News

Our North West Shelf

16 Jun, 2008 11:00 AM

SOARING energy prices and greenhouse gas worries could turn the Hunter Region's coal seam methane reserves into an industry the size of Western Australia's famed North West Shelf.

If explorations in the Hunter Valley and the Gunnedah and Gloucester basins are successful, an export-driven coal seam methane industry could create thousands of jobs and earn the Hunter billions of dollars in ways the industry says are far less damaging environmentally than with coal.

One of Australia's biggest gas companies, Santos, has exploration rights to the Gunnedah Basin and went public this month on an exploration program over the coming 18 months in reserves holding a "prospective" 40,000 petajoules, or 1.1 trillion cubic metres, of gas.

This is about the same amount of gas in the North-West Shelf and is the energy equivalent of about 1.4 billion tonnes of black coal.

In the Gloucester Basin, joint venture partners Molopo Australia Ltd and AJ Lucas last week reported test productions that were described by analysts as "sensational . . . with the world's best" and above the benchmark figure for commercial gas production of about more than 28,000 cubic metres (or 1 million cubic feet) of gas a day.

Santos and its Malaysian partner Petronas are one of four groups vying to build liquified natural gas terminals at Gladstone in Queensland, and the share prices of gas explorers are rising dramatically after years as the bridesmaid of the resources sector.

Spokesman Matthew Damon said that Santos was about to begin its Gunnedah exploration program and if commercial amounts of gas were produced then they could logically be followed by a gas-fired power station, an export terminal in the Port of Newcastle, or both.

Santos told Gunnedah community groups and local MPs that the company planned to drill between 20 and 30 test core holes over the next year to 18 months and would work co-operatively with landholders.

Sydney Gas Company has two exploration licences that cover the great majority of the Hunter Valley and an environmental battle has begun in Wollombi, where the company briefed residents at the weekend.

A foundation member of the Hunter-Bulga Gas Action Group, Graeme Gibson, said his group had been contacted by Wollombi residents, who he said had every reason to complain because the law as it stood meant they were often left in the dark.

The Wollombi residents, like their counterparts in the Wollombi Valley near Wyong, are fighting Sydney Gas but Mr Gibson said the Hunter-Bulga group had gone from a position of "total opposition" to coal seam methane mining to one of supporting the industry with two strict provisos.

The first was that gas companies stayed away from residential and built-up agricultural areas.

The second was no exploration or production from seams lying underneath a water table.

"The risk of the water table cracking and the underground or surface water disappearing down into the resultant void is too great," Mr Gibson said.

One of the biggest coal seam methane projects unveiled in the Hunter is the $750 million baseload power station proposed by the stockmarket-listed Queensland Gas Company, which hopes to feed the station from an $850 million gas pipeline planned between the Hunter and the gas-rich Surat Basin, west of Brisbane.

Each project says it is dependent on the other for success but pipeline partner Garbis Simonian said yesterday this was not a problem because they would be "built together, at the same time".

Mr Simonian, Hunter Gas Users Group chairman and founder of dross recycler Weston Aluminium, said NSW had to catch up to Queensland, which had already proved many of its resources of coal seam methane.

"But if the resources are there, then this is a fuel that produces only about 40 per cent of the greenhouse gases that coal does in producing electricity and it does it using as little as 5 per cent of the water," he said.