Another gas source for Australia - unconventional (shale) gas from the Cooper Basin ?

Santos recently raised their gas reserves (largely due to new coal seam gas exploration) by 42 per cent, saying "the reserves upgrade brings its total reserves to 1.44 billion barrels of oil equivalent at the end of 2009". They now say they have enough gas to proceed with the first phase of their Gladstone based LNG project (partnering with Petronas), noting that total 2P reserves for the project were 4,003 petajoules as of December 31.

Santos CEO David Knox recently made an address to the Melbourne Mining Club, spruiking the proposal that brown coal fired power stations in Victoria be replaced with gas fired power, and pointing out that the Cooper Basin may have more life in it than many think, courtesy of shale gas - the Business Spectator has a report - Gas game changer.

In the address Knox forecast that, in time, the share market would come to understand the enormity of the Santos gas reserves and how they can supply both the export LNG markets at export prices and the local markets at prices that are based on current low levels, plus an inflation adjustment.

In particular, he said, over time there would sufficient gas to replace the four Victorian brown coal power stations, which are one of Australia’s biggest sources of carbon emissions.

The eastern Australian export gas would come from Gladstone, while Gunnedah gas in NSW could be used for both export and local. But then he added a third source – the Cooper basin. Until relatively recently, the Cooper basin has been seen as a dying field but Knox said that the new technology to extract gas from tight shale rocks opens up a new opportunity for the basin to supply NSW, Victoria and South Australia. ...

Knox pointed out that Exxon has paid $US40 billion for a shale gas deposit in the US. No one is suggesting that the Cooper basin is worth anything like that, but its significance to Santos and to Australia was dramatically underestimated until today’s Knox address.

Knox has warned that the natural gas market in the Asian region is becoming very competitive as the US becomes self-sufficient in gas. Nevertheless he believes that the potential in the international market has been underestimated because of the carbon reductions it offers.

Beach Energy has also been showing interest in Cooper Basin shale gas, with chief Reg Nelson claiming unconventional gas had the potential for “a very large gas resource in the order of many tens of trillions of cubic feet that could begin to approach the CSG reserves of Queensland".

Oil and Gas Journal says that Drillsearch Energy are the other company active in the unconventional gas sector in the Cooper Basin.

If Nelson is correct, this would further expand Australian gas reserves, extending their lifespan even under a scenario of greatly increased consumption to around a century (and thus further undermining any arguments to restrict exports based on resource nationalism - though obviously environmental issues remain, particularly given the experience in the US with unconventional gas extraction).

Environmental concerns are also dogging the coal seam gas industry, with farmers starting to resist developments in rural Queensland. The Brisbane Times has a report - Farmers wonder if LNG is worth its salt.

The Darling Downs area in Queensland is not exactly a hot-bed of anti-business radicalism. The prime agricultural region - which has also found itself in the midst of the energy boom - held the seat of the former premier Joh Bjelke-Petersen, while the office of the Nationals senator Barnaby Joyce is in nearby St George.

But in response to energy companies' plans to extract billions of dollars worth of gas from the area's underground coal, normally conservative farmers are shaping up for a fight with big business.

A clutch of energy giants are planning to use the area - part of the Surat Basin in the state's south - as a source of gas to four separate liquefied natural gas (LNG) export plants in Gladstone. All want to make final investment decisions this year, in time to catch a predicted upswing in Asian energy demand and ship their first gas from about 2015.

Mirroring a bitter stoush between farmers and miners in NSW, farmers north of the border are questioning if cashing in on the energy boom might threaten the environment they depend on.

But this is not just a debate over environmental impacts and regional development. The battle highlights an emerging tension between resources development and the rural economy, which could provide another hurdle to the LNG industry's ambitious expansion plans.

One of the most problematic byproducts from coal-seam gas extraction - which requires drilling thousands of holes for each LNG plant - is salt. ''It's toxic to the plants, it's toxic to the soil, it's toxic to the animals,'' said Ian Hayllor, a grain, oilseed and cotton farmer based 250 kilometres west of Brisbane.

AgForce, a peak organisation representing rural producers, says the coal-seam gas projects proposed in Queensland could produce up to 50 million tonnes of salt over the projects' lifetime, suggesting it should be renamed the ''salt-mining industry''.

