PERTH Aug 26 Opposition to Australia's coal
seam gas industry, which is due to sink around $70 billion into
projects in the eastern state of Queensland over the next few
years, appears to be growing with calls for new legislation to
regulate the industry.
A recent poll released by Australia's Greens party, which is
strongly opposed to the industry, showed that 70 percent of
respondents want coal seam gas mining banned in urban areas,
while 68 percent want a moratorium on coal seam gas in Australia
until the effects on the environment are more fully known.
Here are some questions and answers about the industry:
WHAT ARE THE CONCERNS AROUND COAL SEAM GAS AND "FRACCING"?
Coal seam gas production involves pumping large amounts of
water out of the ground to release gas trapped in coal seams.
Opponents say the process could cause the water table in key
farming areas to drop.
A gas drilling technique known as hydraulic fracturing,
which involves blasting large amounts of water mixed with sand
and chemicals into shale rock or coal seams to free trapped gas,
has also been the subject of criticism. The process, also known
as "fraccing", is used primarily for shale gas production, as
well as some coal seam gas production.
Opponents say fraccing could pollute groundwater, that the
expansion onto prime agricultural land will hit farmers, and the
extensive dredging required to build the projects could harm
sites including Australia's Great Barrier Reef.
Industry groups deny that fraccing affects water quality and
say the industry can co-exist with farmers.
WHAT ARE LANDOWNERS' RIGHTS IN AUSTRALIA?
Under Australian law, landowners have surface land rights,
but the government owns mineral rights.
Coal seam gas companies have said they prefer to make
voluntary agreements with landowners rather than force their way
onto farmland to gain access to resources and companies
typically negotiate land access agreements with landowners.
The terms of these agreements are typically confidential,
but Queensland AgForce, a group which represents agricultural
interests, said anecdotal evidence suggests compensation varies
widely, ranging from A$500 ($522.77) to A$5,000 a year per well.
WHAT ARE THE RESTRICTIONS ON GAS DRILLING AND PRODUCTION?
Both Queensland and New South Wales have banned the chemical
combination known as BTEX, which has been used for fraccing in
the United States. These states have also ruled out using
evaporation ponds to dispose of the extremely saline water
produced by coal seam gas production.
Other restrictions vary from state to state.
In Queensland, State Premier Anna Bligh recently banned
mining and coal seam gas exploration within 2 km of urban areas
with populations over 1,000. Farmers have pushed to get the ban
extended to farmland, but experts say Bligh is unlikely to do
so, given the huge amount of investment and jobs involved.
New South Wales, where the coal seam gas industry
is still relatively new, has extended an existing moratorium on
fraccing through the end of this year.
ARE THERE PROJECT-SPECIFIC ENVIRONMENTAL CONDITIONS?
Yes. Individual projects must get state and federal
environmental approvals, which are often contingent on meeting
Coal seam gas projects approved so far have been subject to
meeting conditions that focus on protecting underground aquifers
and disposing of the salty water that the projects produce.
Analysts have said the conditions attached to coal seam gas
projects, although numerous, were not extremely onerous or
likely to present significant obstacles to development.
However, some experts have said that the unknown costs
associated with disposing of brackish water and salt could be
WILL THE GOVERNMENT IMPOSE ANY NEW LAWS ON GAS DRILLING?
The Australian Greens party is currently leading the charge
to impose more stringent regulations and this week introduced
legislation that would allow farmers to refuse to have coal seam
gas drilling on their land.
Opposition leader Tony Abbott, who heads a conservative
coalition of pro-business and pro-farming parties, made
statements earlier this month indicating that farmers should
have a right to deny coal seam gas companies access to their
land, but later tempered those comments, saying he will not back
the Greens' legislation.
The minority Labor government strongly opposes changes to
WILL CURRENT COAL SEAM GAS PROJECTS BE IMPACTED?
Analysts say the recent tightening of regulations in
Queensland is unlikely to affect projects significantly, but
have flagged the growing opposition to the coal seam gas sector
as a factor that could impact the industry down the road.
"While the immediate impact of the new rules on the sector
will be modest, and will not set back progress on the three
major CSG projects already underway in Queensland, it does
highlight the broader risks the coal seam gas sector, in
particular, could face as an increasing number of projects move
forward and if land and water management issues lead to a
stronger backlash from local populations," Eurasia Group wrote
in a note.
There are currently three coal seam gas to liquefied natural
gas (LNG) export projects including Santos' Gladstone
LNG, BG Group's Queensland Curtis Island LNG, and Origin
and ConocoPhillips' Australia Pacific LNG, all
expected to come online around 2015.
Royal Dutch Shell (RDSa.L) and PetroChina also
plan a project, but have not yet moved forward with a final
In a recent note on coal seam gas producer Santos, Macquarie
analyst Adrian Wood indicated that further regulatory changes
cannot be ruled out.
"It appears that state politicians (particularly in New
South Wales) are increasingly siding with the farmers rather
than the miners. While the Federal government remains resolute,
Santos may yet find that the fiscal, environmental or regulatory
goal posts could be retrospectively moved," Wood wrote.
($1 = 0.956 Australian Dollars)
(Editing by Ed Davies)