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Risks and challenges of CBM are manageable, says Chief Scientist

World Coal,

The culmination of a long-awaited independent report into coalbed methane (CBM) activities in New South Wales (NSW) has arrived, and with it brought findings in favour of continued CBM development in the Australian state.

The Chief Scientist & Engineer has released the final report from her 19-month independent review of CBM activities in NSW, in which the findings of Prof. Mary O’Kane’s review are presented, as well as 16 recommendations to government.

Overall, the review found many of the technical challenges and risks posed by the CBM industry can be managed through careful designation of areas appropriate for CBM extraction; high standards of engineering and professionalism in CBM companies; creation of a State Whole-of Environment Data Repository; comprehensive monitoring of CBM operations with ongoing scrutiny of collected data, a well-trained and certified workforce; and applying new technologies as they become available.

"All of this needs to take place within a clear, revised, legislative framework which is supported by an effective and transparent reporting and compliance regime and by drawing on appropriate expert advice," Prof. O'Kane said in the report.

However, the Chief Scientist also noted "there could be unexpected events, learnings, or even accidents" as CBM technologies were applied in new regions. This is common for new applications in the extractive industries and underlines the need for government and industry to approach these issues with eyes wide open, a full appreciation of the risks, complete transparency, rigorous compliance, and a commitment to addressing any problems promptly with rapid emergency response and effective remediation."

"It also highlights the need to record and capitalise on the data and knowledge gained from CBM extraction activities in new regions and to take advantage of new technology developments which, if harnessed appropriately, can make CBM production increasingly safer and more efficient over time," Prof. O’Kane added.

Though the report clearly falls in favour of continued CBM development, it also noted that there was a clear distrust of the CBM industry from local communities. This is perhaps surprising, Prof. O’Kane suggested, given that the industry “is no more dangerous than other extractive industries”.

"There is a perception in some parts of the community that CBM extraction is potentially more damaging and dangerous than other extractive industries," Prof O'Kane said in the report.

"This perception was heightened following the release of the American movie Gasland in 2010. The Review examined this issue in detail and concluded that while the CBM industry has several aspects that need careful attention, as do almost all industries, it is not significantly more likely to be more damaging or dangerous than other extractive industries."

Prof O'Kane also challenged some common beliefs about the industry.

"Many perceive the CBM industry to be a new industry that is being fast-tracked without adequate attention to significant concerns. CBM production has been happening at significant levels in North America (where coal seam gas is generally referred to as coal bed methane) for two decades and in NSW for 13 years (at Camden by Sydney Gas, later AGL). CBM from NSW sources currently accounts for 5% of the NSW gas supply,” she said.

"In the 1990s, the government introduced measures such as a five-year royalty holiday (followed by a five-year incremental sliding scale of royalties from 6% up to 10%) to encourage the petroleum industry. This benefit was removed at the end of 2012,” Prof. O’Kane continued. "Some of the companies that began exploring during this time were responsible for incidents that led to increased concerns about the industry generally."

More broadly, parts of the community simply did not trust the industry.

"CBM companies are viewed as untrustworthy by some members of the community in both urban and rural areas," the report noted. "This lack of trust seems to stem particularly from some CBM exploration companies: being perceived to be in violation of land access regulations; being perceived by some to bully vulnerable landholders; not managing sub-contractors appropriately; engaging in questionable environmental practices; and not reporting accidents to the regulator quickly enough."

Benefits of coalbed methane

Prof. O’Kane said the CBM had clear benefits.

"Industry, particularly the manufacturing industry, believes having increased amounts of locally produced gas helps deal with concerns about rising gas prices and possible future shortages," the report noted.

"The impending increase in export capacity is anticipated to lead to greater demand for CBM production and to cause Australian east coast gas prices to rise to meet the export price. With effective consultation addressing stakeholder concerns and appropriate levels of compensation, CBM development can provide new revenue streams for landholders and their communities. “

The report also suggests that, with appropriate support arrangements in place, landholders can make money from CBM production on their land.

"While local councils have to ensure their communities can cope with the industry influx, industry activity can bring benefits to communities, especially to rural communities, in terms of increased employment, rents and servicing opportunities," Prof. O’kane said.

Much to do

Prof. O'Kane also said there is still much for government to do. "Implementing the recommendations of the review involves non-trivial tasks," she said.

Among the 16 recommendations made in the report, are that:

  • The government set a world class regime for CBM extraction.
  • The government ensure "clear and open communication" on CBM issues.
  • Specific areas of the state be designated as places where CBM extraction is permitted.
  • The government establish an open "data repository" for all existing and new information on and related to CBM activities.
  • The government establish a standing expert advisory body on CBM-related issues including "experts from relevant disciplines, particularly ICT and the earth and environmental sciences and engineering, but drawing as needed on expertise from the biological sciences, medicine and the social sciences".
  • That all people working within the CBM industry be subject to ongoing mandatory training.

In concluding her review, Prof. O'Kane also released reports on regulatory compliance and managing risk, along with information papers on fracture stimulation, setbacks/interface and abandoned wells.

Written by Sam Dodson

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