Salt cannot be burnt or sent into the ocean. It needs a commercial use, but the LNG companies have not yet found one. Santos, one of the LNG proponents, has said trucking the salt to other parts of the country is not economically viable; others are still looking for alternatives.

Mr Hayllor's other concern involves the most valuable commodity of all in these parts: water. It is produced in abundance by the drilling process. Up to 36,000 wells may be drilled in Queensland over the next three to five years.

While the "waste water" could be treated and put to use, Mr Hayllor said the intensive drilling also threatened a shallow aquifer in the Darling Downs that supplied towns, businesses and farmers.

Cross posted from Peak Energy.

Typical MSM inaccuracy in the Brisbane Times story.The Darling Downs was never represented by Joh.He was based in the South Burnett to the North.

Farmers anywhere are a conservative bunch but when they see their land and livelihood threatened they will fight.This certainly applies to open cast mining but pollution is sometimes a more subtle threat.The saline water produced by coal seam gas extraction can be desalinated at considerable expense however the salt remains a problem.Australia has enough of a salinity disaster without creating more problems.

The downs country inland of Toowoomba out to Roma, Mitchell and Goondiwindi is prime dryland farming land.Not too much of that in Australia.Being in the Surat Basin there is also a lot of coal under it.Unless mining methods can be used to extract the energy from this coal without harming food production then the coal is better left in the ground.

If fraccing is used in the Cooper Basin to extract tight shale gas then there needs to be strict controls put on waste water treatment and disposal.This is a very fragile area.

The Darling Downs was never represented by Joh.

Many would argue that almost no one was represented by Joh (demolition workers and corrupt cops excepted). ;)

A year ago Santos was advertising underground space for rent. The idea was that CO2 captured in Hunter Valley NSW coal fired power stations would be piped (1000km?) to Cooper Basin. It seems now they are actually chockers with gas. However suspicions of Cooper Basin's decline are supported by the fact Adelaide's Torrens Island gas fired power station thought it wise to build a backup pipeline to Victoria's Otway Basin.

Now it seems that the Vics are being offered big bucks by the Feds to convert from brown coal to gas fired generation. Note this will never achieve 80% CO2 cuts and will compete with CNG if most trucks eventually switch to gas. Some think the Pt Augusta SA coal fired power stations will convert to gas if Rann gets re-elected. Where will all the gas come from when the already mature Cooper and Otway basins run out? Tasmania gets its gas from the offshore Bass Basin.

If these southern gas basins can't achieve enhanced recovery it seems to me the flow could be reversed in existing pipes. Queensland coal seam gas could be pumped to Moomba SA then onto Victoria via Adelaide. It will compete with export demand for CSG and will be expensive.

At the risk of offending dare I suggest that SA and Vic switch to nuclear power? It will be cheaper in the long run and much lower CO2. After all SA has huge uranium deposits and the Maralinga A-bomb test site. Save gas for future transport needs and all the other current applications.

"Underground space for rent" was presumably the natural gas pockets that have been / are being depleted - so I don't see the inconsistency between this and saying they can also get more gas from shale rocks.

If we switch to CNG for trucks and gas for power stations, so what - as I've pointed out - we'd still have enough gas to last us a century even if we generated all our power using gas, powered all our transport using gas and expanded LNG exports dramatically.

And given the coal seam gas reserves, seemingly not so limited Bass Strait reserves (they've jumped a lot in recent years) and possibility of US style shale gas extraction in the Cooper Basin I don't see why you are complaining about SA going to gas fired power either (other than CO2 emissions, which are still a problem).

As far as the future goes, I'm glad to see moves to build combined CSP and gas power stations in NSW and QLD - in the long run we'll get all the power we want from solar, wind, geothermal, tidal, wave and biogas...

At the risk of offending dare I suggest that SA and Vic switch to nuclear power?

You can suggest all you like, but if the people don't want it, does that make them stupid?

Suggest your sites...

I can't see any nuclear facility ever being built anywhere near the Murray, or other irrigation/farming areas.

My limited imagination can think of only one site for both states with major power links, major transport links, access to significant water, 1/3rd of Victorias energy consumption nearby (IE ALCOA)... etc etc...

The border area near Mt Gambier and Portland. And the conservative locals there are quite happy with their windmills. There is also the prospect of geothermal and potentially wave in the future.

