponds andpipelines related to the water treatmentfaci-lities, SunWater will build the 20kmpipeline from the water treatment plant tothe Chinchilla Weir where the water canthen be used for agricultural purposes, orfor town water supply. The wate¡ treat-ment plant is due to be commissionedby mid-2012.

Santos said it will be investigating twomain treatment processes for coal seamgas water. On its website the companysaid coal seam gas water quality varies byregion but is typically brackish in qual-ity, circa 100-10,000mg/L rotal dissolvedsolids (TDS), sodic, and high in bicar-bonate, making it unsuitable for manyuses without treatment. For its GLNGproject, Santos expects to prefabricate2.5MLld,capacity modular RO plants. Thecompany is also investigating altering thebalance of the water.

46 CIVIL ENGINEERS AUSTRALIA I APRIL 201 1

The company has been studying thebeneficial reuse of coal seam gas waterby establishing an irrigation project at itsFairview and Springwater stations nearInjune in Queensland. The first stage ofthe project i¡volves drip-irrigating 2,10ha

of legume forage crops (Ieucaena) and twomillion locally adapted native tree spe-cies (initially Chinchilla white gum) wlthtreated water over a 2000ha area. In thestudy, Santos said the movement of waterand salts is being continuously monitoredto provide data for ongoing ¡esearch andearly warning of any unacceptable trends.

The company expected that the projectwould produce enough high-qualiry foragefor 1500 head ofcattle, and potentiallyup to400m3/ha of saw logs for milling when thetrees are ready for harvesting in 25 years.

In results to date, the company said:"We have provedthat it is not a problem ofsalinity, rather it is a sodium managementissue to be addressed. Sampling and moni-toring needs to be an ongoingpriority, but

PHoTo: AAP lu¡o¿/Cxlrocxrru Nm

comprehensive field work over extendedperiods of time demonstrate conclusiveþthat this water can be managed and usedvery successfullyl'

In another water management project,Santos had established an agreementwith family-owned agribusiness MountHope Station, "representing a partnershipbetween a landholder and coal seam gas

producer to use water for enhancing anagribusiness while also enabling coal seamgas production'.

The four-year project involves the con-struclion of watel treatment facilities andassociated water infr astructure. It will lookat centre pivot irrigation of a 72l:ra arca,subsurface drip irrigation of a 30ha area,

and irrigation ofan additional 133ha areasurrounding these irrigation areas.

From the same coal seam gas fields,Santos is also partnering with CSIRO andURS to study the potential of injectingtreated water into aquifers in the Romaarea, The shrdy is part of the National

-*

_¡¡-+¡r__

Research Flagships program. The RomaManaged Aquifer Recharge Study willexplore the feasibiliry ofusing coal seamgas water to augment town water suppliesfor the Maranoa Regional Council,

Last November, Santos water strategiesmanager Shaun Davidge said: "Water fromthe current Gubberamunda Formationaquife¡ which has been the traditionalsource of Roma'swater suppl¡ is used for asignificant feedlot as well as for industrialand urban suppliers in the region. pressure

in the Gubberamunda aquifer has beendeclining for several years as a result ofurban, industrial andstock-watering usage.We believe that introducing a new treatedsource ofwater could have a positive effecton the pressr¡re levels of the aquife¡ aswell as bring up the levels of water storage,which will contribute to the sustainabilityof the Roma water supplyl'

During the trial injection test, aboutIML/d will be injected inro the aquifer,and if the scheme is approved, this ratecouLd increase to 3.6GL/a.

The central processing facility - Gasseparation and compressionWhile the water is separated and travelsfrom the well head to get treated in onepipe, the separated gas travels in anotherpipe to the central facilitywhere the gas iscompressed up to amaximum of l5.3Mpaand fed into the gas transmission line totravel to the respective powerstation orport facility.

Major components of the central pro-cessing facilityoften also include an initialgas filtration phase as weìl as a dehydrationfacility to dry the gas to the transmissionpipeline dew point specification.

In the Surat and Bowen basins, thetransmission pipeline is expected to besome 300km-400km. It is expected thatthe high pressure steel gas transmissionpipeline will be buried along the route andthe land rehabilitated above the pipeline,

Along the route, scraper stations arerequired for inserting pipeline mainte-nance tools to ensure pipeline integrity.

Mainline valves are also required.These a¡e buried valves with an aboveground bypassing. These are

of the pipelinemaintenance, or isolation in case of anincident. They are spaced approximatelyevery 50km.

In Queensland, QGC has shortlistedNacap and McConnell Dowell for pipelineconstruction. The APLNG project said ajoint venture between McConnell Dowell

and Consolidated Contractors Companyhas been contracted tobuild the mainline.

The portside processing facilityThe coal seam gas arriving at the portsidegas treahnent facility typicallyhas a make-up of 95.45% methane, 0.03% ethane,0.02% propane, 4.0% nitrogen and 0.5%carbon dioxide.

QGC contracted Bechtel for the front-end engineering design as well as theengineerin g procurement and constructionof its LNG facilit¡ Becåtel has also been ap-pointed the engineering procurement andconstruction contractor for the GLNG plantprorect and the APLNG prored.

Powering the procefsThe process of converting coal seam gas

to liquefied natural gas (LNG) is energyintensive. In the GING E¿vironmental Im-paci Statemenô Santos said the total powerrequirement for its portside facilify wouldbe 25MW per treatment train, increasingto 75MW total when all th¡ee trains are inoperation. This electricitywill be generatedby gas hubine generators within the facility.

Acidgas ¡emovalOn its website, Santos explained the fuststep in its process was to remove the cæbon

tion. The amine solution picks up the 'ãcidgas" and is then stripped ofthe acid gas ina regenerator, where the acid gas is vented,while the feed gas carries along the processtreatment train,

DehydrationFollowing along the outlined process in theG IN G Env ironm ental Imp a c.t St atement, thefeed gas enters a dehydration unit, whichchills the gas to condense anddrop outmostof the water. It then proceeds to a th¡ee-bedmolecular sieve to remove the final traces ofwater to a dew point of -100.C.

Mercury remor¡alThe feed gas then travels through two sulfi.rimpregnated carbon beds to remove traceamounts of mercury in the gas. Santos saidthis was pureþ a precautionary measure toprevent corrosion ofthe brazed aluminiumheat exchangers located downstream, asthey had found no measurable traces ofmercury in gas analysis to date.

Nitrogen removalTo meet sales specifications, nitrogen must

COÀL SEAiI GAs - COVER SIORY

also be removed from the gas. By lettingdown the pressure ofthe gas, avapour richin nitrogen can be extracted and vented ata safe location.

LiquefactionThe main purpose of the onshore facilitiesthough is to liquefi the gas into LNG tomake it easier to transport The gas is cooledto around -161oC, significantly reducing itto 1/600 of its original volume,

Santos erylained that it uses a refrig-e¡atíon process whereby refrigerants areexpanded and compressed in dosed loopsystems to achieve the cold temperahrres.

In the front end engineering design,Santos decided to use the Conocophil-lips optimised câscade process, originallydeveloped in the 1960s. It uses three re-frigerants - propane, ethylene and methanecircuits - cascaded to provide maximumLNG production. Each circuit uses two50% compressofs with conrmon processequipment.

For another proposed project inQueensland, LNG Limited is looking to useits own optimised single mixed refrigerantliquefaction technology. The tedurology isan enhanced LNG liquefaction process thatthe company said was "more simple, cost-effective and efûcient than traditional LNGproc€sses. Its advantages over traditionalmethods include better plant eff ciencythatleads to a 307o saving in processing costscomparedwith traditional methods. At thecore of the process is a simple single mixedrefrigerant cycle enlanced bythe addition ofammonia refriçrationl' the company saidin its notice to shareholders lastNovember.

