'Still cowboys': Why the rush to develop coal seam gas leaves communities wary

By | septiembre 29, 2017
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Ask Nood Nothdurft about life for himself, his wife and 11 children in the midst of a coal seam gas (CSG) field in southern Queensland, and he’s characteristically blunt.

«It’s just a constant s— fight,» says the farmer and manure-to-fertiliser processor from the rolling Darling Downs. «We got screwed over right from the word go.»

In 2006, when prospectors first dragged rigs onto his property, a «beautiful space» some 50 kilometres from the CSG hub of Chinchilla, the family «didn’t have a clue» about what would soon be a runaway industry, he says.

Naively, they signed open-ended contracts with Queensland Gas Corporation (QGC). With the millennium drought still searing much of eastern Australia, they also gladly took contaminated wastewater pumped straight from gas wells into a dam.

Each of seven CSG wells brings in just $265 a year. A network of hydraulic power units, pipes and vents covering 23 hectares of his land brings payments from QGC to $12,000 annually.

«That doesn’t pay my monthly fuel bill,» Nothdurft told Fairfax Media this week. 

The Nothdurfts took QGC to court in what was viewed as a landmark case to force the company to renegotiate the contracts. They claimed the noise and emissions were beyond compliance limits and their family had become ill, suffering sudden migraines and frequent nosebleeds.

The battle, though, has been repeated with less attention by other families around Chinchilla and Tara, a region now pockmarked by pipelines, wells and pumps. Some have ended up selling their properties outright to the LNG companies – dominated by QGC, Origin and Santos – agreeing to conditions that gag their ability to speak out.

Such fights, though, have become salutary for communities elsewhere, particularly in NSW and Victoria, weighing the economic appeal of so-called unconventional gas development against its less welcomed impacts.

These deposits typically lie in sedimentary layers with less space between rock grains, requiring additional steps – such as hydraulic fracturing or fracking – to make the gas flow more readily to the well. One consequence is also the need for thousands of wells for a big field compared with conventional gas.

Gas squeeze

Fresh signs this week that Australia had somehow contrived to deliver domestic gas shortages, while rivalling Qatar as the world’s biggest exporter of the fossil fuel, have prompted a belated panic by the Turnbull government.

Victoria’s Labor government was attacked for blocking onshore unconventional gas projects – despite state Liberals and Nationals backing the ban. 

Prime Minister Malcolm Turnbull too sought to press NSW’s Coalition government to rapidly approve Santos’ controversial Narrabri CSG project that would drill 850 wells in its first stage, more than half of them in the Pilliga state forest.

«We certainly encourage [NSW] to get a move on,» Turnbull said, referring to the state’s vetting process of a project that will cost another $3.6 billion on top of Santos’ $1.2 billion outlay so far.

Former PM Tony Abbott went further, reportedly calling on Turnbull to use Commonwealth «defence powers» to short-circuit state gas approval processes – a «khaki solution» quickly shot down by colleagues.

Even so, by Friday the federal government revealed it was looking at penalising states or territories that placed curbs on CSG mining.

‘No one understood’

Victoria pushed back, saying its offshore gas fields in Bass Strait already produce twice the gas burnt in the state, and that Turnbull should stop «blaming others and act immediately to cap gas exports».

Premier Gladys Berejiklian, too, was blunt. The Commonwealth «can say what it likes, but we need a national approach,» she said on Thursday, adding Santos would have to follow the process laid out in the state’s gas plan.

To whistleblowers like Simone Marsh, a former Queensland government contractor placed under extreme pressure to fast-track CSG approvals, such caution is wise.

Ms Marsh notes how even as far back as 2009, state cabinet was warning the LNG boom could create «a real problem that the availability of gas in the ground may not translate into gas supplied to the domestic market». 

A year or so earlier, Santos was even crowing in its 2007 annual report how «many critical pieces» of its growth plans had been put in place. «This strategy is all about gaining exposure to global prices for our large-scale resources,» it said, noting how such exposure offered «more than four times the prevailing price of gas in eastern Australia».

«No one understood the industry – the scale, the intensity and the speed of it all came in under the radar,» Marsh says.

Nor were regulators keen to wait for the science, letting companies bore away before establishing baseline measures to tell whether subsequent development had led to increases in air or water-bourne contaminants.

Missing data

Despite having to consider LNG projects as much as 600 times larger than a typical coal mine, Marsh and her colleagues were given just weeks to wade through company submissions of more than 10,000 pages each yet full of missing data.

The absence of groundwater data meant, for instance, that a whole chapter on the subject was pulled by her superiors for the $18.5 billion Santos LNG project and yet it still got approved.

Marsh and her team had to make their own calculations as to the project’s accumulated greenhouse gases, accumulated waste volumes and disturbance of native vegetation, among other impacts. 

Every issue they raised «has turned out to be true,» Marsh says. «They didn’t have a solution to deal with all the salt produced, and they still don’t.»

