Australians seem to have accepted coalbed methane as a reliable energy source that can compete technically and economically with conventional natural gas.
Australia had 90 tcf of gas reserves as of Jan. 1 (OGJ, Dec. 23, 2002, p. 114), a third of which is on the Northwest Shelf and supports LNG exports.
Gas is minor in Australia's fuel mix, but the US Energy Information Administration notes that its use is expected to grow at nearly twice the rate of other energy sources, supplying 24% of the country's total energy consumption by 2019-20.
OGJ estimated Australia's gas production at about 1.2 tcf in 2002.
Australian CBM has grown from infancy 10 years ago. CBM supplied 20 bcf, or 25%, of Queensland's gas demand in 2002.
Most CBM is produced in Queensland and consumed in Queensland, New South Wales, Victoria, South Australia, and Australian Capital Territory (ACT). The main producing areas are Peat and Durham fields, operated by Origin Energy Ltd. subsidiary Oil Co. of Australia Ltd. (OCA); Santos Ltd.'s Scotia field; and Tipperary Corp.'s Fairview field.
Sales agreements
CBM is filling in as conventional gas from the Cooper basin and Bass Strait declines.
Australian Gas Light Co., North Sydney, in December signed agreements worth $4.5 billion (Aus.) to buy as much as 1,408 petajoules (1.3 tcf) of gas in 15 years from diverse sellers. The sources are BHP Billiton Petroleum Pty. Ltd. and Esso Australia Resources Pty. Ltd., the Santos-led Cooper basin producers, and Origin Energy.
The deals assure continued gas flow out of the Cooper basin, supplemented by supplies from the Surat and Bowen basins into South Australia, New South Wales, and ACT, as well as expanding the role of supplies of Gippsland gas into Victoria, New South Wales, and ACT, AGL said.
CBM's share of these supply agreements is 316 bcf in 15 years from May 1, 2005, making it Australia's largest CBM supply deal.
AGL also signed for up to 523 bcf from BHP and Esso in the Gippsland basin and 470 bcf from Santos-led Cooper basin producers.
Also in December, TXU Australia signed a conditional pact for 381 bcf of gas from Papua New Guinea—to be delivered via pipeline to Queensland—for 20 years from 2007. It also contracted for 782 bcf of Bass Strait gas for 12 years starting in 2005.
OCA in July 2002 signed a 10-year pact to supply up to 5 bcf/year of CBM to Australian Magnesium Corp. at Stanwell, Qld., starting in September 2004 pending a gas transportation agreement. OCA pointed out then that CBM suppliers won the last four significant contracts for gas supply in Queensland.
CBM production
The AGL purchase agreement "will effectively double CSG (coal seam gas) production in Queensland," said OCA Director John Piper.
The Australian unit of Tipperary Corp., Denver, operates Fairview field, where OCA's interest is 23.9%. Fairview will supply about 57% of contract volumes.
The rest of the gas will come from OCA's other CBM interests in central Queensland. OCA will supply 52% of the total gas, to be shipped through new and existing pipelines.
OCA's share of capital spending is expected to be $200 million, $20 million of which will accrue to the state government as royalties.
OCA's Peat field, near Wandoan township, produces about 6 bcf/year in support of Australia's first major long-term CBM sales agreement, with BP Oil Australia Pty. Ltd.'s Bulwer Island refinery clean fuels project in Brisbane.
The Dawson Valley project yields 3 bcf/year of CBM, and OCA said potential exists for more than 1 tcf of recoverable CBM in similar fields on the Northeast Bowen exploration permits.
The Durham and Fairview projects north of Roma "represent a world-class accumulation of CSG with ultimate potential reserves of 2,000 PJ (OCA share) of recoverable gas," OCA said.
The Walloon coals, near Miles and Chinchilla and more than 50% held by OCA, are believed to contain a resource of up to 15 tcf.
Papua New Guinea's back seat
AGL in December advised the ExxonMobil Corp.-led producer group backing the Papua New Guinea-to-Queensland pipeline that it was reexamining its options for Papua New Guinea gas but is not exiting the project.
It said recent developments indicate that Papua New Guinea gas will help satisfy demand in northern Australia.
AGL said it will continue to support the Papua New Guinea-Queensland pipeline proposal through its role in a consortium with Malaysian state oil company Petronas that was selected to build the Australian portion of the project.