Coal Seam Gas Mining in Australia - Case Study Example

Name: XXXXXX Course: XXXXXX Institution: XXXXXX Title: XXXXXX Date: XXXXXX Coal Seam Gas Mining in Australia Introduction Coal seam gas (or coal seam methane) is a naturally occurring unconventional gas which is extracted from the pores or fractures of coal seams which can be found at depths ranging from 300 to 100 metres. Coal seam gas typically consists of a mixture of a number of gases but is predominantly made up of methane which consists about 95 percent of coal seam gas. Other gases occurring in the mixture include carbon monoxide, carbon dioxide, nitrogen and other hydrocarbons such as ethane and butane (NSW Parliament 2012). The extraction of coal seam gas does not require the extraction of coal itself. Coal seam gas is held in place within coal seams by water pressure. Its extraction or production usually begins by drilling wells into coal seams to extract formation water from these coal seams in order to reduce water pressure and release the gas from the coal, allowing it to flow (NSW Parliament 2012). There are different drilling techniques that may be used to extract coal seam gas. This includes hydraulic fraccing (fracturing) where large amounts of sand, water and chemicals are pumped under high pressure into the coal seams to break up the surrounding rocks and ease the flow of methane gas or multi-lateral, in-seam drilling where several coals seams can be targeted using a single well head by drilling horizontally into each seam from the well-head (Lloyd Smith and Senjen 2012). Once coal seam gas rises to the surface, it is processed by removal of water in the gas and piped to compression plants from where it is injected into gas transmission pipelines. Coal seam gas has a variety of industrial and domestic uses similar to other natural gases such as cooking, heating and is also used to produce electricity in gas turbines (NSW Parliament 2012). The largest reserves of coal seam gas in Australia are found in Queensland and New South Wales. Over the last decade, the production of coal seam gas in New South Wales has experienced exponential growth with billions of dollars invested in coal seam gas exploration activities. Coal seam gas production in Queensland began in 1997 from the Bowen Basin and ever since, the coal seam gas has experienced exponential growth as evidenced by the increase in petroleum exploration licences in New South Wales from 11 in 1993 to 47 by December 2011 (NSW Parliament 2012). In addition, National Coal Seam Gas (CSG) Well data has estimated that there will be 40,000 coal seam gas wells in Queensland alone by the year 2030. In New South Wales, coal seam gas exploration has been most active in areas such as Gunnedah Basin, Southern Coalfield near Camden Hunter Region, Gloucester Basin and the Clarence Moreton Basin (NSW Parliament 2012). The Coal Seam Gas Sustainability Debate Coal seam gas as a natural gas is generally considered to be a cleaner energy alternative than coal or oil as energy sources since it burns more efficiently and produces significantly lower greenhouse gas emissions at the point of extraction and combustion (Hardisty et al 2012). For instance, the use of coal seam gas in generating electricity produces an estimated 70 percent less emissions than coal-powered power plants. Therefore, coal seam gas is expected to play a major role in the transition period from the use of non-renewable energy sources until lower emission renewable energy technologies become more cost effective (Hardisty et al 2012). Another advantage of coal seam gas is that it occurs in abundance in Australia and the growth and expansion of the industry has several economic benefits such as the revenue generated in taxes and from export as it can be piped to liquefied natural gas plants and processed for export and its role in job creation (NSW Parliament 2012). The extraction of coal seam gas also frees up groundwater which can be used for agricultural purposes such as irrigation. However, there have been several concerns raised over the social, economic and environmental impacts of coal seam gas extraction in Australia. Economically, some of the concerns raised by different stakeholders have been that the revenues generated from coal seam mining accrue to the state while the local communities bear the actual and opportunity costs of coal seam gas mining (Hunter 2012). Socially, coal mining and coal seam gas mining has adversely affected some areas of indigenous aboriginal heritage in areas such as Hunter Valley and Western Coal Resource area in addition to necessitating the provision of additional housing to accommodate the influx of workers at coal seam gas mines (ABC Rural 2012). However, the most significant concerns over the sustainability of coal seam gas mining are environmental in nature. This includes the contamination of groundwater