StorageThe LNG produced ttuough theliquefactionprocess is now at a temperature of -l6l"Cand can be stored in a double-walled full-containment storage tank at a pressureslightly above atrnospheric,

Around Gladstone Port in Queensland,it is o<pected that a number of storagetanks eadr holding 125,000m3-200,000m3

will typically exist portside, In each tank asystemhasbeen designedto recovervapourproduced in the storage tanls due to heatgain and return it back to the facilrþ forreliquefaction.

LoadingEven in the loading process, much of thevapour produced due to heat gain can berouted back for reliquefaction. Once loadedonto specially designed ships, the LNGcan be exported to consumers around theworld. i{

clvll ENG|NEERS AUÍRAL|A I ApRtL 2ol1 47

l=äimersA¡3OC¡AÌIO1'

The Effect of Mining and Coal Seam GasOn NSW Farmers

Current legislation fails to adequately protect agricultural resources and farmers' property from theimpacts of mining and coal seam gas (csc) extraction and development.

It is impossible to undertake any large scale miningwithout permanent, destructive changes to naturalresource systems and a range of negative amenity,health and financial impacts to the surroundingdistrict. Current standards and processes, forselecting appropriate sites, minimising cumulativeimpacts, controlling risk and compensating affectedcitizens are unacceptably low.

The image at right shows open cul coal minessurrounding the Hunter River. These coal pits are farbelow the level of river.

These mines have already had serious impacts onthe quantity and quality of ground water. lf a minewall collapsed, the Hunter River will literally end up ina hole in the ground, as happened in 2007 with theLatrobe River in Victoria (see below).

Coal mines adjacent to the Hunter River

While governments appear to be calm about theserisks, farmers living in close proximity to mines andgas fields, and who depend on access to reliable,uncontaminated water, are not calm. They wantaction.

Right now, new open cut and underground coal minesand gas fields are being planned in some of the mostproductive farming regions in NSW. Farmers areconcerned that these mines and gas fields maydamage the precious underground water systems onwhich the productivity of the region depends.

Mining alongside the Latrobe River ended in disaster. TheYallourn Mine Batter Failure lnquiry Report, June 2009,identified slack and lapsed safety standards and found thatm¡ne consultants had lacked the sk¡ll to g¡ve competentadvice for more than a decade.

It is impossible to reassemble and rehabilitatean aquifer after mining. lt may be possible tolimit the damage and risk resulting from onemine, but experience shows that one minetends to be followed by others, and thecumulative impacts are calastrophic - not justin environmental terms, but on the entiresocial and economic character of the district.The same applies for CSG. planninglegislation and the current approvalprocesses make no provision for managingthese cumulative impacts.

Croundwater mo/ement Direction of mining -------+Underground mining can fracture aquifers result¡ng in loss and

co ntam i natio n of g rou ndwater.

Drawdo,vn allwlal

ênsile/compressive

)Í'o*'..*

Last updated: 16 August 2010Contact: David Eyre, Brianna Casey

Member Service Centre: 1300 794 000Page 1 of 4

Growingthe Business

of Farmingþ¿¡i-ersASgOC¡AlION

The Effect of Mining and Goal Seam GasOn NSW Farmers (cont'd)

PROPOSED SOLUTIONS

1. lmproved Strategic Planning and Natural Resource Allocation Decision-MakingCurrent planning processes are not up to the task of resolving the complex resource allocationand risk management questions that must be addressed when considering areas for mine and gasfield development. This is particularly the case when highly valuable agricultural and waterresources are involved.

The current process encourages significant investmentin exploration and the development of mining projectproposals in isolation and prior to consideration ofcompeting values (for example agricultural values) andpotential risks to those values. Mining and gas firmshave an expectation that their investment will berewarded which places pressure on government tooverride sensible planning consideralions and theneeds and wishes of local communities.

There is currently no upfront strategic planning andcost benefit analysis regarding where, why and whenmineral resources should be developed. To illustrate,NSW has extensive undeveloped coal and coal seamgas resources, including in the Liverpool plains. Therehas been no public process to demonstrate a rationalefor allowing the Liverpool Plains to be developedahead of other less agriculturally valuable regions. Thesole decision criteria for issuing licences in this regionappears to have been that it is relatively the mostprofitable to mine.

A related issue is that there is no provision in the approval process to assess or manage thecumulative impacts of successive mining developments, and no upfront limits to futuredevelopment. This results in a'death of thousand cuts'to farming regions, as we have seen in theHunter.

Proposed Solutions:. Exclude mining development from Part 3A of the Environmental Planning and Assess ment Act

1979 (a mechanism under which the Minister can override normal planning approvalprocesses).

. Require aquifer interference approvals for any mining or gas activities involving impacts onground water (as per Section 91 (3) of the Water Act 2000).

¡ Establish an integrated strategic planning process for mining development that factors in allcompeting social, environmental and economic values and identifies areas where mining canand cannot occur

o The recently announced development of a strategic plan for coal mining in NSW mustbe expanded to include all extractive industries and a more meaningful timeframe andplanning process. lt should also result in a halt on mining approvals for open cutmining on alluvial (floodplain) lands orfor long wall mining within 150m of athird orderstream or higher until the strategic plan is finalised

. ln such planning, make explicit, upfront provision for cumulative impacts, including legislatedlimits to the total mining and gas development possible in regions.

o Ensure that the planning and approval process, including the issuance of exploration licences,incorporates inter-agency discussion, strategy, advice and formal concurrence.

Extract¡ng coal seam gas involves ¡ntroduc¡ngfracturing fluids into the coal seam at high pressure.Industty claims there is no risk that these fluíds willescape to the surrounding environment or thatlracturing will damage associated aquilers.

Last updated: 16 August 2010Contact: David Eyre, BrÌanna Casey

Member Seruice Centre: 1300 794 000Page 2 of 4

l=äimersl¡¡ocrAtroNThe Effect of Mining and Coal Seam Gas

On NSW Farmers (cont'd)

2. Exploration Licences, Mining/Gas l-icences and Access AgreementsCurrently, mining and coal seam gas exploration licences are granted with little or noconsideration given to the ¡mpacts on land and water titles in the affected area. Explorationlicences are awarded without any inter-agency or stakeholder consultation, inOdpenOentassessments of natural resources oiher thariminärals, or consideration of cumuiative impacts.There is no formal consideration of the value and vulnerability of agricultural production aciiu¡t¡esthat may be affected by the exploration process or by any subóequeñt development.Landholders are not individually notified of exploration licences granted over their properties andoften have to read about these in the local press. There are no government resources to assist thelandowner to deal with the implications of the granting of ltre exploration licence over theirproperty.

Nor does government take any responsibility in relation to supervising access agreements (eitherfor exploration or mining) and the conduct of explorers and miners õn farm lañd. For exâmple,there is no government supervision of the conduct of opal miners, who permanent occupy ändestablish settlements on farmers' land and typically disregard all mining licence conditions.

Proposed Solutions:

' Require an independent scientific process prior to the granting of exploration licences toidentify high value natural resources and highly productivé agricultural land and rule out thegranting of licences in such areas.o lnclude an independent body in the assessment process,

' Notify each and every party with a registered interest in the land prior to awarding of licence,. Provide an initial appeals process prior to the awarding of licences.

' Require licence conditions to be attached to access agreements' Require agency supervision and accountability regarding compliance with these conditions.' Provide agency support to landholders in developing access agreements and enforcing

access agreements

3. Aquifer lnterferencePart 3 A of the Environmentat Planning and Assessment Act 197g (a mechanism under which theMinister can override normal planning approval processes) has removed the power of the Office ofWater to require Aquifer lnterference Approvals under Section 91 (3) of the Water Act 2000.

