COAL SEAM GAS

Some basics in economics, geology and hydrogeology as applied to eastern Australia

Acknowledgements for data sources: Peter Flood, Carey Bradford, Anita Andrew

Coal seam gas (CSG) is natural gas• Natural gas – what is it, how does it form and

where does it occur? Natural gas is dominated by methane CH4. May have small amounts of other hydrocarbons, CO2, N2.

• It is a colourless, odourless gas that will burn at concentrations of 5-15% in air.

• In nature, it mostly forms by decomposition of organic material (e.g. in landfills, swamps, sediments and organic-bearing rocks).

• Methane is an attractive fuel as it is easy to distribute and on burning produces much less CO2 on a weight basis than coal (the C/H ratio is 0.25 versus >1.4 for black coal).

Natural gas in rocks• Economic concentrations of natural gas occur in sedimentary

basins where it has formed by decomposition of organic material deposited at the time of sedimentation (marine and terrestrial sources). Most economic sources are late Palaeozoic to Neogene in age (e.g. 400 Ma to 10 Ma), and gas is forming in modern sediments

• Three major types of gas occurrence are found in sedimentary rock basins:

Conventional gas, hosted in porous and permeable rocks such as sandstone and limestone, and commonly associated with oil

Shale gas, hosted in “tight” fine grained shale

Coal seam gas, hosted in coal (mostly in black coal).

Methane hydrate

• A huge potential resource of natural gas is locked up in modern marine sediments in the form of methane hydrate (properly termed methane clathrate CH4.5.75H2O, an ice-like substance forming in cold-water conditions)

The oil and gas window

Most natural gas is generated from sedimentary rocks buried to considerable depth and subjected to heat and pressure. The gas “window” overlaps that of oil, but most forms at higher temperature.

Black coal in eastern Australian sedimentary basins has been subject to temperatures (e.g. >100°-150°C) that generated considerable methane

A brief interlude on shale gas

• Production only just commenced in Australia, and there are potential large resources (e.g. Cooper, Canning Basins).

• Forms by decomposition of organic material originally deposited in marine mud, when this material is lithifiedinto shale, and methane is generated by heat and pressure.

• Shale is a “tight” rock and acts as a barrier to fluid flow (whether that be water, oil or gas)

• To economically extract gas, shale needs to be fractured (“fracked”) following directional drilling and use of high pressure water, sand and small amounts of added chemicals (see later)

Shale gas

Large resources currently being developed and exploited in the USA

This is resulting in the USA changing from being an energy importer to exporter and affecting world politics

‘00s to ‘000 m

Directional drilling

Coal seam gas

• Formed during and subsequent to the coalificationprocess from original organic material. The source rock (particularly black coal), is also the reservoir

• Gas is absorbed on to coal and constrained by water pressure

• Optimal reservoir depth 250-1000 m

• Gas can be released by drilling into, and dewatering the coal (by releasing pressure)

• Methane drainage has occurred for many decades in the underground coal mining industry to reduce the risk of gas blowouts and methane explosions

CSG is generated as primary or secondary gas during and subsequent to

the process of coalification of organic material

CSG can form by thermal and biological processes

During the earliest stage of coalification biogenic methane generated as a

by-product of microbial action (primary biogenic gas)

Subsequently, thermogenic methane forms with burial and temperatures

>50°C

Later, biogenic methane can form by reduction of CO2 from shallow

groundwaters (secondary biogenic gas)

Gases produced are adsorbed onto micropore surfaces and stored in

cleats, fractures and other openings in coal, and also in groundwaters

within the coal beds

Coal seam gas

Coal seam gas: derived from coal maturation and subsequent biogenic processes

Coal thin section Coal SEM image

From Pells 2012

Coal seam gas

In Australia, large CSG resources in the Surat and Sydney-Gunnedah

and Bowen Basins. Industry grew rapidly in Qld for supplying gas as

liquefied natural gas (LNG) exports. Limited use for local supply.

Saline water storage

From Kelly, 2012

Environmental concerns

include:

• storage of saline waters at

surface and potential for

contamination

• disturbance of shallow aquifers

that could be used for water

supplies

• gas, salt and chemical entry

into aquifer waters

• fugitive emissions

• disposal of salts from

desalination plants

The economic drivers• since 1999

increasing world

energy need,

especially

growing major

economies (e.g.

China, India)

saw rising price

of oil

• June 2015 to

March 2016 WTI

crude fell from

$US105 to

$US33 BBL -

viability of shale

gas and CSG?

what happens

next?

