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No relief for natural gas producers as Apache’s Kitimat plant delayed

Courtesy of Apache Canada Ltd.
An artist’s rendering of the proposed Kitimat Apache Canada’s LNG facility, which is now delayed for another year

Claudia Cattaneo Jun 20, 2012 – 6:47 PM ET
Last Updated: Jun 21, 2012 7:46 AM ET

Beleaguered natural gas producers in Western Canada are going to have wait a little longer for relief from severely depressed prices. Janine McArdle, the senior executive in charge of the Kitimat LNG project at Houston-based Apache Corp., said the facility’s planned startup will take an extra year as the company continues to look for firm contracts with buyers in Asia.

Apache’s proposed natural gas liquefaction plant on the northern British Columbia coast, which it owns with Encana Corp. and EOG Resource Inc., would be the first in line to ship large quantities of LNG to Asia.

The first cargo is now expected to leave Canada in 2017, a year behind the latest plans. The project has regulatory approval, but Apache needs to be sure it has a market for the gas and that the project is economic before taking a final investment decision, Ms. McArdle, senior vice-president for gas monetization at Apache, North America’s largest oil and gas independent producer, said Wednesday.

Construction of a 10-million tonnes a year plant would then take 50 to 60 months.

“We are moving as quickly as we possibly can given that Canada is new to these buyers, and we are relatively new to the buyers as Apache,” she said on the sidelines of an industry conference.

“We have been talking to multiple markets simultaneously and there is a lot of interest. I always have to remind people that these are 20, 30-year marriages. These things don’t happen overnight.”

Next in line is Royal Dutch Shell PLC’s B.C. LNG project, which is slated for startup in 2019. Shell gave the tentative go-ahead to the project last month with three Asian partners that will secure Canadian gas has customers — PetroChina, Mitsubishi Corp. and Korea Gas Corp. However, the project has yet to obtain regulatory approval.


A handful of other projects are also in various planning stages, but they are further behind.

It’s a tense time for Western Canadian natural gas producers, who are watching closely progress on LNG facilities on the B.C. coast so they can start monetizing reserves already found and look for new ones. The facilities will enable exports to Asia and help alleviate a massive shale supply glut in North America that has depressed prices to 10-year lows.

Asian demand for LNG is expected to increase to 35 billion cubic feet a day by 2020, from 20 bcf today, said Ed Kallio, director of gas consulting at Ziff Energy Group, a Calgary-based gas forecasting firm. He expects demand to outstrip supply in Asia by 2016/2017.

The good news is that there is plenty of gas to keep the projects full. Apache announced last week that it discovered in the Liard Basin a new shale gas field containing as much as 48 trillion cubic feet of recoverable natural gas which it characterized as one of the world’s best.

The find motivates Apache to develop an alternative market for Canada, Ms. McArdle said.

It also further boosts Canada’s 500-trillion cubic feet of natural gas reserves, a number that has ballooned in recent years thanks to shale discoveries such as the Horn River, the Montney and the Cordova, all in British Columbia. To put it in context, the now-shelved Mackenzie Gas Project was underpinned by six trillion cubic feet of reserves in the Mackenzie Delta. The number seemed immense before shale gas was unlocked.

Mr. Kallio, who also spoke at the conference, said it will take a lot more than LNG exports to restore balance to the natural gas market and Western Canadian producers will be stuck in a low-price environment for several years. Demand will have to increase, and supply will come down as production of liquids-rich natural gas runs out of steam with weakening of liquids prices, as drilling promoted by land terms tapers off, and if producers do their part by being more disciplined, he said.

“We had such a rush and we had a bunch of cowboys out there, including Chesapeake [Energy Corp.] and Encana that drilled like crazy, [because] they had nice hedges on through the end of this year. But they have very little hedged next year, and that is why they are selling assets — they are selling fingers, toes, kidneys, prized assets to get the cash flows up” and hang in until the next rising market, Mr. Kallio said.


Sinopec: China Will Pass US as Shale Gas Leader


The Chairman of China Petroleum & Chemical Corp (Sinopec), say that China’s shale gas revolution will exceed that of the United States in five to 10 years.

“I think the total reserves are even more than the U.S. so production is not less than the U.S., but it is a matter of timing,” Fu Chengyu said speaking at the World Petroleum Congress being held in Doha.

State controlled Sinopec is China’s second-largest oil company.

Related Reading: Shell Finds Shale Gas in China


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Shell ‘hits shale gas’ in China


Anglo-Dutch supermajor Shell has found shale gas in China, marking the country’s first discovery of the resource that has transformed the US energy landscape, according to a report.