The impacts of mining and gas development on ground water resources can be catastrophic inboth environmental and economic terms. lt is essential, therefore, that the Office of Water hassole and direct carriage of approvals, licensing and conditions where mining and gas developmentinvolves interference with ground water systems. Approval conditions musl incluãe provisions foraccurate measurement and licensing of the water lost or consumed through the activities of themining and gas industries.

Proposed solution:o the exclusion of Section 91 (3) of the Water Act 2000 from the scope of Part 3A of the

Environmental Planning and Assessment Act 1979 such that aquifer interference approvalscan be required by the Office of Water for all mining and gas developments involving impactson ground water.

o the implementation of Section 91 (3) of the Water Act 2000 via an Aquifer lnterferenceRegulation administered by the Office of Water

Last updated: 16 August 2010Contact: David Eyre, Brianna Casey

Member Seruice Centre: 1300 794 000Page 3 of 4

Crowingthe Business

of Farmingl=ëffmersA3¡OCI^llON

The Effect of Mining and Goal Seam GasOn NSW Farmers (cont'd)

4. Compensationln any legal challenge, the onus is on the landholder to provide all evidence regarding the extentof any damage that has been done, prove which specific mining activities are directly responsiblefor this damage, and bear all costs associated with the process, including any adverse cost ordersin the Land and Environment Court.

Farmers do not have the resources to defend themselves against the financial clout ofmultinational mining companies. The miners know this, often pouring unlimited resources intocases they know they cannot win, simply to scare other individuals from taking them on.

Currently there is no requirement for independent monitoring of any environmental factors duringthe exploration or mining process, with these activities being left in the hands of the minersthemselves. This makes it virtually impossible for famers to gather the evidence needed to provetheir case.

The compensation currently available to landholders typically stops at the boundary of the directlyaffected property. This typically means that farmer adjacent to the mine, or in range of the mine'sdust and noise, get nothing.

There is currently no provision in any statutory instrument to compensate farmers for impacts onwater assets to which farmers hold legaltitle.

Proposed Solutions:. Amend State and Federal water legislation to:

o protect ground and surface water from the impacts of mining and gas activity;o require accounting and licensing for all water consumed or intercepted as the result of

such activity; ando require compensation for any loss of water or degradation of water title resulting from

miningo require full independent benchmarking of water and other environmental factors prior to

exploration in areas with high agricultural values.. Amend legislation such that:

o miners can no longer be responsible for collecting data and monitoring their ownenvironmental performance;

o an Office of Mine and Gas Performance is established (funded by miners at cost) tomonitor mine environmental performance (eg dust, noise, air and water pollution)including cumulative impacts where there is more than one mine in a region;

o a Mining and Gas Ombudsman is established to advise landholders and other affectedparties and investigate complaints; and

o compensation is provided to all landholders affected by mines

The Association is not opposed to mining and coal seam gas development. Wesimply want equal treatment under the law, a balanced approach to decidingwhere and how development occurs, and just terms compensation to allaffected landholders when it does go ahead.

Last updated: I 6 August 201 0Contact: David Eyre, Brianna Casey

Member Service Centre: r tt\í:itit,

lrltswl-qrmersASSOGIAIION Negotiating Access Agreements

ISSUE

Under NSW law, the Government owns and controlsmineral and petroleum resources under the surface ofyour land. With the increase in mineral, coal, coat seamgas and gas infrastructure activities across NSW, theAssociation has prepared a summary of key points forproperty owners to consider when negotiating accessagreements. This summary is intended to complementthe suite of documents already available to membersregarding exploration access and land access agreements,available from the NSW Farmers Association website at:http://www. n swf a rm ers.o rg. a u /po licy_co m m ittees/crm/priority_issue_9.

EXPLORATION LICENCE

Once an Exploration Licence is granted by the NSW StateGovernment over an area of land that includes your property,the miner (holder of the licence) has the statutory right toexplore for the specified mineral on your property.

. Despite the right to explore, the Mining Act 1992, petroleum(Onshore) Act l99l and the Pipelines Act 1967 does not grantthe holder of the licence an automatic right of entry to anyproperty within the licence area.

. The holder of the licence must have ân access arrangementwith the property owner in order to gain access to theproperty, and will always try first to negotiate such accesswith the landholder.

INITIAL CONTACT WITH M INING/EN ERGY COMPANIES

. The mining/energy company must begin the negotiationby serving the landholder with written notice of the miningcompany's intention to obta¡n an access agreement inrespect of the land.The notice must be delivered personally

PROPERTY OWNER BASICS

to the landholder; to a person apparently above the age of16 at the landholder's place of residence or business; by postingit duly stamped and addressed to the landholder at the placelast shown on the records of the DPI; byfax;or by email.

- lf a mining or energy company representat¡ve visitsyour property unannounced, you are not requiredto meet with them, and should ask them to make anappointment to meet with you at a time and place(not necessarily the property) that suits you, to ensureyou are prepared for the meeting (see points below).

. Under Section 142 of The Mining Act lgg2 and Section69E of the Petroleum (Onshore) Act l99l ,this notice mustalso contain:

- A detailed plan and description of the area of landto which access is sought, (including the numberand location of boreholes), and

- Afull description of the prospecting methodsto be used.

. Landholders should ensure the accuracy of any noticesserved on them by the mining company, and discuss anyerrors with their legal advisors.

LAND ACCESS AGREEMENTS

. The holder of the licence will then usually also serve thelandholder with a copy of their generic access agreement.It is important to note that the landholder is underabsolutely no obligation at all to sign, or agree to anyterms contained in this agreement, and should view it asa starting point from which to begin their negot¡ations.

Generic access agreements can be very brief andmay not address unique attributes or circumstancesspecific to your property and operations. As such, theAssociation encourages landholders to request that asmuch detail as possible be included in the agreement,including definitive start and finish dates.

Records of each Exploration Licence, Assessment Lease,Mining Lease application qnd petroleum titles are keptat the Minerqls and Petroleum section of lndustry andlnvestment NSW.

For information on coal matters, please contact t&t NSWon (02) 4931 651 2.

For information on other mineral matters, please contactl&INSW on (02) 4931 6500.

A map showing current coal, petroleum and ¡nineral titlesand applications can also be generated by visitinghtt p ://uvw w. m i n erol s.nsw.g ov.a u lmv2w ebl mv 2?

Under Section 141 of the Mining Act 1992 and Section69D(2A) of the Petroleum (Onshore) Act 1991, theexplorer must poy "reosonoble legal costs of thelandholder ín obtaining ¡nitial advice obout themaking of the orrangement'lThere has been no maxinum amount set yet for thesecosts/ so it is a good point of negotiotion!

Growingthe Business

o{ Farming

ltltswl-qrmersASSOCIATTON Negotiati ng Access Ag reements

- lt is important to note that exploration under thePetroleum (Onshore) Act 1991 includes exploratorybores, but also the more extensive process known as

'PilotTest Production'.This should be recognised whenconsidering the required elements of exploratory landaccess agreements.

. Access agreements should have clear start and finish dates,to ensure the landholder is clear on the period in whichexploration activities could take place. The agreementshould also include specific information about the times ofday and days of the week that exploration activities will beundertaken. Landholders could consider agreeing toseparate access agreements for each exploration activity,eg, in the case of coal seam gas exploration, a separateagreement for exploratory drilling, and a separateagreement for pilot test production.

. Landholders should ensure that they give carefulconsideration to their own farm biosecurity and qualityassurance programmes, farm seasonal workplan, familylife, cost of legal advice, impact of access on daily andwork routines and possible access routes. Arrangementspertaining to any of these are all seen as reasonableconditions to include in an access agreement.

. Similarly, occupational health and safety requirementsare also an important consideration. Landholders shouldconsult with both employees and the mining/energycompany to adopt processes that ensure the health andsafety ofall people accessing the property.These processes

should be detailed in the access agreement.