‘World first’

The industry, though, defends the development of Queensland’s successful CSG industry «a world first».

«The emergence of a $70 billion gas export industry in such a short time is unprecedented,» Malcolm Roberts, chief executive of the  Australian Petroleum Production & Exploration Association, says.

«The industry acknowledges that lessons have been learnt along the way,» he says. «But the bottom line is Queensland and Australia are significantly better off for the development of these projects.»

‘Phenomenal surprise’

Stuart Murray, a retired agronomist who lives in Narrabri and runs a cattle farm a few kilometres from Santos’ proposed CSG field, is not convinced.

Suspicious of how resource companies operated after a prospecting coal miner broke multiple promises and apparently spread unwanted weed grasses on this land, Murray journeyed up to Chinchilla with dozens of other locals to examine CSG for himself.

«It was a phenomenal surprise – the extent of the industrialisation,» Murray says. «Why bugger up the Pilliga and take risks with the underground water.»

While Murray made his own submission to Santos’ environmental impact statement – one of more than 22,000 the company has to respond to – he highlights the Independent Expert Scientific Committee’s report that identified many issues.

Despite drilling 60 wells and spending years to prepare, Santos’ groundwater modelling was found to be poor.

The 850 wells in stage one could result in a two-metre drop or more in the water table, nor is there a disposal plan for the estimated 430,500 tonnes of salt the project will generate over its 25-year life.

Santos’s claim that the area contained no so-called type 1 groundwater-dependent ecosystems, was «based on very limited field sampling», the committee said.

Sydney gas

Murray notes how officials from Turnbull and Deputy Prime Minister Barnaby Joyce down declare CSG to be safe but says «people in Sydney won’t put up with it».

He has a point. The only gas production in NSW, AGL Energy’s CSG field at Camden on Sydney’s south-west fringe will close in 2023 even though the area still contains gas.

But unlike AGL’s plans to shut its ailing Liddell coal-fired power station in 2022 – which continues to draw demands to keep it open or sell it – the federal government is notably silent on Camden.

Fairfax Media sought answers from the office of Josh Frydenberg, the energy minister, which deflected them to Joyce, the acting resources minister.

Joyce, whose landholdings in CSG-rich areas near Narrabri came under renewed scrutiny this week, declined to comment on why the federal government had targeted north-west NSW and not Sydney as a prospective gas site.

Industry and NSW government officials say Sydney squats atop a huge coal seam. Even better, nobody taps aquifers after they were polluted long ago.

Liberal premier Barry O’Farrell, though, ruled out CSG wells within two kilometres of homes. He also bowed to huge protests in the lush northern rivers region to block a tight-sands gas project there. 

‘A bit of tragedy’

Sue Higginson, chief executive of the NSW Environmental Defender’s Office , who has often fought to have the courts enforce the state’s environmental laws, praises the Berejiklian government’s commitment to put the Narrabri project through an independent process that she sees as having a year to run at least. 

«There’s almost a bit of tragedy about it,» she says. «Here we have the current Prime Minister advocating for the worst practice [of approvals] – just bring it on.»

Just as Liddell’s extension struggles to make economic logic, the Narrabri CSG venture hardly looks like a solution for soaring gas prices – should it clear environmental or social hurdles. 

According to a 2015 consultants study for the Australian Energy Market Operator (AEMO), the Gunnedah region including Narrabri had among the highest cost gas to produce, with a $7.25 per gigajoule reference price.

By comparison, the Australian Competition and Consumer Commission in its recent interim gas review report that identified a possible east coast shortfall of 55-108 petajoules of gas in 2018, estimated the cost of gas delivered to Asian markets at $5.87/GJ. Local industrial users were being offered $10-$16/GJ.

AEMO cautions not to read too much into the 2015 estimates, but other analysts have put a relatively high price tag on Narrabri’s gas.

AGL exit

AGL Energy, which ditched its other CSG venture in the mid-north NSW town of Gloucester in 2016, said the study’s estimate of $4.95/GJ was probably on the low side after drilling in the complex basin proved more difficult than expected.

Public opposition – fuelled in part by visits to and from the Queensland gas fields also played a big role in AGL’s exit.

Santos chief executive Kevin Gallagher, meanwhile, welcomed Turnbull’s comments that the Narrabri project was «critical to energy security».

The gas would be enough for more than 1 million homes, 33,000 businesses and 300,000 jobs that rely on natural gas as a source of energy in NSW, he said.

Gallagher, though, had relegated the project to a non-core asset last year, valued at zero dollars on Santos’ books. He hopes to restore its «core» status by Christmas, a spokeswoman says.

Nothdurft, however, says communities should be wary of promises made by companies and governments alike.

While winning his court case last month, he secured only $60,500 in compensation, half of what he paid in lawyer fees.

«It’s still a cowboy industry,» he says. «They get away with whatever they want.»

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