The economic drivers

• Increasing world energy need, especially growing major economies: China, India

• Natural gas (including CSG) is viewed as being convenient, less polluting than coal or oil, and potentially more abundant

• Although not a new industry in Australia, CSGdevelopment has really only grown since 2005, with the impetus being the LNG export market

• Over 70% of Queensland’s domestic gas supply is CSG, only 6% in NSW: potential for growth in supplying households, industry and for power generation

• In 2013, 4840 CSG wells in Qld and 230 in NSW

The economic drivers• NSW has a problem situation where most of its gas supply to

1 million customers is conventional gas (Cooper Basin), with the resource diminishing and contracts ending by 2017. New Bass Strait gas contract with AGL in 2015. Customers will pay more.

• Current and potential employment and investment benefits. In Queensland, projects underway employ 18 000 people and generate $1 bn p.a. in royalties to the Qld govt.

• A caveat: since 2014, the world economic outlook has become weaker and demand for energy resources (thermal coal, gas, oil) has decreased, resulting in lower prices and loss of economic viability for some operations.

• In Queensland, LNG developments and exports are delayed and less viable, and in NSW, abandonment of Gloucester Basin and Camden operations by AOG. Santos “hunkering down” in Narrabri area

Sydney-Gunnedah-Bowen, Surat and Galilee Basins are main focus

Australian sedimentary basins with CSG potential

Australian CSG reserves

• Reserve life is ≈150 years at current rates of production,

but production is projected to increase with the

establishment of the CSG LNG industry

• Australia has substantial subeconomic demonstrated

resources and large inferred resources – Qld has 92% of the reserves, NSW 8%

– reserves in the Surat (69%) and Bowen (23%) basins with small

amounts in the Clarence-Moreton (1%), Gunnedah (4%),

Gloucester and Sydney basins

• CSG uses are growing

– pipeline gas or as a fuel for on-site electric power generation

– pipeline gas to regional centres and cities as power generation,

industrial facilities and mains gas

– LNG for export

Australian CSG

Reserves

On a world basis, Australia is well endowed with unconventional gas (e.g. CSG)

Why does CSG only occur here?

• Must have the appropriate sedimentary rocks (e.g. coal) and geological conditions

• Many other parts of Australia are underlain by sedimentary rocks, but these either do not have the source materials, or they have been subject to heat and pressure that have destroyed gas potential

• CSG does not occur in igneous and metamorphic rocks that underlie about half of continental Australia

• There is essentially NO CSG potential in the New England region of northern NSW due to the above factors and community group concerns about “CSG Mining” in the region are baseless

CSG in southern Queensland and northern NSWIn southern

Queensland, CSG mainly occurs in the

Walloon Coal Measures of the SuratBasin (which is a lobe

of the Eromanga/Great Artesian Basin), with a

resource also in the underlying Bandanna

Formation of the Bowen Basin

Productive aquifers of the Surat Basin are shown in blueand aquitardsshown in brown

CSG in southern Queensland and northern NSW

Productive aquifers of the Surat Basin are shown in yellow, aquitards in greyand brown

Namoi alluvium

In northern NSW, CSG mainly occurs in coal measures of the Gunnedah Basin, underlying

the Surat Basin

CSG in Sydney Basin

1.5

2.0

2.5

3.0

1.0

0.5

250 200 150

Permian Triassic Jurassic Cretaceous Tertiary

100 Time (Ma)

Dep

th s

ub

-sea (

km

)

50 0

0

-0.5

-1.0

Missing section

Wianamatta Gp

Mittagong Fm

Hawkesbury SS

Narrabeen Gp

Illawarra Coal Measures

Shoalhaven Gp

Sea level

ISO-VR

0.5

0.6

0.7

0.8

1.0

1.3Burial history the

Sydney Basin Faiz et al. 2006

Faiz & Hendry 2006

CSG in Sydney Basin

1.5

2.0

2.5

3.0

1.0

0.5

250 200 150

Permian Triassic Jurassic Cretaceous Tertiary

100 Time (Ma)

Dep

th s

ub

-sea (

km

)

50 0

0

-0.5

-1.0

Missing section

Wianamatta Gp

Mittagong Fm

Hawkesbury SS

Narrabeen Gp

Illawarra Coal Measures

Shoalhaven Gp

Sea level

ISO-VR

0.5

0.6

0.7

0.8

1.0

1.3

A

B C

Exploring for CSG: directional drilling has

revolutionised the industry

Downhole steerable drilling motor and drill bit

Directionally drilled borehole

Several directional wells can be completed from the one site. The drilling process might follow on from preliminary exploration involving a seismic survey

OLD

NEW

From Pells, 2012

Drilling involves considerable friction, thus drill fluid additives are used

Exploring and testing for CSG• Exploration takes place in known coal basins• Drill core of coal is recovered for testing• Laboratory testing of coal core takes place to

determine gas yield and flow rate.