. UnderSection3l oftheMining Act l9g2,theminingcompanymust not explore within a certain range of improvements,such as fences, gardens etc, so it is important to ensure thatthis section is complied with. This section is largely untestedin court.

WHAT HAPPEN5 IF NEGOTIATIONS BREAK DOWN

. ll after 28 days of negotiating, the mining/energy companyand the landholder cannot reach agreement as to the termsof the access agreement, either party may request thatan arbitrator be appointed. The parties may agree to theappointment of any person as an arbitrator.

PROPERTY OWNER BASICS

. lf after a further 28 days, the parties cannot agree on theappointment of an arbitrator, then either party may applyto the Director-General for the appointment of a rnemberof the Arbitration Panel as an arbitrator.

. Under Section 147 of the Mining Act 1992 and Section 69J

of the Petroleum (Onshore) Act 1991, the arbitrator mustconciliate, "use their best endeavours", and must actaccording to "equity, good conscience, and the substantialmerits of the case" to bring both parties together to reacha settlement acceptable to all of them. lf the parties arestill unable to agree, then the arbitrator may imposean access arrangement which may be appealed firstlyto the same arbitrator, or then further to the Land andEnvironment Court.

COMMUNICATION STRATEGIES

. Mining/energy companies often prefer to deal withlandholders on a "one-on-one" basis. Landholders must beaware, however, that often the professionalism, experience,and negotiating abilityof the mining/enqrgyteam can placethe landholder at a distinct disadvantage. lt is recommendedeither that the landholders form small groups and requestthat they meet together, (for Association Members, localBranches and/or District Councils may be available tocoordinate) or else that the landholder engage a solicitor orexperienced negotiator to assist them.

. lt is also helpful if the landholder keeps accurate diary notesof every contact made to them by the mining/energycompany, including the nature of such contact, and thepersons involved. Likewise, every piece of correspondenceeither to or from the mining/energy company should beretained. Landholders may also wish to send a letter oremail to the mining/energy company confirming in writingthe key points of their conversation.

DISCLAIMER:

The material contained in this document does not constitute legal advice Theinformation provided is of a general nature only The document is not to berelied upon in substitution for detailed legal advice NSW Farmers'Associationis not responsible for any action taken in reliance on any information containedin this document. Readers of th¡s document should not act upon informationcontained in th¡s document without consulting legal counsel

A number of conditions that may be included in access

agreements to protect landholders and their propertyrights are Iisted at Section 141 of the Mining Act 1992 andSection 69D(l ) of the Petroleun (Onshore) Act 1991.

lf the landholder desires, the mining/energy company canbe directed to contact them only through their solicitor, orlegal advisor. This is best done in wr¡t¡ng, and signed bythe landholder.

noræ,Mr Sam Haddad FVTPA MATCDDirector GeneralDepartment of PlanningGPO Box 39SYDNEY NSW 2OO1Attention: Coal and Gas Strategy

3 March 2011

Dear Mr Haddad

iVo¡tIe¡t Riue¡s

Re6ional

Orgonisotion

of Cou¡cits inc

Submission: Coal and Gas Strategy Scoping paper

The Northern Rivers Regional Organisation of Councils (NOROC) represents the localgovernments of Ballina, Byron, Clarence Valley, Kyogle, Lismore, Richmond Valleyand Tweed on the far north coast of New South Walãs, as well as utility provider RousWater and catchment authority Richmond River County Council. fogethèr we serveclose to 300 000 residents.

NOROC appreciates this opportunity to provide feedback on the Coal and GasStrategy Scoping Paper as coal seam gas exploration is currently being undertaken insome of our constituent member councils in the Clarence-Moreton Basin. We wish toprovide the following comments:

1. NOROC supports in principle the investigation of alternative sources of energyto traditional coal mining, and in particular the potential for coal seam gas toplay a critical role in moving to a row carbon economy. on behalf of théNorthern Rivers community we emphatically urge that strict environmentalcontrols apply to every stage of the extraction, production and distribution ofmethane.

2. ln general, the Scoping Paper provides little intormation that pertains direc¡y tocoal seam gas mining. None of the Government's initiatives to addresscommunity concerns target coal seam gas mining, let alone in the Clarence-Moreton Basin. This is despite the Scoping Paper acknowledging that there willbe a significant proportional increase in the use of gas, from lg% in Z0O2 to30% in 2030.

3. Of the four public meetings convened by the Department of Planning so far,none have been in the Northern Rivers. The Department will be aware that inthe Northern Rivers there is a rapidly increasing demand for credible,accessible and easily-understood community information regarding coal seamgas mining. Action groups and alliances have been formed, ãnd cõnstituentcouncils such as Lismore City Council and Rous Water have independenilypassed resolutions calling for a moratorium on further coal seam gasexploration pending a full and impartial investigation into its effecté on thecommunity. These resolutions have been in response to a call for support fromthe NSW Farmers Association.

4' The key issues for NOROC are generally consistent with those raisedelsewhere in the state, namely:

PO Box 450BALLINA NSW 2473 Email:

Telephone: 0427 307 033

. The need to improve management of cumulative impacts such as noise, dust,blasting and lighting impacts, given that even the exploratory drills operatearound the clock for between 20 to 40 days at a time. We are directly involvedstakeholders as our member councils have regulatory responsibility for anyconstruction for generation of up to 30 megawatts.

. Protecting the amenity of health of people living in population centres and alongthe pipeline north. We would view this as an integral part of any strategicenvironmental assessment (SEA) process, and would encourage this type ofassessment be used either in preference or in conjunction with site-specificassessment and management.

o Potential conflicts with existing agricultural land use, the unique and richbiodiversity of the Northern Rivers, the aboriginal heritage of the Bundjalungpeople of this area and tourism. We are also aware that horizontal drilling cantake place at a depth of 2km if landowner consent directly above the ground isnot granted.

. Site rehabilitation must be undertaken in a progressive and integrated manner,as currently councils do not have complete information as to the location andcondition of drilling sites. lt is essential that this information be available infuture property searches.

¡ Concerns over the treatment and disposal of produced water and the impact ofcoal seam gas extraction on water tables and aquifers and unintended methanerelease from existing bores. The broader issues of hydraulic fracturing, thechemicals used and the potential effects on groundwater are of concern,however, we recognise that its use in this region is limited due to the nature ofour geology.

o The required upgrades to transport infrastructure, in particular track upgrades,the associated impacts on regional and local roads and any ongoing regulatoryresponsibilities for councils and associated costs.

o The Nodhern Rivers by virtue of its proximity to Queensland has a number ofcross-border issues that it has to regularly manage. A pipeline that woulddeliver gas to Queensland extracted from NSW could come at a cost toNorthern Rivers communities. We would welcome a cost-benefit analysis asproposed in the Scoping Paper.

With regard to the remainder of the Paper, NOROC is in general agreement with thesections relating to potential initiatives of the NSW Coal and Gas Strategy and invitesthe Department to actively engage with us and our member councils.

lf you would like any further information, please contact our Executive Officer, C.raigKelly on 0427 307 033.