News wires  06 December 2011 11:29 GMT

An official with Shell’s partner PetroChina, a unit of state-owned China National Petroleum Corporation, said drilling results from two wells drilled by Shell had been positive.

“Shell has two vertical wells and they got very good primary production,” Professor Yuzhang Liu, vice president of PetroChina’s Research Institute of Petroleum Exploration and Development, told Reuters on the sidelines of the World Petroleum Congress (WPC) in Doha.

“It’s good news for shale gas,” said Liu, who regularly represents PetroChina at industry events around the world.

China currently has no commercial shale gas production and the inaugural find could cap imports in a market that natural gas producers are hoping will drive demand.

Some industry executives doubt the explosion of shale gas in the US could be replicated elsewhere due to difficult geology, the lack of water availability or land access issues.

Liu accepted the rock formations in China were “different” from those in the US but denied this meant they were more challenging or less bountiful.

In less than decade, shale gas has transformed the US from gas shortage to a point where companies are planning to export liquefied natural gas, fundamentally altering the dynamics of the international gas market.

Many gas producers who were targeting the US for supplies were forced to rethink their plans and China, with its booming energy demand, was seen as the answer to their need for a new market.

A Chinese “shale gale”, as the revolution was termed in the US, could jeopardise that market too.

Shell declined to confirm the find but said in a statement:”Shell will complete drilling activities by the year end… as planned.”

Chief executive Peter Voser has previously said he has “great expectations” for Chinese shale but was cautious in his comments to the WPC on Tuesday.

“We are going through the exploration phase there and are exactly now analysing what potential is available now in China,” he told a news conference.

In 2009, PetroChina and Shell agreed jointly to evaluate shale gas reserves of the Fushun-Yongchuan block in the Sichuan basin.

Earlier this year, industry sources said Shell had started drilling two shale gas exploration wells in Fushun.

A US Energy Information Administration report in April said China had 1275 trillion cubic feet of technically recoverable shale gas resources – by far the largest in the world – followed by the US with 862 Tcf and Argentina with 774 Tcf.


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Shell Is ‘Welcome Barbarian’ in China’s Shale Gas


By Stanley Reed and Dexter Roberts

The hilltop city of Yulin, about 500 miles (800 kilometers) southwest of Beijing, was once a strong point in the defensive wall that protected the Chinese heartland from the tribes to the north. An ancient fortress survives in the old part of the city, the Chinese characters for “Suppress the Barbarians” carved over its gate.

Today, Yulin’s a boomtown in the oil- and natural-gas rich Ordos Basin, Bloomberg Businessweek reports in its Nov. 21 issue. In the streets not far from the fortress walls, where men sell roasted goat heads from carts, young boys hand out brochures for apartment towers built for newly wealthy oil workers and coal miners.

If fresh characters were carved into the old fortress gates now, they might say “Resource Barbarians Welcome!” Or they might simply be a pair of corporate logos: one for PetroChina Co., the publicly traded wing of China National Petroleum Corp., the nation’s largest oil company, and a second for its foreign partner, Royal Dutch Shell Plc (RDSA), the largest European oil company.

A half-hour drive from the city is a new, white building that stands out in the desert scrub land. Clean and bright, it has offices, conference rooms, and a big second-floor terrace overlooking acres of neatly arranged tanks and piping.

This is the Changbei gas field. An estimated $1.3 billion joint venture, the field is managed by The Hague-based Shell for PetroChina and produces more than 3 billion cubic meters of gas a year.

Over a lunch of stir-fried chicken and snow peas, tangy local peaches and green tea in the building’s high-ceilinged commissary, the plant’s two bosses, General Manager Xu Li, a Shell man, and PetroChina veteran Xu Yanming, his deputy, banter about Changbei.

Shell Cost Controls

Xu Yanming, dressed more like a local merchant than an oil man — in slacks and a dark windbreaker — ribs Shell’s Xu, who has a degree from Oxford University and wears the standard blue, one-piece Changbei boiler suit.

“Shell has had four managers — and the whole time it has just been me,” Xu Yanming says. An earlier Shell manager, whom he dubbed a yangren — slang for Westerner — assumed ridiculously high costs, including $20 per diem for Chinese staff. Shell had also factored in exorbitant costs for water.

“Some at Changbei think PetroChina had stronger cost controls than Shell,” Xu Yanming chuckles.

