Calls for Gladstone CSG to LNG halt

THE call for a moratorium on all coal seam gas (CSG) to liquefied natural gas (LNG) activities is growing in Gladstone after the ABC Four Corners report on Monday night.

The program detailed farmers’ concerns about the Queensland Gas Company’s (QGC), proponents of QCLNG on Curtis Island, lack of transparency and the possible contamination and water reduction of the Great Artesian Basin and the taking over of land for gas wells.

The report quoted a chemical management specialist and Mariann Lloyd-Smith an adviser to the federal government’s National Industrial Chemicals Notification and Assessment Scheme (NICNAS), as saying chemicals linked to CSG production had not been evaluated by the national regulator and environmental applications by the QGC contained out-of-date and deficient safety data.

In response a QGC spokesperson said ABC’s Four Corners left an impression that QGC have been other than forthright and honest in their dealings with landholders, that our operations are unsafe, and that our operations are compromising groundwater quality.

“We are confident our activities pose no unacceptable risk to health and safety or to the environment,” the spokesperson said

Most of the issues raised in the program are not new, and were advanced by a few, long-standing and committed opponents to the industry whose motives are known to us but were not disclosed in the program.

“Some complaints by landholders are legitimate and are known to QGC, and we are working to rectify them.”

However, Curtis Island resident Cheryl Watson told The Observer QGC are not going to come out and admit they are doing wrong.

“If the state and federal governments had done their job properly there would not be this genuine concern in the community,” Ms Watson said.

“There needs to be a moratorium until the issue is sorted out. They had hydrologists and scientists on the program and if it was all wonderful they would be saying so, but when QGC is challenged they say the science is all wrong.

The QGC spokesperson said due to the claims made by the chemicals expert on the program, Mariann  Lloyd-Smith, QGC is doing a full audit of their processes and those of the company’s contractors to reassure that QGC comply.

“We might add that the views of Ms Lloyd-Smith stretch the bounds of impartiality as her association with the National Toxics Network attests.”

The full response to all questions posed by Four corners to QGC are as follows:

QGC’s position on common themes presented by Four Corners.

1. Landholders are not provided with full and honest plans of QGC’s proposed works on their properties

We plan the location of wells and infrastructure in consultation with landholders.

This is a formal process that involves:

an initial meeting to understand the landholder’s business obtaining landholder consent to enter the property working with the landholder to identify potential locations for infrastructure

The final location of wells and equipment also takes into account cultural heritage and the need to minimise environmental impacts.

Four Corners was critical about the status of QGC’s development plans and implied that we had not presented them to some landholders.

It is a function of field development planning that we refine plans as we gather more and better information – about geology and environmental constraints – and consult landholders about their needs and expectations for working with us.

It is likely that plans we had developed in 2008 differed from those we made in 2009 and were different again to those prepared in 2010.

We have taken a view, in the interests of transparency, that it is better to disclose these plans to landholders with the proviso that they may change.

In contrast to the impression of widespread opposition to our operations, we are in discussions with more than 900 landholders about access to their properties and have agreements with more than 600 of them.

We do not enter properties without landholder consent and have never taken a landholder to court.

2. On the Four Corners program, landholders Ann and Robert Bridle were shown a map of QGC’s plans on the Bridles’ property. The map showed a planned pipeline only, and no other development. Why did it not include other infrastructure?

When we discuss plans with landholders, we typically provide a map showing the location of infrastructure specific to that particular negotiation.

The map shown in the Four Corners program does not show a pipeline or any other infrastructure.

It is a seismic line, and it was misleading to suggest otherwise.

Our records show that QGC staff in 2009 outlined to the Bridles the broad scope of work that was contemplated on their property.

This information had also been made public in the project’s environmental impact statement.

We provided the Bridles with maps showing the appraisal infrastructure contemplated at the time and explained that full development plans would be provided after exploration and appraisal drilling had been completed.

We explained at the time that the exact location of plant and equipment for infrastructure would be determined over coming months and we sought the Bridles’ involvement in site investigations.
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We continue discussions with the Bridles about their consent for us to enter their property to do site surveys to better understand the impact of placing infrastructure on their property.