Yours sincerely

Cr Phillip SilverPresident, Northern Rivers Regional Organisation of Councils

PO Box 450BAL¡-INA NSW 2478noroc@ I ismore. nsw. qov. auABN: 38 905 052 556

Email:Telephone: 0427 307 033

Australian Government National Water Commission - coal seam gas

Australian Government

National rÀ/atcr Com m ission

You are here:1. Home2. Media and events3. Commission media4. 20105. coal seam gas

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National Water Commission urges caut¡onon Coal Seam GasMedia release 3 December 2010National Water Commissioner, Ms Chloe Munro, today called for industry, governmentsand planners to adopt a precautionary and more integrated approach to managing waterrelated impacts of Coal Seam Gas developments.ln a Commission Position Statement released at an industry conference, Ms Munrohighlighted the need for these developments to be managed in a way that is consistent withthe objectives of the National Water lnitiative.'An adaptive and precautionary management approach will ensure that as we develop ourunderstanding of the industry's impacts on water resources, this new knowledge will betaken up in approval processes and improved management practices,'said Ms Munro.'We also need to ensure that our current environmental approval processes, which have thecapacity to address many of the issues relating to water and Coal Seam Gas development,are better integrated with water planning and management arrangements.'Ms Munro said, 'The Commission acknowledges that Coal Seam Gas industry represents asignificant economic opportunity for Australia.'However, we also recognise that if not adequately managed and regulated, the industryrisks significant, long{erm and adverse impacts on surface and groundwater systems.'Key risks identified by the Commission stem from the large volumes of water beingextracted, the depressurisation of coal seam aquifers, and the disposal of large volumes oftreated waste water.Ms Munro emphasised that the potential impacts of Coal Seam Gas developments,particularly the cumulative effects of multiple projects, are not well understood.'The Commission takes the view that mining activities should operate under the same rulesas other water users', said Ms Munro.Consistent with the National Water lnitiative, this would make water access entitlementsavailable to coal seam gas activities wherever possible; bringing projects into consistentstate and territory water planning and management regimes from their inception.The Commission also recommends that project approvals should be transparent, includingclear and public articulation of predicted environmental, social and economic risks alongwith conditions implemented to manage the risks.The Position Statement sets out eleven principles that the Commission believesgovernments should apply to managing the impacts of Coal Seam Gas.These principles address water management issues such as long-term reductions inadjacent aquifer pressures and levels, discharges to surface waters, and water producedas a by-product of the extraction process.Position statementLast updated 3 Dec 2010

http://www.nwc. gov.au/wwwÆrtmU2958- coal-seam-gas.asp?intSitelD= 1 2U03t20tt

NSWGOVERt.t t'1E t.Jr

NEWS RELEASEPrenrier of New SoLrth W¿rles

TOUGH NEW RULES FOR COAL SEAM GAS EXPLORATION

19 December 2010

The NSW Government will introduce tough new rutes for coal seam gas exptorationlicences - including rigorous community consultation and tighter environmentalcontrols during the approval process.

The new requirements will be_ subject to a staged implementation and will involve theDepartment of Environment, climaie change "ño

w"t'|" (DEccW, the Department ofPlanning (DoP) and tndustry & tnvestment NSW (t&t).

The changes to the coal seam gas exploration process mean:

' Applicants will now have to submit fon¡vard work plans thoroughly detailing anyexpected enviro_nmental impacts. The plans will be reviewed ov oeõCw and Dop and

. made public before ïil:l'l%""îtïil ,n" review of environmentar ractors, incrudins

for any drilling or related activities such as hydraulic fracturinitake their recommendations into consideration before approvin!

' All chemical additives used in the process of exploring for coal seam gas must beincluded as part of the review of environmental faciors in1¡fle applications;'and' ff" following new community information and consultation conditions will beintroduced, requiring licence holðers to:o Provide detailed information about their activities to all affected councils and

landholders;o Establish a hofline for community enquiries; ando Distribute l&l information on landholder rights in the process.

"We recognise community concerns about coal seam gas exploration - and we are listening tothem," Premier Kristina Keneally said.

"The reality is natural gas is an important part of cleaner and more sustainable energy sourcesinto the future.

"However, it is important to get the balance right: managing our natural resources in anenvironmentally responsible wãy, with extensivelommunity consultation - while moving theindustry forward to a cleaner source of power.

'BTEX chemicals are not currently used in any hydraulic fracturing activities in NSW - but theidea of banning these chemicats ið certainly sómétning ," àr" invõstigating.',

Primary lndustries Minister Steve Whan said: "There is no doubt that natural gas will be animportant source of energy for our homes, schools and hospitals into the future, but we can'tallow this to progress unchecked.

"Communities need to have a voice here - they need to be kept informed of anydevelopments and they need to be fully aware of their rights.

"The involvement of DECCW in the exploration licence process will ensure that both shortterm and long term environmental impacts are taken into account.

"Further, the involvement of the Planning Department in coal seam gas applications from theexploration stage onwards will ensure a streamlined approach to potential mining activities.

"These proposed changes will enhance existing environmental checks and strengthencommunity involvement in any decisions made about coal seam gas exploration into thefuture."

Submission by

Tyalgum District Community Association Inc

RC: THE NSW COAL & GAS STRATEGY MINISTERIAL SUBCOMMITTEE OF CABINET

lnquiry by the Ministerial Subcommittee into;

the development of a long term Strategy concerning the co-existence (or othertvise)of communities and industry interests.

Preamble

This submission

' is made on behalf of the Tyalgum District Community Association, based at Tyalgum inthe Tweed Valley, approximately 25 km west of Murwillumbah, New South Wales.

o has been prepared in haste due to the short notice that residents and local communityorganisationslave been given concerning petroleum exploration licences being exerciied inthe Northern Rivers area of New South Wales.

' concerns only Coal Seam Methane 'mining' as it applies generally under the Petroleum(Onshore) Act - with specific reference to Petroleum Exploiation Licence (pEL) - 445.

' does not address in detail, the merits or otheruvise of gas coal seam mining other than tofirmlY.flnC r.fnequivocallv assert that where such mining causes or is likely to causequantifiable harm to the environment, individuals or the community then no licences shouldbe issued until all such matters are satisfactorily resolved in the públic interest.

' addresses widespread public concern about the unjust nature of the legislation whichpermits exploration without proper and comprehensive assessments as to the likely impactthat such exploration can have on the environment, communities and individuals.

¡ notes that the political, legislative and administrative processes of granting petroleumlicences lack genuine concern about matters of public interesl; none the least being thehealth of the environment or affected communities and the lack of concern about proced-uralfairness and due process. Furthermore the emphasis of the whole process seems to stronglyfavour the financial interests of the petroleum industry and Government revenue.

' focuses on the Tweed area as a case in point [referencing PEL 445]- highlighting theineffective legislative processes which could put resideìts, businesseõani tneenvironment at risk of harm

Objective of the submission;

noting the concerns and unresolved issues raised below, we are calling on the relevant Minister tohalt all Methane Gas Seam mining exploration and extraction in thé Tweed and Clarence Riverareas pending a full and proper assessment of the costs, benefits and social and environmentalimpacts of such mining.

TDCA Submission - Gas Seam Mining April 201L Page 1 of 1L

Overview in Summary;

Legislation; Petroleum (Onshore) Act, appears to be unconstitutional in part; it does not afford allparties the same rights in respect of due process, procedural fairness and equity. And it doesnot ensure that the losses of various existing rights or benefits is warranted or that thosesuffering or likely to suffer losses are properly and fully compensated.

Political policy: the policies and guidelines of the government appeared to lack any weight indetermining whether licences for exploration or extraction should be granted.

Ministerial authority; the process by which Ministers may issue licences seems to lackstransparency and accountability. lt also seems to lack reasonable appeal mechanisms andthe objective testing of evidence to ensure that all matters are properly considered againstthe guidelines.

Delegation of functions by Minister (s126); Delegation powers which allow the Minister todelegate powers to the holder of any offiçe seems unwise and open to reducedaccountability.

Administrative and Regulation deficiencies; Requirements to ensure that Methane Gas Seamexploration and extraction complies with procedural requirements and that the regulatoryrequirements meet public interest safety standards.

Exploration licences: Licences are issued over a'blanket' area without regard for any specificmatter in a specific location which may cause harm to the affected public interest, otherindustries, village communities, or individuals.

Environmental Concerns: it is clear from objective international, national and scientific informationavailable that the fracking and waste disposal arrangements from Methane Gas Seammining are not effective or are not sufficiently effective to protect fundamental naturalenvironmental matters (eg ground water and local atmosphere).