Changbei is the most visible playing field for a tricky high-stakes game Shell has entered into with the Chinese behemoth, an engagement that mirrors the larger global shift of power from the major oil companies to the state-owned crude producers.

Unlocking Resources

PetroChina wants Shell’s expertise to unlock the unconventional gas and oil resources, such as shale gas, that require new techniques to extract. Shell wants PetroChina’s help in gaining access to the mainland, China’s newly hot gas fields, and its energy-hungry consumers.

The U.S. Energy Information Administration said in April that Chinese shale may hold 1,275 trillion cubic feet of gas, 12 times the country’s conventional natural gas resource. The “technically recoverable” reserves are almost 50 percent greater than the 862 trillion cubic feet estimated for the U.S., the agency said.

Last year, China became the largest energy consumer in the world, surpassing the U.S., according to BP Plc’s Statistical Review of World Energy. China is expected to account for almost half the world’s growth in oil consumption in the next two decades, becoming the largest market for oil, and it’s trying to more than double the use of gas in its economy, to 8 percent of the energy mix, by 2015.

Flow to China

Shell isn’t just angling for the gas in China. As China and Asia surge in importance, the company wants to use its Chinese partnerships to help gain influence over the flow of all global resources destined for China, from the Middle East to Australia.

Shell executives think they’ve picked a winner in PetroChina and the company is going all out to please Beijing. In June, company directors visited Changbei and the Iron Man Wang Jinxi Memorial Hall, a shrine to an iconic 1960s oil worker, at PetroChina’s largest field, Daqing.

“This is the most advanced Chinese alliance; this is about the future,” says Jerry Kepes, a partner at the Washington energy consultant PFC Energy. “Shell gets it. But Shell has to deliver.”

The relationship carries plenty of risk. For Shell, the risk is that once PetroChina has absorbed its know-how, it will become a competitor that not only will take Shell’s share of the business but also will one day attempt to swallow the Anglo- Dutch giant whole.

Courting CNPC

The Chinese have long known there was gas in Changbei, without having the skills or technology to extract it. So they went looking for a partner that did. Even though the pair seemed to be made for each other — both are gigantic, bureaucratic, and eager to be top players — CNPC, as PetroChina’s parent company is known, and Shell courted for more than a decade before getting serious in the late 1990s.

The two companies signed a production-sharing agreement in 1999. Shell’s bosses dithered on giving the final go-ahead for investment when China raised gas prices and the market outlook improved.

At about the same time, the company spurned an invitation to participate in the $12 billion West-East Gas Pipeline that China wanted to build to bring gas to its major cities. Shell’s management did not think the terms were adequate.

Sharing Priorities

“It became clear that we did not share the same priorities and expectations,” said Shell Chief Financial Officer Simon Henry.

Shell’s top managers didn’t give the green light on Changbei until 2005, after lower-level executives warned it was on the verge of losing the deal and another great opportunity.

Since then, Shell’s expertise, coupled with PetroChina labor, has made Changbei work.

The field’s gas is “tight,” meaning it’s trapped in rocks that don’t easily give up their treasure. Shell solved the problem with horizontal wells that level off when they reach the gas, which is in layers about 10,000 feet (3,000 meters) below the surface.

A two-pronged pipeline is then drilled out from the bottom of the well horizontally for about 6,000 feet so that the well can suck gas from a huge expanse of rock. So much gas flows into these pipes that Changbei’s fields are highly prolific.

Slashing Well Costs

Before teaming up with Shell, PetroChina used to take more than 250 days to drill a well like this. Now it takes about 130 days, slashing costs on the 25 wells that have been drilled so far to $10 million from about $17 million each.

Xu Li said development costs at the equivalent of less than $1 a barrel of oil make Changbei highly profitable. Shell won’t disclose the project’s profit margin.

While noteworthy, Changbei is the first step of a much larger plan. Shell, which has about $4 billion invested in China wants to be that nation’s energy concierge, catering to the oil and gas industry’s needs. CNPC is the only avenue available to fulfill such ambitions.

The breakthrough in Shell’s China strategy occurred in August 2009 at a meeting held in The Hague. Peter Voser had recently become Shell’s chief executive officer and had cut short his vacation to meet with a delegation led by CNPC Chairman Jiang Jiemin.

Diplomatic Summits

The chemistry was good between Jiang and Voser, a Swiss national who has instilled more financial discipline at the conglomerate. Since then, meetings have occurred every few months, either in the Hague or at CNPC’s 25-story headquarters in Beijing’s Dongcheng district.

