"Risks and challenges" of CSG manageable: chief scientist

UPDATED 12.18pm: "CHALLENGES and risks" associated with coal seam gas can be managed, NSW's Chief Scientist has said in her final report on the CSG industry.

The report handed down by Chief Scientist Mary O'Kane follows 19 months of research and sets a series of conditions needed to allow the safe extraction of coal seam gas in the state.

Prof O'Kane says she drew on information from experts around the world and consulted with community, industry and government groups to prepare the report.

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"Having considered all the information from these sources and noting the rapid evolution of technological developments applicable to CSG from a wide range of disciplines, the Review concluded that the technical challenges and risks posed by the CSG industry can in general be managed through:

  • careful designation of areas appropriate in geological and land-use terms for CSG extraction
  • high standards of engineering and professionalism in CSG companies
  • creation of a State Whole-of-Environment Data Repository so that data from CSG industry operations can be interrogated as needed and in the context of the wider environment
  • comprehensive monitoring of CSG operations with ongoing automatic scrutiny of the resulting data
  • a well-trained and certified workforce, and
  • application of new technological developments 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 says in the report.

However, the Chief Scientist also notes "there could be unexpected events, learnings, or even accidents" as CSG 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," she says in the report.

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

Lock the Gate says report vindicates its stand

Anti-CSG group Lock the Gate has seized on these comments to say Prof O'Kane's report vindicates its stand against the industry.

"The Chief Scientist report released yesterday made it clear that CSG mining could contaminate groundwater and food products and could place human health at risk, which are exactly the concerns which have been raised by the community for several years" Lock the Gate Alliance spokesperson Carmel Flint said in a statement.

"The report has recommended a massive overhaul of the laws relating to CSG mining and an entirely new approach to collection of baseline environmental data and monitoring.

"It has warned that health risk assessments are needed before projects commence to help make sure that the population is protected from the risk of exposure to contaminants and the cumulative impact of pollutants."

The findings come as NSW Labor promises to ban any coal seam gas activity in the Lismore, Ballina, Byron, Tweed, Kyogle, and Richmond Valley local government areas, should it win next year's state election.

"The Chief Scientist has indicated that the CSG industry should only proceed in NSW if appropriate measures are in place to manage the large volumes of toxic wastewater and salt which it produces," Ms Flint said.

"However, experience in Queensland has proven CSG drillers are light years away from achieving that outcome, and the industry still does not have a plan as to how it is going to manage the vast mountains of salt it produces.

"The report identifies serious risks of seismic events and water pollution if CSG miners attempt to reinject waste back into underground aquifers.

"It also warns of the dangers of using wastewater for irrigation especially without thorough and regular testing due to the potential for contamination of the food chain.

"The report recommends 'careful designation' of areas where CSG extraction is 'appropriate' and this would be best implemented by a system of no-go zones to protect important food-producing areas, water resources and other environmental assets from CSG mining.

"The report states that existing studies on unconventional gas mining and human health impacts are very limited, and this should ring alarm bells about CSG drilling near homes.

"In view of the report, the NSW Government shouldn't be putting families at Gloucester and Camden under threat by allowing CSG wells to be drilled or operated near residential dwellings."

Report notes community sees CSG companies as "untrustworthy"

Prof Kane notes in her report the community continues to hold serious concerns about the coal seam gas industry.

However, she says the industry is no more dangerous than other extractive industries.

"There is a perception in some parts of the community that CSG extraction is potentially more damaging and dangerous than other extractive industries," Prof O'Kane says 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 CSG 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 CSG industry to be a new industry that is being fast-tracked without adequate attention to significant concerns.

"CSG 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). CSG from NSW sources currently accounts for 5% of the NSW gas supply.

"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.

"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.

"CSG companies are viewed as untrustworthy by some members of the community in both urban and rural areas," the report says. 

"This lack of trust seems to stem particularly from some CSG 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 coal seam gas

However, Prof O'Kane says the industry has its 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," she says. 

"This is a particular issue for several companies that have long-term gas purchase contracts expiring. As well as raising concerns about price, several industry and government figures have also expressed concern about potential gas shortages, in the light of the high-value contracts for the export of gas from the new LNG plants at Gladstone.

"The impending increase in export capacity is anticipated to lead to greater demand for CSG 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, CSG development can provide new revenue streams for landholders and their communities. 

"With appropriate support arrangements in place, landholders can make money from CSG 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."

Recommendations

Prof O'Kane makes 16 recommendations, among them that:

  • the government set a world class regime for CSG extraction, 
  • the government ensure "clear and open communication" on CSG issues,
  • specific areas of the state be designated as places where CSG extraction is permitted,
  • the government establish an open "data repository" for all existing and new information on and related to CSG activities, 
  • the government establish a standing expert advisory body on CSG-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 CSG industry be subject to ongoing mandatory training


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