by chemicals and sand used in the process of fraccing to extract coal seam gas and the disposal of this contaminated water as it returns to the surface after fraccing (ABC Rural 2012, Lloyd Smith and Senjen 2012). Coal seam gas also disrupts agricultural production since most coal seam gas deposits are found areas of high agricultural fertility. This is due to issues such as the abnormally high use of water in coal seam gas mining in agricultural areas which also require water, possible damage to underground water sources or aquifers due to fraccing and the destruction caused to farm lands due to the movement of trucks and service vehicles during coal seam gas mining (ABC Rural 2012, NSW Parliament 2012). The following table outlines different stakeholder concerns and interests in relation to the current coal seam gas industry in Australia. Stakeholder Concerns Interests Government Developing and implementing strategies for sustainable coal seam gas mining as a cleaner energy alternative -Generation of revenue from coal seam gas mining through taxes and exports - Fulfilling greenhouse gas emission reduction targets. Mining Companies Mitigating the negative social, economic and environmental impact of coal seam gas extraction raised by other stakeholders such as environmentalists and local community groups. Obtaining approval and certification of sustainability of operations and ensuring the sustainability of coal seam gas reserves through continued exploration -Maximising the profitability of coal seam gas through continued exploration -Corporate social responsibility advantages of sustainable mining practices. Landholders and Community Groups The amelioration of negative consequences of coal seam gas mining such as resolving the land and water use conflict between coal seam gas mining and agricultural use. Obtaining economic benefits from coal seam gas mining activities in the area through improved infrastructure and facilities, income generating and employment opportunities. Farmers -The continued disruption of agricultural activities as a result of fraccing due to contamination of groundwater by chemicals and sand, movement of heavy trucks and service vehicles and the safe treatment and disposal of water returning to the surface. -Limited access to fertile land due to coal seam gas mining. -Access to fertile agricultural lands and water sources to increase agricultural output and guarantee food security. -Developing and practicing sustainable agricultural practices. -Ensuring food security Indigenous Communities The destruction of heritage sites and disruption of Aboriginal lifestyle due to coal seam gas mining. Preservation of cultural and heritage sites. Environmentalists The environmental impact of coal seam gas mining due to its negative environmental consequences such as groundwater contamination due to fraccing, the threat to biodiversity and its impact on land and water use. -Development and implementation of standards for sustainable coal seam gas mining. -Conducting accurate environmental assessment impact prior to licensing coal seam gas mining. -Protection of natural habitats to ensure biodiversity in coal seam gas areas Table 1: Different stakeholder concerns and interests in relation to the current coal seam gas industry in Australia. Reflection: Processes and Structures for Sustainability in the Coal Seam Gas Debate Sustainability basically entails making present day decisions that do not impair the prospects of maintaining or improving future living standards (Repetto 1986). In the case of coal seam gas mining, mining activities should have adverse social, economic and environmental consequences which threaten areas with coal seam gas reserves. For example, contamination of groundwater and restriction of access to land and water due to mining negatively affects agriculture and food security in areas where coal seam gas is extracted (Hunter 2012). Currently, the processes and structures that facilitate stakeholder engagement in the coal seam gas sustainability debate are based on reporting frameworks such as ISO 26000, the United Nations Global Compact and the Global Reporting Initiative (Swayne 2012). For example, the Global Reporting Initiative (GRI) provides a self-reporting framework for organizations to report on their economic, environmental and social performance and provides a common standard for sustainability reporting. This is essentially triple bottom line or corporate social responsibility reporting intended to foster accountability to both internal stakeholders (shareholders) and external stakeholders such as the government, environmental lobby groups and other interest groups (Jenkins and Yakokleva 2012). The GRI gives mining companies an opportunity to disclose both positive and negative information regarding the impact of their coal seam gas mining activities which is relevant to other