A gas revolution in Australia's heartlands creates divisions.
THE good times have finally hit Roma, a once-sleepy Queensland cattle town of 7,000 souls. In 1900, when residents were drilling for water, they struck gas deep underground. Australia's first natural gas lit Roma's streetlamps, but they flickered out after just ten days. The gas igniting Roma 112 years later is something else. Coal-seam gas (CSG) is transforming Australia's energy market, and stimulating its robust economy. It has also inflamed an environmental protest movement over hydraulic fracturing, or "fracking", the method of extracting gas from coal and shale. An unlikely alliance of farmers and green-minded city folk are trying to slow the boom down, if not stop it altogether.
Australia's gas rush started with liquefied natural gas (LNG) exports from reserves under the Indian Ocean, off the north coast of Western Australia. Explorers are now flocking to Queensland and New South Wales, on the other side of the country. Thanks to surging demand in Asia, the gas trapped in coal seams is the next frontier. Such "unconventional" gas was once unprofitable because it was harder to extract than gas from other sources. Better technology has changed that.
The pace of change has taken many people by surprise. In the six years to 2010 production of CSG increased 22 times. Gas from coal seams now supplies about one third of eastern Australia's gas. David Knox, chairman of the Australian Petroleum Production and Exploration Association, an industry body, says the CSG bonanza, on top of Indian Ocean gas, means Australia is likely to overtake Qatar as the world's leading LNG exporter by 2020 (it is now fourth).
Santos, an Australian company of which Mr Knox is chief executive, leads one of three consortia at the front line. Each is planning to pipe CSG from the Surat and Bowen basins, around Roma, to the coastal city of Gladstone about 400km away; there they will liquefy it for export (see article). About 3,200 CSG wells have been drilled in Queensland. A report by the Senate, the federal upper house, suggests 12 times more than that could be drilled.
In Roma industries supplying the fracking fields have sprung up around sprawling cattle yards. The town's unemployment rate, at 2%, is less than half Australia's as a whole?and falling. Robert Loughnan, Roma's mayor, complains that soaring rents are making housing "untenable". But few quibble about the economic benefits of A$180 billion ($175 billion) of private investment committed to LNG projects in Australia over the next five years; about 40% of that is linked to CSG.
Previous mining booms took place in outback regions far away from most Australians. The CSG boom is different. It is to be found under farmland, and beneath towns and cities in eastern Australia, home to most of the country's population. Water has brought people into the streets against CSG. As the driest continent after Antarctica, Australia is understandably preoccupied by fears of scarcity and pollution. Many rural communities depend for water on the Great Artesian Basin, which is Australia's biggest groundwater reserve and lies deep under the region that corporations are anxious to exploit.
Fracking involves pumping water, sand and chemicals to fracture the coal seams and bring their mixture of gas and saline water to the surface. Not all coal seams need fracking to make gas flow. Critics charge, though, that fracking can contaminate adjacent groundwater that farmers and townsfolk need. More worrying, high-quality water can be lost from aquifers as it seeps into fracked coal seams.
A report on May 17th by the Queensland Water Commission, a public body, found water levels in 528 aquifer bores would decline because of CSG water extraction. Gas drillers are obliged to purify the water they extract. On one of its CSG fields north of Roma, Santos irrigates crops with extracted coal-seam water treated by reverse osmosis. Mr Knox calls this the "purest drinking water on Earth".
Sceptical farmers also resent the fact that they will barely share in the boom's riches. Landholders in Australia own only the topsoil; the state owns everything beneath. Companies with exploration licences are obliged to negotiate compensation deals with landowners, but not to seek their permission to drill. The value of such deals is arbitrary: perhaps A$5,000 a well from some big companies. Farmers complain the mere presence of CSG explorers on their land cuts its market value.
Lock The Gate, a Queensland protest movement, has spread to neighbouring New South Wales, Australia's most populous state, where CSG production is less advanced. Many farmers have heeded the call to close their farm gates against CSG companies. An anti-CSG rally outside the state parliament in Sydney on May 1st drew 4,000 people.
Amid calls for tighter regulation, the New South Wales state government imposed a moratorium on fracking until April; its status remains in limbo. The federal government has introduced legislation for a scientific committee to report on the effects of CSG mining on water. But such interventions are unlikely to curb CSG drilling, with its glittering promise of jobs and royalties for governments. Already, some companies are looking beyond coal seams to the gas revolution's next stage. Geoscience Australia, a government agency, estimates Australia's untapped shale gas (which needs more fracking than coal seams) could double the country's gas resources.
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