Right-wrong, stupid-smart, that region may be happy to have these things to aid the marketing of the entire Green Triangle region. Just as Tassie benefits off the clean green image essentially created by all those obnoxious greenies the conservative locals of the green triangle may just be smart enough to realize that trading on the back of the sustainable power/sustainablility image is very beneficial to them.

It's not a complete argument. But until new arguments are put forward to sway the public - suggesting nuclear can remain just that.

But go ahead, suggest your sites.

I don't buy this 'centuries of gas' line. It sounds like something the Brits may have said about the North Sea during the Thatcher years. I think CNG could be bigger than LNG export if we end up using a tonne of gas around year 2025 for every tonne of oil we use in 2010. I'd give figures but I can't seem to download the file. I'll check back later.

SP nuclear will require coastal sites for cooling water. It can provide cheaper desalination than reverse osmosis if it uses waste heat from the cooling system. When people are desperate for water and sick of paying for carbon taxed electricity they might decide they can live near a nuclear plant after all. So a list of potential sites would be near earmarked or existing desalination plants eg Kurnell NSW, Wonthaggi Vic, Tugun Qld, Pt Stanvac SA, Whyalla SA. Tas doesn't need desal but the underwater HVDC cable is limited to .5 GW export.

We need 20 GW of always available power in Australia with gas the quicker replacement for coal. However after a decade or two the price of gas may have risen several times more than the CPI. Then we will realise we shouldn't have put all our eggs in one basket.

I said a century of gas and I've posted the figures that support this calculation (see the natural gas and coal seam gas links in the main post) - no one has ever questioned the figures but feel free to point out any errors that you think I've made (as opposed to simply saying "I don't believe it").

And I don't think anyone said anything about putting all their eggs in one basket (I just do that to show we have at least a century of supply under a maximum consumption scenario - I don't recommend it - in fact I recommend we should aim for an entirely electric transport system and all renewable power from diversified sources - wind, solar, geothermal, tidal, wave, hydro, biogas).

Just for fun I'll buy into one round of all or nothing one upmanship. It's Saturday and I'm stuck at home ;-)

Note: I am well aware that water scarcity is a big issue... but which water and where?

When people are desperate for water and sick of paying for carbon taxed electricity they might decide they can live near a nuclear plant after all.

Which people?
They might also be desperate enough to stop flushing 20-30% of water treated to drinking water quality down the loo or pouring it on inappropriate gardens ... embrace water recycling, storm water harvesting, sewage recycling etc etc. WE don't need to desal water for loos.

AND let's be clear, most water consumption in this country is for agriculture... and most of that in the Murray Darling Basin which is not near the coast. And from my faulty memory maybe 50% of that "water" is "exported". If the voters (of Melbourne) are ever in danger of going without water treated to drinking water quality standard being flushed down their loos Brumby is just going to pipe it from the irrigation sector. Stuff the food bowl (or at least SPC fruit exports or a few vintages from the wine regions), stuff the Murray, stuff the residents of Adelaide and stuff the Snowy. That seems to be the plan. I doubt that desal water is ever going to flow over the GDRange to Shepparton. A bit like Bass Links reversal of fortune. Was it not sold as a green supplier to Victoria, now a Tasmanian umbilical to dirty coal?

Perhaps instead of a policy of growing Melbourne out to 6 million sucking in the resources of the peripheral catchments... thus requiring the centralized engineering (and it would appear "pro development" ie BAU growth) approach, perhaps another path is possible?
(Note: I am aware that Bendigo, Ballarat etc are pushed for water).

Which is harder for the public to swallow, recycled water or a proton pill?
(Note: I am aware that it should perhaps be a neutron pill in this context.)

Drinking water is a very small part of total water consumption in this country.

My alternate all or nothing scenario.
(Note: I do not necessarily believe in all or nothing scenarios!)

At prices approaching $3 a kilolitre desal water is far too expensive for agriculture and will never be pumped out of the city limits.

Pre Basslink in 2006 Tasmania used 0% coal fired electricity. By 2008 that had jumped to 25%. That makes me think the same will happen if they connect Moroccan solar power to Europe via HVDC cables beneath the Mediterranean. The Moroccans will end up toasting their marshmallows on coal fired electricity produced in Germany.

Still waiting to re-read the gas reports by the Parliamentary Library but their site is down.

Just go via Google cache - this should be one of them :

Just sticking to the water thing... the other North African argument is just a distraction: this in my inbox.