Gas is absorbed into coal and is at least partly released along fracture systems (cleat) when pressure is reduced.

Drilling also provides data on reservoir pressure, gas and water production and water composition

Extracting CSG

CSG is produced via cased wells. The drill hole is cased with steel and cemented in place to prevent escape of gas and associated formation water into shallow aquifers and at the wellhead

Gas and water entry into the bottom of the cased hole

Double steel casing with cement infill

Extracting CSG• Water is pumped out of

the coal seam aquifer thus reducing the pressure. Gas is desorbed from coal and released. Produced water and gas are separated at the wellhead

• “Fracking” (hydraulic fracturing) of the coal seam aquifer has been used in about 20% of CSG wells in eastern Australia in order to improve rate of gas extraction

Fracking process, modelled on shale

gas extraction in USA

Composition of a typical fracking fluid used in Australia

Some of the above chemicals include sodium hypochlorite and hydrochloric acid (as used in domestic swimming pools), acetic acid (vinegar) and disinfectants. Use of partly water-soluble benzene derivatives (BTEX chemicals) is banned in Australian jurisdictions. Other scientific considerations are that coal seams are not in hydrologic connectivity with other aquifers (due to aquitards) and huge dilution factors are involved

Produced (formation) water compositions• CSG-associated water is commonly brackish, with a range of 200-

10000 mg/L TDS (compare typical drinking water of <500 mg/L TDS). Values in RED exceed ANZECC guidelines for stock water

Data for 126 CSG formation waters

in Surat and Bowen Basins,

Queensland

Waters are essentially Na-Cl-HCO3 types, with

low Ca, Mg, K, SO4, metals

pH 7.7-9.4 BTEX <2 ppb

Cl 29-5360 ppm Zn Most <0.5ppm

SO4 <1-105 ppm Cd ≤0.005 ppm

HCO3 58-5280 ppm Cu Most <0.02ppm

Na 18-4270 ppm Pb Most <0.01 ppm

Ca 1-324 ppm As ≤0.02 ppm

Mg <1-302 ppm Hg <0.0001 ppm

K <1-276 ppm U ≤0.001 ppm

Fe <0.1-350 ppm V ≤0.03 ppm

B 0.2-3.5 ppm Ni Most <0.02ppm

F 0.1-3.7 ppm Cr Most <0.02 ppm

Mn Up to 5.7 ppm Mo Most <0.02

Water and CSG extraction over time

Predicted gas and water production from a CSG well: time frame is up to 20 years

Community concerns about water and CSG extraction

1. aquifer drawdown

2. aquifer contamination from CSG-associated

waters (e.g. salinity, BTEX chemicals, gas,

heavy metals, F, B)

3. disruption to, and potential local sterilisation of

current farming and grazing practices

4. threat to native flora and fauna

5. fugitive emissions of methane from wells and

pipelines (powerful greenhouse gas)

6. end of well life

Environmental consequences of water and CSG extraction

• Potential for aquifer interference, e.g. is there significant connectivity between CSG aquifers and shallow aquifers used by rural industries, towns, etc?

• Hydrological modelling of the Surat Basin in southern Queensland by non-corporate organisations (University of Southern Queensland, Queensland Water Commission) has demonstrated the likelihood of limited drawdown of water levels in productive aquifers over decadal periods

• This is due to presence of abundant aquitards in the Basin sequence and that the amounts of water withdrawn represent a tiny fraction of the total groundwater resource

Hypothesised risks to aquifers from dewatering

Remember that in the real-world situation (e.g. Surat Basin), many of the overlying units are aquitards

Testing for aquifer interaction

• potential for aquifer interference, e.g. is there significant

connectivity between CSG aquifers and shallow aquifers

used by rural industries, towns, etc?