We do, of course, compensate landholders for accessing their land.

We also operate under a constitutional mandate that says the gas resource is owned by the people of Queensland.

Companies like QGC pay the state a royalty to develop the gas that is equivalent to 10% of the value of the gas.
It is essentially a profit share with the state’s share helping to fund hospitals, schools, roads and other social infrastructure.

Compensation is based on an independent land valuation that considers land use and the impact of gas activities and it varies from property to property, depending on the productivity of the land and the scale of gas activity.

In general, the annual compensation for a landholder could range from a few thousand dollars to more than $100,000 and we also pay a one-off, up-front payment, often of similar amounts.

In our experience, many landholders find our compensation to be a much-needed, additional income stream.

3. QGC’s wells leak and are dangerous

We have openly acknowledged that the Argyle 2 well is a problem.

It is on the Lloyd’s property and was shown on television to be seeping gas around the well head.

This well was drilled in 2001 and would have been constructed with much greater rigour had we applied today’s standards.

The appearance of gas seeping to the surface is not a good look, but neither is it unsafe.

To give you context, we have made two attempts to cement the well to stop the seepage of gas that was shown on television.

Work on a third attempt started this week and the well will be plugged and abandoned.

The landholders and the Queensland Government have been kept fully appraised of remediation plans and we and the gas industry regulator are satisfied that the seep does not cause an unacceptable safety risk.

To put the safety of this well in context, methane will ignite if its concentration in the air is within a range of 5% and 15% (assuming, of course, that an ignition source exists).

The methane concentration for this well is more than an order of magnitude below the minimum amount required for ignition.

The television program also showed footage shot in early 2010 of a local landholder taking gas meter readings near a well head.

The landholder at the time alleged that 39 of QGC’s wells were leaking and we then inspected all of the 143 wells we operated.

One well, which had been identified weeks earlier by QGC as having a small seep, was repaired.
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Unfortunately, the potential for error of the local landholder’s gas meter was not considered by Four Corners.

If it were, we would have learned that gas meters used in the gas industry are calibrated to ensure they detect unsafe levels of gas and are not set off by other hydrocarbons such as grease on pipe threads.

The Queensland Government’s gas industry regulator also inspected QGC’s wells and even explained the potential for error and need for correct calibration of gas meters to the landholder in question.

At present, we have 800 wells across 35,000sqkm of our tenements in Queensland.

Three of these wells have minor leaks and are scheduled for repair as soon as rigs can access sites.
We have notified the gas industry regulator of this.

Our safety approach is designed to lower or eliminate any risk posed by leaking gas through the use of specific controls.

These controls include regular well inspections, testing, repair programs, well monitoring and isolation procedures.

In the unlikely event of an incident, further controls are designed to prevent the event getting worse.
These include alarm systems, shut-in valves and controlled intervention.

This philosophy – control the risk and, if necessary, limit the potential consequences – is used around the world with hazardous industries.

4. QGC has “covered up” incidents involving hydraulic fracturin

In 2009, QGC drilled a well, known as Myrtle 3, near the Bridles property at Tara.
Interconnectivity of the coal measures and the aquifer existed naturally at this location, before QGC drilled Myrtle 3.

In drilling the well at this particular point, we unintentionally provided a route for water in the aquifer, as well as the coal measures, to enter the well.

As the well is not being used for production, water from the aquifer and the coal measures has been contained in the ground, except when released through the well head for testing.

It is capable of being rectified and steps are under way to do so.

This was not a catastrophic failure in well design or operation.

The aquifer has not been ruined or rendered useless.

Water flow from the Springbok aquifer to the Myrtle 3 well has been relatively minimal and monitoring has not indicated any impact on Springbok aquifer water quality or levels.

The issue has not been covered up.

We have provided full briefings and updates on the well to government and nearby landholders since mid-2010 when we had a good understanding of the circumstances.

5. QGC has not complied with government regulation in its handling of dangerous chemicals

We do not believe that we have breached government regulations, and we have also received assurances from our contractors who are responsible for handling these chemicals that this is the case.

