At least 500 coal seam gas wells planned for Northern Rivers
NSW MEDIA RELEASE – 12 December 2011
The Greens NSW mining spokesperson Jeremy Buckingham feared 500 or more coal seam gas wells will pockmark the Northern Rivers if Metgasco plans to export gas to Queensland or to an export terminal off Northern NSW after Metgasco have evidence at hearings of the NSW Parliamentary Inquiry into Coal Seam Gas on Thursday 8th December in Sydney.
After refusing to reveal internal estimates of the number of wells required, Metgasco Managing Direction Peter Henderson had this exchange with Greens MP Jeremy Buckingham:
“The Hon. JEREMY BUCKINGHAM: In your estimation, would you need more than 500 wells to deliver that type of project?
Mr HENDERSON: Mr Buckingham, I am sure you have a lot of data from other operations to gain your own view of that, but certainly 500 wells would be in a reasonable range.”
“If Metgasco are serious about earning a social licence from the community they should be honest and up front and say how many gas wells they are planning,” said Greens MP Jeremy Buckingham.
“If a pipeline hooks up the Northern Rivers to Queensland’s LNG export market, there will be a large demand for gas. 500 wells may be just the start.
“The nature of this industry is to march across the landscape, looking for new gas and drilling new wells as the productivity of existing wells falls away.
“It’s not good enough for this information to be kept secret. Knowledge of the number of wells planned is crucial for the community to make an informed decision about the future of the Northern Rivers,” her said.
Contact: Max Phillips – 9230 2202 or 0419 444 916
HANSARD 8 December 2011
The Hon. JEREMY BUCKINGHAM: You said earlier on that there was an economic benefit from this and there was also a suggestion that you are planning to provide gas to the proposed Richmond Valley Power Station. The other proposal you have suggested that you are interested in executing is an export liquefied natural gas project—what is known as the Lions Way Pipeline. Your submission states that it is looking to produce and export 1.5 million tonnes per annum. How many coal seam gas wells do you require to make that a viable proposition?
Mr HENDERSON: There is a question of the size of the market and there is also a question of the productivity of the wells. The size of the market is clearly an important factor, but so too is productivity, and that is why we have not gone out with a number. Clearly, if a well will produce a million cubic feet a day rather than 100,000, you need ten times fewer wells. We have not gone out with numbers on that simply because we have a lot more work to do to establish exactly how many wells we would need.
The Hon. JEREMY BUCKINGHAM: Considering that you have been established for some time and you have assessed the productivity of your wells as they are, you have done no modelling on an average across those wells of how many wells you would need to supply 1.5 million tons per annum?
Mr HENDERSON: Clearly we have done modelling, but we are certainly not at the point of making the final investment decision on that and we would anticipate having more data before we get there. It is not the sort of figure that we generally quote until we have actually gone through the process and are ready to make some sort of development application or commitment.
The Hon. JEREMY BUCKINGHAM: So you have done modelling of how many wells you may require?
Mr HENDERSON: We have done internal modelling—
The Hon. Dr PETER PHELPS: Point of order: It would seem to me that we are now delving into a public examination of matters which are of commercial-in-confidence in relation to the operations of this company. While they may have done modelling, I do not see it provides any benefit if they tell their competitors exactly the productivity of the wells that they are currently looking at or could be implementing in the future.
CHAIR: I remind all committee members that witnesses who come to these inquiries do so as guests of the Parliament. They are here to give evidence. If Mr Henderson does not wish to give out information which he feels may be of detriment to his company—or of benefit to his company—particularly in terms of commercial information, he is quite at liberty to decline to answer that particular question.
The Hon. JEREMY BUCKINGHAM: The issue I am interested in is not productivity, which may be commercial-in-confidence; it is the number of wells.
The Hon. Dr PETER PHELPS: How can you work out the number without the productivity of each well?
CHAIR: Order! I am sure the witness is capable of answering the question.
The Hon. JEREMY BUCKINGHAM: In your estimation, would you need more than 500 wells to deliver that type of project?
Mr HENDERSON: Mr Buckingham, I am sure you have a lot of data from other operations to gain your own view of that, but certainly 500 wells would be in a reasonable range. The other thing you need to take into account is the nature and type of wells. Clearly, we are going to be trying to minimise the footprint of our wells, and it is not so much the number of wells but how many sites you need to have. If we can drill six or ten wells from one site, it will look largely like one well. If you are trying to get the impact and basically what disruption there is going to be to the land area, it is the case of the number of wells and our ability to get as many from one site as possible. A figure we have quoted a number of times is that we would expect to be able to take no more than 1 per cent of the land and certainly less than 2 per cent. That is the sort of measure that we will be taking in terms of managing the success and effectiveness of our operations.
The Hon. JEREMY BUCKINGHAM: Speaking of 2 per cent, if I told you that 2 per cent of the water you are drinking at the moment contained brake fluid, caustic soda, NF-6, GEL stabiliser, potassium chloride, ethanol, sodium bicarbonate and all the other chemicals you have listed, would you be concerned? Would you continue to drink that water?
The Hon. RICK COLLESS: Point of order: That is purely a hypothetical question and I do not think it should be answered.
CHAIR: The question is out of order.
The Hon. JEREMY BUCKINGHAM: You say in your submission that no chemicals or drilling fluids are discharged into the environment. Are you saying that you retrieve 100 per cent of all your drilling chemicals and fracking chemicals from coal seams?
Mr O’BRIEN: We have not done any fracking in coal seams yet, but certainly drilling fluids we recover. One of the things you have to do with coal seam gas is you have to dewater the well. You recover all your drilling fluids plus the water from the well.
The Hon. JEREMY BUCKINGHAM: One hundred per cent—there is absolutely none left in the coal seam?
Mr O’BRIEN: One hundred per cent.
The Hon. JEREMY BUCKINGHAM: In relation to drilling chemicals, you say: All of the above chemicals are removed from Metgasco operations and placed in approved industrial waste disposal sites. Could you expand on what those approved industrial waste disposal sites are?
Mr O’BRIEN: Our water handling currently is that our water is disposed of in above-ground holding ponds. We have two styles of pond, one that takes produced water and another one that takes drilling fluids. When those ponds are decommissioned, we will sample the water and any sediment in those ponds, and then we will dispose of both of those according to the quality at that stage.
The Hon. JEREMY BUCKINGHAM: Are they evaporation ponds?
Mr O’BRIEN: They are holding ponds. In the Casino area you get significant rainfall; you also get some evaporation. Over a 12-month period you will get net evaporation out of those ponds.
The Hon. JEREMY BUCKINGHAM: The only way you deal with produced water and drilling fluids is to hold them in those ponds?
Mr O’BRIEN: Currently, for our production pilots, that is the case, but when we go into production we will look for a beneficial use for the water. We have done a number of studies so far and there appear to be a good range of options for disposing of our water. Our production water, on the knowledge we have so far, is of relatively high quality. It is good enough for stock use as it is, without any upgrading, and then there are multiple parts to upgrade it so that it becomes a fully usable water source.