• hydrological modelling to assess the potential drawdown of

water levels in productive aquifers over decadal periods;

aquitards in the basin sequence will limit the amounts of

water withdrawn

• active monitoring of groundwater impacts

– water chemistry

– ground surface levels

Environmental consequences of water and CSG extraction

Planned monitoring system for Surat Basin

Environmental consequences of water and CSG extraction

Examples of potential water drawdown levels due to CSG extraction in the Surat Basin over decades from QWC hydrological modelling study. Does not take into account (a) natural recharge, or (b) drawdown due to other water users (e.g. agriculture)

Environmental consequences of water and CSG extraction

• In Surat Basin, 1500 GL water would be extracted with CSG production over 20 years (i.e. 75 GL p.a.)

• This is about 1/40000th of the water in the Great Artesian Basin (Surat Basin is part)

• Does not take into account (a) natural recharge (880 GL p.a.), or (b) other uses of Basin water for agriculture, town water supplies, etc.

• By legislation in Queensland, CSG producers are required to make good any impact on water supply

• water produced from coal seams is

highly variable in quality (potable to

saline) and quantity

• disposal options: evaporation dams (no

longer permitted), reverse osmosis (RO)

treatment, re-injection into suitable deep

aquifers (treated or untreated), direct

use of water for power station cooling,

coal washing, stock

• salts can be used a commercial source

of salt, soda ash and chlorine

• RO water is required for drinking water

standards and is used for stock,

augmentation of town supply, irrigation

of crops and tree plantations, industry,

dust suppression – supplements and

augments GAB groundwater

Aquifer contamination

Impact on farming

and native flora and fauna

• Apart from water issues there are other impacts including:

• Effects of land clearing on native flora and fauna

• Disturbance of farming and grazing operations

• infrastructure and access roads

• microseismic disturbance from fracking and water removal: allegations that earthquakes are caused

• surface subsidence

Geoscience Australia geodetic network to monitor ground

surface response to resource extraction in Surat Basin

From Garthwaite et al. (2015)

Landowners and CSG companies

• all underground resources

are owned by the Crown

• landholders have legal

rights − access, negotiation

and compensation

• CSG companies cannot

enter land without consent

and must negotiate on

placement of infrastructure

• sites must be rehabilitated

at the end life

• land owners are entitled to

financial compensation for

CSG activities

Surat BasinTara, Queensland

Fugitive greenhouse gas emissionsBackground methane values:

• methane seepage to the

atmosphere from

sedimentary basins

containing coal deposits is

commonplace

• emissions globally from

geological sources 60−80

Mt/a with 13−29 Mt/a from

seeps and micro-seeps (Etiope et al. 2012)

• sources are primarily located

along coal basin fringes

associated with coal outcrop

and subcrop formations

What are fugitive emissions?

IPCC Guidelines for National Greenhouse

Gas Inventories: Energy Sector - includes

CH4, CO2 and N2O (from combustion)

• Conventional oil and gas

(equipment and well leaks etc.)– exploration

– production

– venting and flaring

– processing

– storage

– distribution

• Coal mining – seam gas− underground mining (ventilation air,

drainage)

− open-cut mining

− post-mining

− abandoned mines (only underground)

CSG Fugitives

currently not counted in

National Inventory but

fugitives from CSG

under scrutiny

industry rapidly growing

with large export CSG

LNG proposed/underway

LNG projects proposed in

Queensland

total capacity 50−60 Mt pa

1000’s of wells and long

distance pipelines

potential for significant fugitive

emissions

little reliable data available

most studies based on life cycle

assessment

results sensitive to assumptions

Remember, methane is generated naturally by ruminant animals (20% of emissions in Australia), anaerobic vegetation decomposition, landfill, sewage treatment plants, flatulence, etc.

End of well life?

• wells are expected to be

productive for ≈ 20 years

– not much experience

– site dependant

• small footprint of well with

directional drilling and

multi head wells

• pipelines are buried

underground

• requirement to seal well

and rehabilitate site

• can well life be extended?

Potential environmental impacts - summary

• Aquifer drawdown

• Aquifer contamination from CSG-associated waters (e.g. salinity, BTEX chemicals, gas, heavy metals, F, B)

• Fugitive emissions of methane from wells and pipelines (powerful greenhouse gas)

• Disruption to, and potential local

sterilisation of current farming and

grazing practices

• Threat to native flora and fauna (just

like farming, grazing, roads, urban sprawl)

Attempting to dispel myths- a difficult task for the scientist

• Unfortunately, good science and media- and politics-driven agendas do not mix well

• Factual information can be ignored or selectively used to suit the arguments of protagonists

• Fear, ignorance and political

opportunism make media

stories, whereas scientific

information and logic don’t