PhD opportunity - Community Receptivity to Decentralised Urban Water Systems
Monash University - National Urban Water Governance Program

* Project title: Exploring community receptivity to alternative urban water infrastructure and servicing arrangements: a case study of Melbourne, Australia.
* Location: Monash University, Clayton, Victoria
* Hours: Full-time
* Scholarship: AUS$27, 000 (this stipend does not cover University fees for international students).

This research project will contribute towards the theme ‘Society and Institutions’ which is a part of a $17m, interdisciplinary national research program entitled “Cities as Water Supply Catchments”. The successful candidate will work full-time for 3 years to investigate the different expectations community members have regarding traditional (centralised services) and diverse water supply approaches (i.e. decentralised, alternative urban water supplies), with a particular emphasis on stormwater harvesting. The candidate will be expected to scope and design a quantitative, large-scale resident survey, with the aim of characterising the scope of expectations amongst community members and to identify pathways forward for advancing localised, sustainable water practices.

IE: We have options.

I will make a preemptive comment for anyone who suggests that we can't clean the water up.
You may be right. But IF you hold this view, can you simultaneously believe that we can use chemisorption technology to get Uranium from the oceans...

Here's why I think increased dependence on gas fired base or intermediate load electrical generation is unwise. A slight extrapolation of Figure 2 of this report
suggests that Australia will consume or export 5000 PJ or about 100 million tonnes of gas by year 2025. Currently Australia consumes 49 Mt a year of oil (954,000 bpd at 7 barrels per tonne) about 60% of which is imported.

I tentatively suggest that for every tonne of oil that Australia uses in 2010 we will need a tonne of gas in 2025. Uncertainties impinge on the uptake of electric transport, the need for plastics feedstocks, population growth and differing energy values. If this is broadly right then Australian gas production needs to jump from 100 Mt to 150 Mt in 2025. Transport will be 30% of gas demand, not the current 3%. Due to the compounding effect Australia's probable gas reserves will run out well before 2100 and the price will escalate. There is no way we can make 150 Mt a year of gas from pig poo.

Again if this conjecture is right I think we should
a) find some other form of low carbon electrical generation that doesn't need gas
b) put a conservation protocol on unrestrained export of gas.

I'm sorry but if you do the numbers for all gas power and all gas transport, you'll find (if you include coal seam gas and shale gas) that it lasts a century (but only 40 years if you count natural gas only - which is why the unconventional sources are so important).

Please show a detailed calculation proving otherwise.

Given that a century is rather a long time (and we'll never generate all our power using gas or fuel all our transport using gas), I fail to see why we'd bother restricting gas consumption or exports on any grounds other than environmental ones...

But I do agree we want to shift to other sources of electricity starting now - which is why I keep talking about solar power, wind power, geothermal power, ocean power, biogas etc

OK here's a quickie calculation if you accept the notion of gas as an oil replacement as well as other domestic uses plus export at 150 Mtpa. If I recall some think Australia has 500 tcf of NG and CSG combined.
500 tcf X 19.4 = 9,700 Mt nearly ten billion tonnes. However I suggest some of that won't be easy to recover.

Now 9700 ultimately recoverable reserves divided by 150 gives 64.7 years. Amazingly a couple of years back before Gorgon etc went prime time ABARE came up with 65 years.

Unless steam trains make a comeback gas is our last compact onboard fuel. See also Energy Bulletin on nitrogen fertiliser. Burning it in power stations and selling it cheap to foreigners will leave future generations short.

You seem to be agreeing with my numbers as far as I can tell - I said 70 years for natural gas + CSG.

The scenario for this isn't a realistic one (ie. we'll never use gas for all power and all transport), so we'll still be plugging along fine more than a century from now.

Thus I still fail to see why you'd bother banning exporting it or restricting use - why not just encourage electrified transport and large scale renewable power generation right now - then we'll never have a problem.

Unless steam trains make a comeback gas is our last compact onboard fuel. See also Energy Bulletin on nitrogen fertiliser. Burning it in power stations and selling it cheap to foreigners will leave future generations short.

What did people do before the steam trains?
They lived local lives for local people.

Just because we currently use "cheap" gas to make N which we send on a one way trip to the toilet, doesn't meant we can't change this system. Mind you, it will be difficult.

"selling it cheap to foreigners". Would it be better if we sold it cheap to bogans?
Is it the cheapness or the foreignness?
Is it "cheap" to them?