These meetings resemble high-level diplomatic summits more than business negotiations — not surprising, perhaps, given the size of the respective companies. The chairman of CNPC, which has more than 1.5 million people on the payroll and revenue of $271 billion, is more like the governor of a major province than a CEO of a company.

Each session follows the same format. The CEOs sit at the top end of a horseshoe-shaped table and converse through an interpreter hidden by a huge arrangement of flowers. Aides sit along the sides of the horseshoe.

The CEOs reach agreements in principle on ideas to pursue and signal to aides to work out the details before the next meeting three or four months later. Invariably there are lunches and dinners and drinks. The talks recently have been enlivened by the Chinese liquor Maotai. Every executive is expected to drain a toast to each person present, with no half measures tolerated.

‘Government Functionaries’

Shell executives have warmed to Jiang because he appears to be receptive to their ideas, unlike some of his counterparts at state companies. CEOs of Chinese state companies are political animals whose decisions aren’t driven strictly by profit motive.

“These are talented, tenacious people that should not be underestimated,” said Jeff Layman, a partner at law firm Baker Botts LLP in Beijing. “But at the end of the day, they are still government functionaries. They may be looking at their futures beyond the companies they are managing.”

The powwows between the two companies have produced a list of projects, some of which are already under way. If they all come to fruition, they could be investing $50 billion together, not only in China but also in Qatar, Australia, and elsewhere over the next decade or so.

Syrian Joint Venture

Shell also let CNPC into a joint venture in Syria that might have been an entrée into the Arab world. The deal has fizzled, and Shell is no longer lifting crude since the Syrian regime was hit with international sanctions following its crackdown on dissidents.

For Shell executives, this elaborate courting of the Chinese reflects a growing awareness of the energy market’s new realities.

Forty years ago major Western oil companies such as Shell controlled more than 60 percent of the world’s oil reserves. Thanks to waves of nationalizations and depletion of oil fields in the West, the producing countries now control the bulk of that oil.

With few exceptions, the only way to make an impact in such places — whether Venezuela, Russia, or Abu Dhabi — is through partnerships with the national oil companies. China is the biggest of these.

Global Player

According to Xinhua, China’s official news agency, China plans to invest $828 billion in its power industry by 2015, developing oil and gas fields, building refineries and pipelines across the country and adding power plants, wind farms and nuclear reactors. Green energy production is a priority because China also wants to cut carbon emissions and reduce the energy intensity of its economy by 2015.

PetroChina’s plans are ambitious, too, and its objective is clear: It wants to be on the level of Shell someday and is pushing its partner to help it become a global player.

For instance, Shell sponsors a leadership development program for senior Chinese executives run by Peter Nolan, a professor at the Judge Business School at the University of Cambridge.

The company supplies materials and speakers for the program to build relationships with the Chinese executives and prepare them to work on joint ventures. PetroChina executives have even visited the Hague to learn how Shell complies with U.S. Securities and Exchange Commission regulations.

Riding the Tiger

The big question is: Can Shell keep riding this tiger? What prevents PetroChina’s parent, CNPC, from exploiting the Western producer for what it wants and then tossing it aside or perhaps even taking it over?

For now, CNPC appears content to see what it can gain through the partnership. Shell CFO Henry, who manages the PetroChina relationship, said in an interview that there is a quid pro quo for being permitted to work in China: helping the Chinese company acquire oil and gas resources outside of China.

Qatar, the emirate that is the world’s leading gas exporter, is a place where Shell is playing the energy concierge with considerable skill. In 2008, the company sold more than one-third of the output of its Qatargas 4 plant in Qatar to PetroChina in long-term contracts.

That deal impressed Shell’s majority partner in the project, Qatar Petroleum, and has led to two others: Shell, Qatar Petroleum and PetroChina are planning a refinery and petrochemical complex in China’s southeastern Zhejiang province.

Tripartite Relationship

Shell has also brought in PetroChina as a 25 percent partner to explore for more gas in Qatar. If that arrangement yields a big find, it could lead to a new $10 billion to $15 billion liquefied natural gas plant.

“This tripartite relationship is important to us,” said Andy Brown, Shell’s Qatar chief. “We can play a role between a major energy-producing country and a major energy-consuming one.”

Shell is delivering not only in Qatar but also on Curtis Island, a 30-by-15-mile strip of land within Australia’s Great Barrier Reef World Heritage area.

In 2010, it joined forces with PetroChina to buy Arrow Energy for A$3.6 billion ($3.6 billion). Arrow has plans to build a $20 billion liquefied natural gas plant to feed the fuel to China. Henry says being able to buy an energy company in a developed country such as Australia earned Shell “huge Brownie points.”