The environmental authorities referred to in the Four Corners program are part of the environmental approval process.

In 2010, we submitted an environmental authority application to the Queensland regulator and included an initial draft risk assessment on chemicals used in hydraulic fracturing with agreement from the regulator that the completed risk assessment and management plan would follow.

This final assessment and management plan are yet to be submitted and, therefore, are yet to be approved.

As to other claims made by the chemicals expert on the program, Mariann Lloyd-Smith, QGC is doing a full audit of our processes and those of our contractors to reassure ourselves that we comply.

We might add that the views of Ms Lloyd-Smith stretch the bounds of impartiality (if the ABC ever intended to present her views as such) as her association with the National Toxics Network attests (http://ntn.org.au/about-us/).

It is interesting to note that the network’s partners include Greenpeace and Friends of the Earth, the latter of which has waged a campaign against the coal industry and QGC under the direction of Drew Hutton, a long-time, Brisbane-based, anti-development campaigner and Greens supporter.

While we see nothing wrong in any of this, viewers may have appreciated this knowledge up front.

6. Chemicals used in QGC’s operations, in particular its hydraulic fracturing of wells, pose a threat to groundwater supplies in the Surat Basin and widespread contamination of the Great Artesian Basin can be expected

This theme assumes that we have no controls on the chemicals we use or how we use them.

If we take this theme to its logical extreme, farmers on the Darling Downs would not be using pesticides, fertilisers and other chemicals in agriculture because of the fear of widespread contamination.

However, it is how these chemicals are used, not whether they are used, that is critical.

Hydraulic fracturing has been used around the world for 50 years to improve the flow of oil and gas from reservoirs kilometres under ground.

It has been used on more than a million wells in the United States alone and US Environmental Protection Agency studies have not found any risk to water supplies as a result.

The issue is how we use these chemicals.
We have stringent controls around their handling by people who are trained to deal with them properly and carefully.

We have rigorous licensing and monitoring and report their use to government.
About 99% of hydraulic fracturing fluid is water and sand and most of the chemicals that we add to help carry the sand and spread the fracture biodegrade in days to months.

The chemicals are highly diluted and equivalent to about a teaspoon to every litre of water and sand.
Water that comes out of these wells is monitored, tested, treated and re-used in other wells.
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As an additional safeguard, QGC alone will spend about $50 million on monitoring bores designed to detect significant changes in water quality and levels from any coal seam gas production.

7. QGC’s coal seam gas extraction operations are impacting on water levels in the Great Artesian Basin

The Great Artesian Basin is not simply a homogenous underground river.
It is a complex network of multiple aquifers of astronomical quantity and varying quality, some of which are clearly connected, and many of which will take many thousands of years for water to move between them.

Governments have long imposed limits on water extraction from the Great Artesian Basin to curb large withdrawals by farmers, particularly from shallow aquifers.

We know that most of the coal seams from which we draw gas are deep below the aquifers used by farmers and that more than 1000 water bores on our tenements are taking water from shallow aquifers above the coal seams.

Of this total, fewer than 40 bores take water from coal seams.

In all cases, we have given undertakings that we will “make good” any losses we cause to farm water quality and quantity if we have an impact through extracting gas.
In “making good”, we may:

Re-set pumps at deeper levels within bores to access alternative available water columns Deepen bores to provide access to aquifers of suitable quality and yield that are less affected by coal seam gas operations Install replacement bores, particularly if original bores cannot be reconditioned or deepened Provide bulk water of suitable quality to bore owners to compensate for loss of yield in water supply bores Compensate bore owners for their losses in agricultural productivity due to diminished bore yield or water quality.

We are also investing about $1 billion on treating water that, due to its salinity, would otherwise not be used.
This water will go back into the water cycle and allow farmers to “bank” their allocations while they use the water we have treated.

The Four Corners program referred to the water level dropping on the Lloyd’s property since gas companies had arrived.

Our independent analysis of this, which has been shared with the Lloyds and confirmed by government agencies, shows that our activities are unlikely to have affected the water level in their bore.

During the recent long drought, we also provided the Lloyds with free water from our operations to help sustain their feedlot operation.

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