Potential Toxic inundation to Ground Water: direct evidence, much of it scientific and verifiedindicates increased toxicity of ground water where Gas Seam mining has occurred.

Specific risks must be addressed; All factors likely to adversely affect a localised region, industryor community must be thoroughly examined publicly and assessed prior to any exploration orextraction for gas.

Poor protection against harm: the current legislation seems aimed at remedial action after amisadventure or harm is caused to affected parties, rather than ensuring that such harmnever occurs.

Notices of perceived danger (s129) : such notices concerning the operations of a petroleumlicence may only be given to the licensee and not to the effected landholder or other personswho may be affected.

Royalties seem totally inadequate: A cost benefit analysis of Methane Gas Seam royaltiessuggests that there is a poor return to the nation compared to the profit generated byextractors and exporters. Royalties should be linked to profit.

Royalty lnsurance against damages: The very likely adverse effects of Gas Seam Mining,warrants a comprehensive insurance scheme funded by Gas exploration, extraction,processing and exporting industries

TDCA Submission - Gas Seam Mining April 2011 Page 2 of 11-

Terms of Reference [oR] (see ltalics)

The newly elected NSW Government has set terms of reference that seek "to (also) ensuressustainable local communities and the ongoing development of awide ronge of existing industries(eg agriculture, tourism) in mining regions through the coordinated management of allenvironmental, social, health and economic impacts on regional development, job creation,infrastructure andwealth distribution ...... about where mining and non-mining activities canmost appropriately develop.. "

GOMMENT; if Coal Seam Methane mining interferes with or adversely affects non miningmatters (environmental, community, social, health, safety or economic stability of a regioñ)then such mining CANNOT be an appropriate development.

The aims finter alia] are too Facilitate sustainable development of the coal mining industry and associated activities

(including coal seam methane) in identified mining regions alongside continued developmentof existing industrie s including agriculture ;

o Minimise any adverse health, environmental, food production and land use impacts,including cumulative impacts associated with development of existing industries includingagriculture.

COMMENT: it appears that the aim of the government is not to prevent or prohibit harmto health, the environment or food production or land use - rather the aim is simply tominimise the amount of harm which the government expects to occur. The anticípátion byGovernment that Gas Seam Mining will cause harm is alarming in itself, but to be satisfiedthat the harm is simply to be minimised and tolerated is not acceptable.Nothing short of the prevention and prohibition of harm is acceptable.

Ensure the industry is regulated efficiently and effictively,.

COMMENT: governments are relatively effective at creating efficient and effective regulationof industries, however they are notoriously ineffective at ensuring the enforcement ofsuch regulations. There is evidence to date that existing regulations are not being enforcedor applied in the public interest.

Provide the context for the NSW Coal & Gas Strategt, including:

a) identifying the size, area, and location (including suruounding communities, land usesand activities) of the State's coal resources, and those resources that might be minedby open cut methods;

b) assessing the likely growth (including the economic, employment and socialimplications) of the industry over the next 25 years, taking into consideration domesticenerg)/ requirements and export opportunities, and any potential challenges or policydevelopments having an impact on this growth.

COMMENT: in the context of a balance between the benefits of methane extraction and thesocial, environmental, health, safety, population, amenity and existing industries it isincomprehensible that the PEL445 (title) was ever granted. Note below the government's reporton far North Coest strategies; Take further note that the licence was granted under the current'regulated' arra ngements.

TDCA Submission - Gas Seam Mining April 201L Page 3 of 11

The Far North Coast is the most biologically diverse region in NSW, with stunning beaches, WorldHeritoge oreos, charocter-filled villoges ond productive rural hinterlonds. lt is no surprise that around2500 people come to settle ¡n the region eoch year to enjoy the lifestyle.

The region's natural wealth is olso the basis of resource industries, expanding exports and tourism, whichcontribute significantly to the State economy.ln the next 25 years the region's populotion is expected to grow more thon 26% to 289, 000. A wellbolanced long-term vision is needed to provide for this growth while ensuring the environment isprotected,

o 2. Identrfy key impacts and constrainß associated with coal seam mining, including:

(a) Environmental and amenity impacts on surrounding communities, land uses and activitiese.g., conflict between miners and the thoroughbred industry in the Upper Hunter Vallq.¡:

(b) population health impacts of mining, particularly dust and particulate emissions andnoise,'

(c) interaction between specific mining activities and potential biodiversity or conservationsites;

(d) impact of mining activity on subsidence;

(e) pressures on transport infrastructure in key mining areas and related communities; and

(fl impacts on water resources, including water for coal washing.

COMMENT: factors such as health, safety and social well-being or security of affected residentsand the risk of collateral damage to other parties is, according to this TOR, not considerednecessary to identiff as 'key impact or constraint'factors. Nonetheless it is noted that otherimpacts on communities, population, biodiversity, infrastructure and water resources are noted as

possible constraints. Unfortunately is not clear what weight these constraints would have onbalance against an indecent rush to create amethane gas extraction industry.

o 3. Assess government's existing regulatory, legislative andfacilitation activities to determineif the existingframework is adequate to address the issues that have been identified, andrecommend measures to strengthen whole of government regulatory and monitoringmechanisms.

COMMENT: as a generalisation the legislation, regulatory processes and facilitationactivities concerning the issuing of petroleum exploration and extraction licences are noteffective and do not best serve the public interest. To recommend measures to strengthenthe whole of government regulatory and monitoring mechanisms would require a Ph.D.thesis.

However as a good start, the strengthening of public interest disclosure laws,whistleblower protection, and the creation of a Regulatory lnspection Bureau paid for by therespective industries would be a good first step.

o 4. Identifu options for addressing kzy issues for inclusion in the Strategy. This could include,

fo r ins t anc e, ide nt ify ing :

strategic initiatives to minímise the potential environmental, health, social, transport, landuse conflict, and other impacts (including on local communities) associated with the

sustainable development of the industry, eitherfor specific coalfields where the managementof cumulative impacts is likely to be a significant issue, or the industry more generally;

COMMENT: See critical comment above in respect "minimising" harmful impacts ratherthan preventing and prohibiting harm.

TDCA Submission - Gas Seam Mining April 20L1 Page 4 of 11

5. Assess, where relevant, the various options identified using a broad based social,environmental and economic cost-benefit analysis framework and an objective assessment ofequity considerations to inform the assessment of the various options identified. This couldinclude, for instance, cost-benefit analysis of competing land uses (mining, agriculture,tourism, environmental conservation) in specific regions or defined sub regions, as well aspotential health costs and benefits, to guide decision-making on the relative merits ofintroducing or expanding coal mining in these regions or sub regions.

COMMENT: a cost-benefit analysis of the competing interests is really dependant ongovernment policy. The weight the government gives to mining royalties as opposed torevenue raised from taxes from the produce of existing landholders is a matter ofgovernment (preference) policy. Whether that policy also factors in the ongoing sale andretail benefits that accrue from agriculture and farming is not clear. lt seems more likely thatgovernments to date flavour the "cash in hand" that mining royalties bring rather than theaccumulative benefit that working the land has for the nation as a whole.At present these policies and supporting legislation do not seem to realistically balance theadditional factor of likely harm to communities or the environment caused by Methaneexploration or extraction.

ln the absence of clear policy statements from the government as to where their preferenceslie, it seems a pointless exercise arguing the respe'ctive merits of royalty receipts comparedto adverse effects on communities, the environment or the accumulative loss io the financialwell-being of the nation..

6. Facilitate the development of the associated infrastructure required to support the ffictiveand fficient operation of the coaffields. This could include an assessment of the totalapproved production versus existing transport handling capacity (from rail to port),.projected/potential maximum productionversus transport capacity; and transport-relatedimpacts on local communities.