Still, the long-term risk remains that PetroChina will learn to develop even difficult oil and gas fields with the aid of technology-rich service companies such as Schlumberger Ltd. and Halliburton Co., then kiss Shell goodbye.

That’s the thing about the energy game in China: Sooner or later, someone has to lose.


China: Third West-East Gas Pipeline to Start Operation in 2013


China’s third West-to-East gas pipeline, mainly carrying gas from Central Asia to southeastern Fujian province, is expected to become operational by the end of 2013 , China Daily reported on Thursday, citing a source with the country’s dominant gas supplier.

The 5,200-kilometre project, with annual shipment capacity of about 30 billion cubic metre (bcm), will include one artery, six branch lines, three gas storage facilities and a liquefied natural gas (LNG) terminal, the report said.

The pipeline will run from the Xinjiang region to the city of Fuzhou in Fujian province, the source was quoted as saying.

Work on the fourth and fifth pipeline will be initiated some time after 2015, with each pipeline having an annual capacity of about 30 bcm and supplying gas to the country’s industrialized coastal regions, the English newspaper reported.

Turkmenistan, Uzbekistan, and Kazakhstan will be the major sources of supply for all the planned pipelines, the report said.

China National Petroleum Corp (CNPC), parent of China’s largest oil and gas producer PetroChina Co Ltd , has long planned to add more lines across the country to feed booming demand in the eastern and southern coasts.

But its plans have been modified from one time after another due to uncertainties in gas supplies.

Talks with Russia for gas imports of up to 68 bcm per annum have been on and off for years as the sides were far apart on prices.

China’s first West-to-East gas pipeline, pumping domestic gas from Xinjiang to eastern cities including Shanghai, is running at full capacity of 17 bcm per year, and the second line, sending Turkmenistan gas to the east, is scheduled to reach its capacity of 30 bcm by the end of next year.

China’s natural gas imports rose 86.5 percent from a year earlier to some 25 bcm in the first 10 months, of which 12.3 bcm was piped in from Turkmenistan and the remainder shipped in by LNG carriers, according to the National Development and Reform Commission.

The country aims to more than double the current 4 percent share of gas in its overall energy consumption by 2020.



Origin, Sinopec seal LNG deal

Published 4:26 PM, 21 Apr 2011

Oil giant Sinopec on has signed China’s second-largest gas purchase agreement, worth around $US85 billion ($A80.7 billion) over 20 years by one estimate, in a deal that also gives it 15 per cent of the Australia Pacific liquefied natural gas (LNG) project.

Sinopec will pay $US1.5 billion for the stake in the project, completing a preliminary deal agreed in February with project developers ConocoPhillips and Origin Energy Ltd.

ConocoPhillips and Origin announced the deal at a joint news conference overseen by Resources Minister Martin Ferguson.

“Australia very shortly become the second-largest exporter of LNG in the world and we have effectively now got a very important new industry in Queensland,” Mr Ferguson said, referring to the northern state where the project is to be built.

“Deals like this one put Australia on track to be one of the world’s largest suppliers of LNG in coming years.”

“The APLNG project has the potential to significantly expand the burgeoning coal seam gas to LNG industry on Australia’s east coast and cement Gladstone’s place as a key LNG hub.”

Australia has around $US200 billion in LNG projects on the drawing board. Much of their exports are destined for China, which is looking to lock in supplies to feed its rapid growth and cut its reliance on polluting coal energy.

Australia Pacific LNG will have initial capacity of 4.5 million tonnes per annum (mtpa) of LNG, eventually ramping up to 18 mtpa, and is expected to come online at the end of 2015.

Sinopec’s deal to take at least 4.3 million mtpa could be worth around $85 billion if pricing is similar to that of recent coal seam gas supply deals done by Australian gas firm Santos, said CLSA analyst Mark Samter.

The price of $US1.5 billion for the 15 per cent stake is also well above similar deals made recently – state-run Korea Gas Corp (KOGAS) paid just over $US600 million in cash to buy a 15 per cent stake from Santos Ltf and Malaysia’s Petronas .

“That price reflects their view of the value of the project…APLNG is dramatically stronger I think than other projects, and that’s what reflects in that price,” Origin managing director Grant King said.

“It’s a full price… they’ve extracted a decent amount of value for the equity,” Mr Samter said.

