CSG in Victoria Geoff Collins Manager Energy Resources Development and Engagement.

CSG in Victoria

Geoff CollinsManager Energy Resources Development and Engagement

Presentation Overview:1. Context

2. What is CSG

3. How is it produced

4. Hydraulic fracturing

5. Water

6. Access to land

7. Prospectivity - how likely is CSG to eventuate

8. Questions

Context

• Victoria’s gas demand will have doubled by 2030

• Current gas reserves will be depleted somewhere between 2025 and 2030

• There are three possible sources of local supply which need to be

investigated:

Sources: AEMO Gas Statement of Opportunities

DPI Annual Statistical Review

• conventional gas offshore

• shale gas and tight gas onshore

• coal seam gas onshore

What is CSG?

CSG is methane, the principal component of natural gas. It is formed by:

CSG is largely held on the surface of the coal. The greater the hydraulic pressure, the more gas that can be stored.

• temperature as coal is buried (black coals)

• biogenic activity in coal (brown coals)

How is it produced?

• To produce CSG, pressure must be reduced to allow the methane to come off the coal surface

• Methane flows through natural fractures to a collecting well where it is brought to surface

• Depth is in the range of 200 to 1000 metres

• Drill rigs are truck mounted and occupy a space of about 60 by 80 metres

• Well spacing is of the order of 500 to 700 metres

• A producing well occupies a space of about 10 by 10 metres

Hydraulic fracturing

• Hydraulic fracturing or fraccing is used to enhance permeability where natural fractures are insufficient to allow gas to flow to the well

• Fraccing uses a fluid that is 98% water and sand. Wells are cased to contain the fracturing to the coal seam and to isolate shallower aquifers

• Victorian regulations mean any proposal for the use of additives in hydraulic fracturing requires detailed assessment

For a list of chemicals that might be used in fraccing fluids: www.appea.com.au

Water - sub-surface

Including

• lowering of (non-coal) aquifer pressures

• connection between aquifers

• natural connection

• connection caused by fraccing

• fraccing fluids

Water extraction requires licensing by SRW

Water - surface

Disposal of water

• disposal to land is exempt under EPA licensing

• disposal to an aquifer requires EPA licensing

• disposal to a waterway requires EPA licensing

Access to land

• Victoria wants to see both development of its earth resources and a thriving farming sector.

• The area that a CSG operation occupies means that farming activities can continue

• While there is no right of veto, the MRSDA puts requirements on companies that want to access land and provides a general requirement to consult

Prospectivity - how likely is it to eventuate?

• Most of the world’s CSG is coming from black coal

• Victoria largely has brown coal or disseminated black coal. Around Wonthaggi there are some thicker black coal seams but their extent is limited

• There is little information about the characteristics of Victoria’s coal from which to draw conclusions

• What evidence there is, is inconclusive.

Where Victorian brown coal is located

Questions?

Gippsland Basin CoalGippsland Basin Coal

CretaceousBlack Coal

Tertiary Brown Coal

Otway Basin Coal Otway Basin Coal