Unconventional gas

Rowan Drinkwater, Science, Technology, Environment and Resources

Key Issue
The development of coal seam gas (CSG) and exploration for other unconventional gas sources has been highly controversial. This controversy is focussed mainly on environmental impacts and land access issues. This brief outlines some of the key terms and concepts underlying the debate.

What is unconventional gas?

Natural gas is combustible gas that is formed and held in underground deposits. This gas is composed mainly of methane—up to 98 per cent—with varying amounts of other trace gases depending on how and where it is formed. Some sources of natural gas are called ‘unconventional’ because they are more difficult to extract and require additional technology or effort beyond that required for more ‘conventional’
gas.

The different types of unconventional gas, and the naming conventions, vary depending on their geological origin. There are three main types. CSG—or coalbed methane—is found in shallow coal seams. Tight gas is found in sandstone layers that are not sufficiently porous—or too ‘tight’—for the gas to flow through and hence trap the gas. Shale gas is found in shale layers (see Figure 1).

Unconventional gas production, almost exclusively from CSG, from 2011–12 accounted for about 13 per cent of all gas production in Australia.

Figure 1: The geology of natural gas resources

The geology of natural gas resources

Source: US Energy Information Administration website

Australia’s main CSG projects are located in Queensland and New South Wales (see Figure 2). There are also significant potential volumes of shale and tight gas, across all states and territories except the ACT, with the largest basins located in Western Australia, the Northern Territory and in the Cooper Basin, which straddles Queensland and South Australia. States and territories are all at different stages in developing their regulatory frameworks for shale and tight gas, but these industries are still emerging, with preliminary exploration currently underway.

How is it different to conventional gas?

From a consumer perspective unconventional gas may seem practically identical to conventional sources of natural gas, but there are a few important differences.

Most sources of conventional gas are located offshore, while many onshore sources are not located near other land users and local communities. In contrast, CSG developments are often close to, or even co-located with other industries, such as agriculture. In addition CSG developments can be located close to regional towns and cities.

Figure 2: Australia’s coal seam gas reserves—in petajoules (PJ)—and associated infrastructure

Australia’s coal seam gas reserves—in petajoules (PJ)—and associated infrastructure

Source: Office of the Chief Economist, Review of the socioeconomic impacts of coal seam gas in Queensland 2015

Co-location at times has resulted in conflict between landowners and resource interests.

In addition, the extraction of unconventional gas typically requires more wells and more access roads and pipelines. This means more land is needed than for conventional gas developments. Significant volumes of water are also produced through the CSG extraction process. This water contains salts and other contaminants that need to be treated at the surface and used or disposed of appropriately.

For shale and tight gas, hydraulic fracturing is usually required to enable gas production. Hydraulic fracturing is a process where fluid and sand is injected at high pressure in order to re-open natural fractures and create pathways for gas to flow.

Hydraulic fracturing, or ‘fracking’, has become synonymous with CSG production. However, this is somewhat of a misnomer, as fracking is not always used in CSG production in Australia. Of all the CSG wells in Australia, fewer than 10 per cent have been hydraulically fractured, but this number may increase over time. Hydraulic fracturing also requires significant volumes of fresh water—typically in quite dry areas—which can present its own challenges and risks.

Consequently, these projects can often be more complex and costly than conventional gas ventures.

Why were these resources developed?

In Queensland, gas production from the two main CSG basins—Bowen and Surat—began in 1998 and 2005 respectively. Production from these sources began in part as a result of the reduction of conventional gas production from existing fields.

The production also coincided with a Queensland government policy in place at the time that required up to fifteen per cent of electricity to be sourced from gas-fired generation. This policy, in part designed to reduce the state’s greenhouse gas emissions, also helped create a fixed gas demand in the initial stages of development. Later expansion of the CSG industry has been due primarily to the Liquefied Natural Gas (LNG) export market. The high export value of LNG also precipitated the exploration of shale gas resources in other states.

Risks and concerns

There have been a number of concerns raised about the risks of unconventional gas development including: human and environmental health impacts, threats to water resources, air quality concerns, land use competition and social impacts.

Comparing the impacts observed in Australia with overseas industries is challenging because of the influence of local conditions on the potential risks. However, issues around well integrity, environmental and human health risks as well as more general concerns have been found to be similar.

The scarcity of baseline environmental data has also hindered efforts to understand the potential impacts of CSG developments and establish causal links between certain activities and observed impacts. Research into these impacts and their management is continuing.

The water trigger and the IESC

The regulation of onshore gas resources is primarily the responsibility of states and territories. However, in 2013, the Australian Government amended the Environment Protection and Biodiversity Conservation Act 1999 to require CSG and large coal mining developments to obtain Commonwealth approval where they would have a ‘significant impact’ on water resources. This is known as the ‘water trigger’.

This Commonwealth approval is separate to state approvals and must take into account advice from the Independent Expert Scientific Committee on Coal Seam Gas and Large Coal Mining Development (IESC). Future shale gas or tight gas projects in Australia will not be regulated under this trigger as it only applies to CSG and large coal mining developments. The water trigger is currently under review. The review report was due to the Minister for the Environment by 31 March 2016.