COMMENT: the costs of any infrastructure to facilitate the export of Methane must be borneby the relevant industry. No public funds should be used to facilitate Methane exportbusinesses (particularly those which are foreign owned). However, setting aside otherfactorsagainst Methane production, if the Methane extracted is to be used exclusively for domesticpurposes then the provision of normal domestic infrastructure would be provided as usual asa government service.

7. Establishþrmal mechanisms to improve the communication between government, industry,and the community on mining-related matters.

COMMENT: the establishment of formalcommunication mechanisms between government,industry and community is important. Unfortunately such mechanisms are dependent on therespective party's power and influence. And in respect of community power and influencethere is a deficit and clear disadvantage in the period between elections. Clear governmentpolicy and a power to take a matter before a relevant court at minimal cost, would go someway to balancing the respective parties powers and influence.

8. Recommend to Cabinet a short-term and a medium to long term Coal Mining Strategt thatassists the coal industry to continue to develop in a broad, balanced and sustainable mannerthat takes into account human health and environmental protection.

IDCA Submission - Gas Seam Mining April 2011 Page 5 of LL

COMMENT: Research and objective assessment of the health and safety of all factors isnecessary to ensure that any Methane exploration or extraction causes no quantifiable harmin any given location. That independent research and objective assessment must be paid forby those seeking to exercise the exploration and extraction of methane. ln the absence ofsupportive evidence that such exploration and extraction will not cause harm, then thegovernment must err on the side of public safety and well-being and deny the relevantlicenses.

lssues in Detail

Legislation;

The Petroleum (Onshore) Act [the Act], appears to be unconstitutional in part; The Act in Part 11 -Compensation, provides limited compensation for simple specific damages and harm causedto a landholder's property. lt also provides compensation for the loss of the use of landoccupied by a petroleum title. But other losses of amenity, production, expansion andgeneral value do not seem to be appropriately covered by the Act. The compulsory loss ofany right, entitlement or benefit must be fully and properly compensated and it seems the Actdoes not meet that constitutional standard.

The legislation apparently does not require any limits as to the number of wells that may beestablished on a landholder's property. Theoretically, if not in practical terms, the legislationpermits the Minister the right to completely take over a landholder's property by grantingpetroleum license rights over the entire property. The inequity of legislation which permitssuch powers would seem to be unconstitutional. Furthermore the lack of specific limitingprovisions under the Act controlling where wells may be located seems to be an unjustprovision, which robs landholders of some fundamental property rights.

A petroleum titleholder may cause a broader range of damage or harm to a land title holder byhaving a petroleum well or several wells on a landholder's property. That situation couldsubstantially detract from the overall value of a property. lt may even make the propertyunsaleable. A farming asset and residence which has been built over the years couldbecome a úirtual liability if petroleum wells on the property seriously detracted from its value.And not only are the wells of themselves a potential robber of value but the maintenance andready access to those wells by engineers, inspectors and others would be a furtherdetraction of a land owner's property value

Simply having a petroleum well on a property could totally destroy an organic farm (animal, plant orvegetable) certification. Yet the compensation provisions under the Act do not seem toaddress this issue. Moreover such personal losses to a vocation, lifestyle or business couldnot be compensated simply by the payment of money. Furthermore if the loss of suchcertification caused the land title holder to failto meet existing contractual obligations thenthat additional loss must be taken into consideration when calculating any compensation.

The same arguments in principle hold true for all agricultural businesses, whether they be organiccertified or not.

Moreover, having petroleum wells on one property may cause serious loss of value to adjacentproperties for the same reasons. lf the introduction of those wells is a direct cause of loss orvalue to an adjacent property it seems that this must be a factor to be considered in grantingpetroleum licenses; and likewise legislation must also ensure that such losses are properly

TDCA Submission - Gas Seam Mining April 2011 Page 6 of L1

compensated for under the Act.

Other losses and damage may be caused to the environment generally, adjacent farms,communities and villages and businesses in those villages. The specifics of these losses willbe addressed below, but it should be noted that the legislation is inappropriately silent aboutthe compensation and means to obtain compensation that may be payable to relevantparties for such damage or harm.

Political policy:

It is clear that regardless of the recommendations and requests that are put to this MinisterialSubcommittee Review, the Government's policies, guidelines and objectives willflavour thewhole process.

Therefore it is incumbent on the government to publicly declare their value weighted preferences formethane mining (in respective locations) compared to their preferenceJfor the protection ofpublic health, safety, well-being, communities, businesses, industries and the environment.

ln the absence of that clear policy directive and guideline to formulate appropriate legislation,administrative practices and enforcement of regulations, the whole process oi a MinisterialSubcommittee is in effect, superfluous and redundant..

We look fonruard to be new Government setting out their Methane exploration and extractionobjectives in a comprehensive public document as soon as possible, but certainly before thecurrent Sub committee Review makes any recommendations.

Ministerial authority;

Ministers mav issue a petroleum exploration licences if they so wish without full and accountableregard to the likely or certain impact that the execution of such licences may have on variousparties or the environment. The extent to which any regard is given to any argument seemsto be at the sole discretion of the Minister or his/her delegate.

Under the Act, the only parties who seem to have any right of appeal to the issuing of such licencesis the immediate landholder whose property rights will be diminished by thè granting of thelicence.

Clearly some basic principles which will guarantee minimal protection to the health and well-being ofpeople, property or the environment must be included in any license application forconsideration by the Minister. Yet petroleum licences are granted covering vast tracts of landcontaining towns, villages, businesses, industries, farms, water courses, water aquifers.

From the information available it is not certain what information is specifically required to beprovided by an applicant for a petroleum exploration or production licence. Due process andprocedural fairness would require that ALL relevant information must be made available tothe decision maker. Yet it does not appear that any specific mining locality or processinformation is required other than the boundaries of the area subject to the application.

For example it is not clear whether an applicant must disclose the chemicals to be used and theirquantities, the intended volume of water to be used, the process of injection, the depth of theintended operation, whether the drilling is vertical or at an angle and whether or why thatangle drilling is necessary. Similarly the satisfactory disposal of any water, soil, chemicals orpetroleum products must be spelt out in any application.

TDCA Submission - Gas Seam Mining April 2011 Page 7 of 11

lf petroleum licences are to be granted, those licences must only be granted when thespecific processes identify safe procedures, appropriate chemicals, drilling anglesand depths and safe disposal of residue have been declared and resolved. Allfactorsrelevant to the processes used must be publicly identified and taken into considerationbefore the licence is granted.

Though the Act appears to make provision for National Parks and Native Title, other less wellprescribed areas such as cultural or National Heritage places, wildlife corridors, rare flora orfauna locations or unique tourist attractions do not have such protective provisions.Permitting petroleum exploration licences in these areas is contrary to any common sense, itignores the value of national assets and is certainly contrary to the public interest. Yet thelegislation seems silent as to how those national assets can be protected and by whom theymay be protected under the Act.

ln some locations, because the specific landform or geography (e g. valleys or natural basins) anyuse of toxic chemicals, used in the petroleum licence process would be a serious threat tothe life and well-being of residents in that area. Alternatively the process of fracking couldallow the leaching of natural but toxic chemicals into watercourses or the atmosphereparticularly in natural basin areas.. lt appears that petroleum licences have been issuedwithout regard for any specific geographical assessment of the risk to communities, people ingeneral or the environment.

lf there are requlations specifuinq the distances from such places at which exploration can occur, itis simply not possible to issue a blanket license for vast tracks of land in the hope that anyrisk to people or the environment will be dealt with properly at a later time.

lf petroleum licences are to be granted, those licences must only be granted for specific andprecise locations. All factors relevant to the location must be identified and taken intoconsideration before the licence is granted.

This approach would it appears, be totally different from the 'blanket' licences currently granted.Therefore it is strongly recommended that the licence process be in two parts.