stakeholders. The GRI sustainability reporting guidelines also stipulate that they report on other critical areas such as their human rights record (Swayne 2012). Other organizations such as Transparency International compel these companies to disclose their equity holders and subsidiaries to highlight any potential conflict of interest that might affect sustainability reporting (Jenkins and Yakokleva 2012). However, despite the existence of detailed sustainability reporting mechanisms backed by legislative regulations in the form of parliamentary committees which make recommendations to state governments hence shaping government policy, the effectiveness of these processes and systems is severely hampered by the differences in resource capabilities among the different stakeholders which often determine the outcome of sustainability reports (Deegan and Blomquist 2006). Particularly, mining companies as stakeholders exert considerable influence over the outcome of environmental impact assessments as they provide majority of the funding for research facilities into coal seam gas mining (Azzone et al 1997). An example is the University of Queensland's Coal Seam Gas research centre which is funded by major mining companies casting doubt over the credibility and independence of the research output (Sykes 2012). The financial costs associated with undertaking monitoring activities such as environmental impact assessments is also beyond the reach of stakeholders such as farmers and indigenous communities who cannot independently verify the accuracy of the disclosures in the sustainability reports (Azzone et al 1996, Deegana and Blomquist 2006). For example, the Commonwealth Scientific and Industrial Research Organisation (CSIRO) recently publicly disagreed with The Australian Petroleum Production and Exploration Association over claims its findings indicated that coal seam gas does not pose a threat to groundwater (Lloyd 2012). In addition, the government’s dependence on such mining gas companies for revenue may also affect government policy towards crucial sustainability issues such as land and water use in coal seam gas reserve areas. An area of improvement which may help enhance the effectiveness of processes and structures on the coal seam gas sustainability debate is levelling the playing field in terms of access to and disclosure of information. As the stakeholder with constitutional authority, the government should redirect some of the taxes paid by mining companies into funding research by the various stakeholder groups such as landholders and environmental lobby groups to bridge the resource gap between them and mining companies (Swayne 2012). In the absence of such initiatives to level the resource inequality, there will always be disagreements over sustainability reports which augur well for mining companies as they continue to extract profit at the cost of the environment. Bibliography ABC Rural, 2012, The Coal Seam Gas Debate. Retrieved on 5 September, 2012 from Azzone, G, Brophy, M, Noci, G, Welford, R & Young, W 1997, ‘A stakeholders' view of environmental reporting’, Long Range Planning, Vol. 30, No.5, pp 699-709. Deegan, C & Blomquist, C 2006, ‘Stakeholder influence on corporate reporting: An exploration of the interaction between WWF-Australia and the Australian minerals industry’, Accounting, Organizations and Society, Vol. 31, No. 4, pp 343-372. Hardisty, PE, Clark, TS & Hynes, RG 2012, ‘Life Cycle Greenhouse Gas Emissions from Electricity Generation: A Comparative Analysis of Australian Energy Sources’, Energies, Vol.5, pp 872-897. Hunter, T 2012, ‘Food security v energy security: land use conflict and the law’, Crikey 20 February. Retrieved on September 5, 2012 from Jenkins, H & Yakokleva, N 2012, ‘Corporate social responsibility in the mining industry: Exploring trends in social and environmental disclosure’, Journal of Cleaner Production, Vol. 14, No.3, pp 271-284. Lloyd, G 2012, ‘CSIRO vents over CSG claims’, The Australian, 5 September. Retrieved on 7 Septemeber, 2012 from Lloyd-Smith, N & Senjen, R 2011, Hydraulic Fracturing in Coal Seam Gas Mining: The Risks to Our Health, Communities, Environment and Climate. Retrieved on 5 September, 2012 from < http://frackingfreeireland.org/wp-content/uploads/2011/08/NTN-CSG-Report-Sep-2011.pdf> New South Wales Parliament 2012, Legislative Council General Purpose Standing Committee No. 5, Inquiry into coal seam gas / General Purpose Standing Committee No. 5, Sydney: NSW (Report No. 35) Repetto, R 1986, World Enough and Time, New Haven: Yale University Press. Swayne, N 2012, ‘Regulating coal seam gas in Queensland: lessons in an adaptive environmental management approach?’Environmental and Planning Law Journal, Vol.29, No. 1, pp. 163-185. Sykes, E 2012, ‘Concerns over funding of new Coal Seam Gas Centre’, ABC Brisbane. Retrieved on 6 September, 2012, from Read More