The project holdings of Conoco and Origin are now 42.5 per cent each following Sinopec’s equity investment, and the joint venture partners are still aiming to make a final investment decision by mid-2011.

Origin Energy shares were placed on a trading halt on Thursday. Sinopec shares were up 0.9 per cent in Hong Kong.

Mr King in February said the company may sell down more of its stake in the project to future LNG buyers.

He said the joint venture would not give a running commentary on current gas marketing efforts.

But ConocoPhillips senior vice president exploration and production Ryan Lance said APLNG was largely targeting the Asian region.

“The large buyers in Japan and Korea down through China to India as well,” Mr Lance said.

Mr Ferguson said China was Australia’s second-largest LNG customer and the Sinopec deal brought new and existing LNG contracts with the Asian superpower to more than 15 million tonnes per annum.

The APLNG project will involve the progressive development of coal seam gas fields in south central Queensland over a 30-year period and a 450 kilomtre transmission pipeline from the gas fields to Curtis Island near Gladstone, where an LNG facility will be built.

Federal Environment Minister Tony Burke gave the project the green light on February 22.

Welcoming the project, Queensland’s Finance Minister Rachel Nolan said Australia Pacific LNG estimates the annual contribution to the economy of the Darling Downs and Southwest region at up to $900 million during operation.

Ms Nolan said the economy of the Mackay-Fitzroy-Central West region could see an increase of up to $770 million a year during construction.

“On a state level, Australia Pacific LNG estimates the project could stimulate an increase in Queensland’s Gross State Product of approximately $2 billion per annum,” Ms Nolan said.

Chinese demand ramps up

China aims to boost gas consumption to 10 per cent of its total energy use by 2020 as it tries to reduce greenhouse gas emissions by cutting the use of dirtier burning coal. It has spent tens of billions of dollars buying into energy resources from Africa to Latin America.

Energy consultancy Wood Mackenzie has forecast China’s LNG imports to rise five fold to 46 million tonnes by 2020.

Sinopec’s deal will be second only to China’s first LNG import deal sealed in 2002 when China National Offshore Oil Corp (CNOOC) secured 3.7 mtpa of gas from Australia’s Northwest Shelf project for 25 years.

CNOOC, parent of CNOOC Ltd , is the leading Chinese LNG developer with three receiving terminals in operation and another two under construction.

PetroChina‘s two terminals were scheduled to begin operation from April.

The deal will also be Sinopec’s first venture into foreign unconventional gas assets and moves Australia Pacific LNG one step closer to meeting its target of making a final investment decision this year.

Sinopec is building its first terminal in eastern Shandong, which will be fed from ExxonMobil‘s Papua New Guinea LNG project.

The latest deal will enable Sinopec to accelerate work at the proposed 17 billion yuan ($A2.46 billion) terminal in the southern coastal city of Beihai in the Guangxi region, which is expected to open in 2014.

The Beihai terminal will have an initial capacity of three million tonnes per year, expandable to five mtpa by around 2015 when Australia Pacific LNG comes online.

Environmental fears
The deal has environmentalists fearing for the future of the Great Artesian Basin.

Friends of the Earth spokesman Drew Hutton said the agreement was bad news for the environment, the Great Artesian Basin and for landowners.

“The federal government water group and Geoscience Australia believe there are going to be dramatic draw-downs (of the water table) in sections of the Great Artesian Basin and the damage could last for hundreds of years,” Mr Hutton told AAP.

The basin is a major source of water for farmers and communities in inland Queensland.

Origin Energy managing director Grant King says he’s confident the project would not harm the basin.

“Our project has done an enormous amount of work in understanding the impact the project will have on water, acquifers and the Great Artesian Basin,” Mr King said.

“The technical work, the engineering and scientific work done by our teams gives us the confidence there won’t be any adverse impacts.”

Mr King said trials were underway to understand issues surrounding water management.

He also said they were treating the unwanted water that comes up during the gas extraction.

“That water is treated and applied for a number of beneficial uses and one of the uses could be reinjection (into acquifers),” Mr King said.

Mr Hutton said CSG companies don’t know what to do with the unwanted water.

“They don’t know how to treat it to an acceptable level at an acceptable cost,” he said.

“They don’t know what to do with the one million tonnes of salt a year that comes to the surface except to wack it into landfill.

“Is it worth disrupting and sometimes destroying the farms that provide our food and fibre?

“The cost of this industry is far too great.”

According to Australia Pacific LNG, at its peak this project will create about 6000 direct jobs in construction, and about 1000 direct jobs in the operational phase of the project.

Original Article

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