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Is this the end of coal seam gas for now?

Coal seam gas (CSG) has become a divisive issue in recent times, particularly in rural and regional areas of Queensland and New South Wales. Despite the regulation of CSG being primarily a State responsibility, several private members have introduced bills that aim to exert greater Commonwealth controls over CSG. This FlagPost will examine the latest bill, which was introduced into the House of Representatives on the 11th of February. It could have the effect of stopping all new coal seam gas developments across Australia for at least two years.

CSG (as well as large-scale coal mining) has been particularly polarizing in agricultural areas, such as the Hunter Valley in NSW and the Darling Downs in QLD. CSG proponents (such as Santos and AGL) argue that CSG is necessary to secure Australia’s continuing natural gas supply. Proponents also point to the economic benefits derived from exporting CSG as liquefied natural gas.

CSG forms underground as buried organic matter decomposes, forming coal and gas over millions of years. This methane gas adheres to fractures and pores in the coal and is kept in place by high water pressure. When a well is drilled into the coal seam, water is removed and the pressure is lowered, allowing the gas to come away from the coal. This means that a CSG well produces gas and a large volume of water.

Opponents are concerned that the extraction of CSG interferes with underground water and risks contaminating water supplies. Some opponents claim that CSG withdraws too much water from aquifers, endangering agricultural activities which rely on this groundwater. Other opponents of CSG highlight the impact of CSG on cropping and grazing land and complain that farmers have little power to control CSG activity on their land.

The Commonwealth has been reluctant to interfere in the regulation of CSG by the states. Although the Commonwealth and five jurisdictions (Victoria, New South Wales, Queensland, South Australia and the Northern Territory) signed the National Partnership Agreement on Coal Seam Gas and Large Coal Mining Development, this agreement only commits the parties to seek advice from the Independent Expert Scientific Committee on Coal Seam Gas, established through legislation in 2012. The Agreement is not legally binding and does not restrict the ability of the states to licence and regulate development of CSG. The lack of nationally consistent policy on CSG means that the regulation of CSG varies considerably between jurisdictions.

In response to concerns that environmental and social impacts were not adequately addressed by the states, several Private Members’ bills have been introduced to attempt to force the Commonwealth to regulate CSG more closely. A bill introduced in 2011 by Senator Larissa Waters sought to give landowners more rights in their dealings with CSG companies. A bill introduced by Mr Tony Windsor MP and another bill introduced by Senator Waters both sought to mandate the approval of the federal Environment Minister for CSG (and other mining and petroleum) activities which extracted large volumes of underground water. These bills have not been proceeded with by the Parliament.

The latest bill that attempts to place federal controls on CSG, introduced by the Hon. Bob Katter MP, would create an offence under the Environment Protection and Biodiversity Conservation Act 1999 if: a person takes an action that is or results in ‘drilling through or into and aquifer… for the purposes of, or connected with, coal seam gas extraction’, within two years of the commencement of the bill. Violators could be fined up to $200,000 for an individual and $2 million for a corporation.

Although the bill may be intended to prevent drilling into aquifers used for agricultural or drinking water purposes, which are common in the Great Artesian Basin, any coal seam that produces CSG also produces water and could be considered an aquifer in the geological sense. The McGraw-Hill Dictionary of Geology and Mineralogy defines an aquifer as ‘A permeable body of rock capable of yielding quantities of groundwater to wells or springs’. Other authorities (including the National Water Commission) give similar definitions. As coal is a sedimentary rock and coal seams are evidently permeable to water, it appears that any coal seam possesses the necessary elements of an aquifer.

The implication of this is that the Bill becomes a de facto ban on new production of any CSG. If it is illegal to drill into an aquifer for CSG activity, it then becomes illegal to drill for CSG at all. This would also apply to exploration wells, drilled to find and evaluate the status of gas deposit. It is unclear if this is an intended consequence of the bill or not. Existing, already drilled wells would not be affected. Any expansion of existing fields could not be permitted and any new developments would be off the table for two years. Needless to say, this would stop the recently approved Gloucester CSG project.

However, whether the Bill progresses in the Parliament remains to be seen. Both the Labor and Liberal parties have supported CSG in the past and have given no hints that their official policies are changing.