Part 1. a petroleum licence prospector applies to hold licence over a specified area and pays alicence fee directly proportionate to the area covered.The licence fee would pay for a proper investigation of the area under consideration. Anylicense granted would take note of specific places and circumstances which are described asbeing excluded from the licensed area.

Pa¡t2. After land or aerial surveys and petroleum licence prospector may apply for a new andseparate licence to carry out physical exploration at specific locations.A fee for that license would pay for a proper independent and objective assessment of thelocation subject to the licence application. All factors relating to the relative merits for andagainst the application for the licence must be publicly assembled and assessed before aminister decides to grant or withhold the licence

Delegation of functions by Minister (s126);

The Act allows the Minister to delegate powers to the holder of any office (presumably employedunder the Act). This arrangement seems to allow junior officeholders in the relevant agencyto grant various petroleum licences. This seems to be a facility which allows the Minister toavoid responsibility and accountability in respect of granting petroleum licences.

Granting of licences must only be done after a thorough examination of the relevant facts balancedagainst the policies of the incumbent Government, the interest of other affected parties andthe general public interest. Though the administrative work and general assessment ofarguments for or against the granting of a licence may be carried out by relevant agencyoffice holders, it is really the absolute responsibility of the Minister to make the final decision.

TDCA Submission - Gas Seam Mining April 20L1 Page 8 of L1

The power to grant a licence or reject a licence must not be delegated by the Minister. That isan abrogation of responsibilities and undermines the process of Minisierial accountability.

Administrative and Regulation deficiencies;

Government agencies seldom have sufficient resources to ensure compliance with all statutoryrequirements or the enforcement of regulations. ln the highly lucrative field of methane gassales there is a constant risk of compromise at best or corruption at worst.

Methane gas explorers or extractors must be levied an amount in their ongoing licensing fees to paythe costs of maintaining a satisfactory standard of regulatory process (ie claims assessorsand inspection officers).

Best practice suggests that the administrative and regulatory process should be handled by a seriesof officials at varying levels. This process constantly tests whether the administration andregulatory process is working and it also minimises the opportunity for maladministration orcorruption.

Random sampling of petroleum licence applications by a specialist group of auditors and inspectorswill ensure that adherence to any and all guidelines, practices or procedures which arerequired, were properly administered. .

Exploration licences:

Petroleum licences appear to be issued over 'blanket' areas. As discussed above, 'blanket' licensescannot properly address the specific concerns of individuals, communities, villages and otherinterest groups about the likely adverse effects that petroleum licences may haùe.

ln plain words, licences which are granted for a blanket area without regard for the specific interestsof parties who may be affected indicates very bad legislation, a þoor understanding of socialand community needs, an abrogation of effective administration and an unjust andprocedurally flawed process.

lf licences must be granted they must be granted for specific locations having regard to theinterests of all parties who may be adversely affected by the granting õf sucn licences.

Environmental Concerns :

Objective international, national and scientific information available as well as direct evidence ofpersons who have suffered from methane gas exploration or extraction verifies that theprocesses used to extract methane is fraught with danger and must be treated with theutmost care.

Australia is one of the driest areas on Earth, and our water supply from groundwater and aquifers isparamount to sustaining life in Australia. The national subterranean water reserves must beprotected by all means possible - even if that is at the expense of keeping gas reserves inthe ground.

TDCA Submission - Gas Seam Mining April 201L Page 9 of 11

The environmental concern of having any part of our groundwater or dam reserves contaminated bymining processes is simply unacceptable.

The fact is, that any litre of Australia's groundwater, river water or reservoir holdings is morevaluable than any litre of compressed natural gas.

Any industrial practice which uses vast amount of water in its processing must be viewed withconsiderable scepticism. That scepticism should be greatly heightened if the residual waterfrom that process becomes contaminated to the extent that it is un-potable.

And further concerns should be raised if it is likely that the contaminated water used in the gasextraction or other contaminants from the ground can be mixed with sweet freshwater, thusmaking it also un- potable.

Many communities and agriculture or farming industries are dependent on fresh ground water. Anyactivity which puts that water at risk in any way must be prohibited.

Exposure óf Toxic inundation of Ground Water:

The relevant Government agencies have, or should have information about instances ofcontamination by Methane gas of naturalwater reserves both in Australia and otherlocations. These examples should be publicly available. Similarly a register should exist onthe relevant Agency web site listing any instances or complaints of Methane contaminationarising from Gas Seam extraction or exploration.

Specific risks must be addressed,'

All factors likely to adversely affect a localised region, industry or community must be thoroughlyexamined publicly and assessed prior to any exploration or extraction for gas. As a case inpoint the licence PEL 445 applies to deep valleys and natural basins in the geographicregion near Mt Warning. There are many National and State Parks recognised for theirnatural beauty.

However the real concern is that this area is totally dependent on ground water for village life.Already Arrow Energy has drilled in valleys above Kyogle and is fast approaching Tyalgumand other Tweed Valley areas.

Tyalgum poses a unique risk factor. We are located in a natural basin. lf there is an escape ofMethane gas during a time of an atmospheric inversion layer, then the methane could betrapped in the basin. Given Methane's properties, it is likely that people would not know thatthey were being gassed until it was too late.

The specific nature of each location where gas is mined or where it may be inadvertently releasedmust have a direct bearing on the consideration of granting any petroleum licence.

Poor protection against harm:

The current Petroleum (Onshore) Act is typical of government legislation. Governments stipulatethat certain events must not happen but if they do, then a Band Aide should be applied to theproblem. Safety issues work best if they prevent injuries rather than treat them.

What is needed in legislation, is more emphasis put on determining any risk in the first instance.More importantly is the need to ensure that where risk is involved that those at risk are givena veto over any proposed action.

Knowing that a risk to local residents is present and not providing adequate protection is culpablenegligence at best or callous disregard for safety at worst.

TDCA Submission - Gas Seam Mining April 20L1 Page L0 of 1.1

Notices of perceived danger (s129);

It appears that notices of dangers concerning the operations of a petroleum licence may only begiven to the licensee and not to the effected landholder or other persons who mây béaffected.

This is simply not acceptable. Where there is a risk to any person, directly or indirecfly it is obligatoryon the person detecting the dangerto alert any person who may be affected.

To restrict the circulation of this information to petroleum licence holdeis seems to confirm the closeand unhealthy association between Government and the petroleum industry. The publicinterest is apparently not paramount.

This legislative provision must be revoked and a more publicly responsible attitude adopted in thelegislation.

Royalties seem totally inadequate;

A cost benefit analysis of Methane Gas Seam royalties suggests that there is a poor return to thenation compared to the profit generated by extractors and exporters. Royalties should belinked to profit.

Royalties should be paid on the well head production as a base rate at 1Oo/o of the value at thatpoint. However after the gas is processed it is sold at wholesale prices to retail ouflets.

The final Royalty payment should be based al 10o/o of the wholesale sale rate with a discount takeninto account for the earlier well head payment.

Royalty lnsurance against damages.'ln addition to the Royalty payments which should be collected, an additional l0% rate should be

added which should be used to fund an insurance arrangement against any and all damagescause by the Methane exploration, extraction, processing and exporting industries

This submission has been prepared without sufficient time to adequately research all necessaryaspects to support the arguments. Nor has there been time to copy and enclose supportingdocumentation. However the information provided above is so provided in good faith and tóthe best of our knowledge and information.

You are further advised that the submission has not been formally adopted by the TDCA but thatprocess will be formalised next week. Given these circumstances you may take thisdocument to be our formal submission until advised othenruise.

The Association may be contacted through

P.Bennett, PO Box 65, Tyalgum, NSW 2484Phone 02 6679 38S1P. P. Bennett@optusnet.com.au

Regards

Peter Bennett

For the Tyalgum District Community Association.

TDCA Submission - Gas Seam Mining April 2011 Page 11 of 1L

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