Galilee Basin – QLD’s new energy frontier (part two)

The eastern margin of the Galilee Basin where the Permian coals are at shallow depth or outcrop have been the focus for coal mining. More recently there has been an increasing interest in UCG while the Queensland Government in 2008 put 18 areas across the Basin up for tender for coal seam gas (CSG). This attracted a wide interest with 67 applications being received.

To read the first part of this story click here.

While the Queensland Government’s domestic power policy in relation to gas has stimulated development of CSG, the introduction of broader policies such as a national emissions trading scheme will favour gas and geothermal over coal as the preferred fuel. And the long term prospects to use CSG as a feedstock for export LNG projects is also an important factor in its development.
With regard to CSG, AGL and Galilee Energy are commissioning a five well pilot operation at Glenaras near Aramac. Further east, both Blue Energy and Comet Ridge have commenced multiwell CSG drilling programs with the aim of establishing gas reserves by mid 2012. Origin Energy has also recently completed a modest exploration and drilling program in its Galilee Basin tenements.
“Other companies are planning to undertake seismic and commence drilling programs by mid 2010,” Grahame Baker told The Australian Journal of Mining.
The senior advisor at consultancy firm RLMS said, “One is likely to see first commercial CSG from the Galilee from 2015. Geothermal is in its very early days and unlikely to be available until at least 2020.”
There is already a gas fired power station at Barcaldine (58 MW), not far from the Galilee Basin, though it currently operated on CSG from the Bowen/Surat Basins.
“A number studies are being undertaken for local power generation from CSG. These cover the supply to the main Queensland grid to the east as well as supply to the North West Queensland mineral province centred of Cloncurry and Mount Isa,” said Baker.
“Power generation in the Galilee will require significant transmission infrastructure to be established, certainly in the billion dollar range.”
Getting gas from the Galilee Basin will also involve a massive investment in gas transmission pipelines. A number of preliminary studies have been undertaken to link various parts of the Galilee to the existing eastern Queensland gas system - through to Moranbah which is connected to Townsville, to the Wallumbilla (Roma) to southwest Queensland pipeline which is currently delivering CSG to Sydney and Adelaide markets via the Moomba gas hub and direct to North West Queensland.
A 1,000 MW baseload gas fired power station will consume approximately 70 PJ per year of CSG while 1 million tonnes of LNG will need about 65 PJ of CSG to be produced.
“A 150 TJ per day CSG gas production [55 PJ per year] with gas treatment and compression facilities may need 200 production wells and could cost of the order of $500 million to establish,” said Baker.
“Details of the likely expenditure on establishing large scale CSG production in the Galilee Basin are unknown and will remain so until the extent of the resource is better known as well as establishing the optimum well design and production techniques.”
Currently most commitments are to establish 5-10 well exploration and appraisal programs with some wells operating in a pilot configuration to establish both reserves and well productivity profiles. These programs usually take around two years and can involve expenditures up to $30 million.
The Galilee Basin is a sparsely populated region with a few small towns and virtually no infrastructure. Thus any developments, be they in coal mining, CSG, UCG or geothermal will incur additional costs over the more developed coal areas such as the Bowen, Gunnedah, Surat and Sydney Basins where extensive infrastructure is in place and where there are well established communities.
The Premier is confident that project proponents will make a significant contribution through new rail lines, port infrastructure, water supplies and airport facilities “worth billions of dollars”.
Bligh said that to help the region's development the State Government has established a group to examine how proponents could align their plans, particularly for infrastructure. She said the Galilee Basin Common Issues Forum was already identifying common goals and opportunities, including on a common rail corridor and port facilities.

To read the first part of this story click here.