1.2.3.2 Coal seam gas

Targeted exploration for CSG has predominantly occurred in the eastern part of the Central West subregion focusing on the Gunnedah Basin (Figure 3). Current petroleum exploration licences (PELs) completely or partially in the Central West subregion are shown in Figure 6 and summarised in Table 3. These are PEL 12, PEL 238, PEL 428, PEL 433, PEL 434, PEL 450, PEL 456, and PEL 462. However, only small portions of PEL 12 and PEL 238 are in the Central West subregion with most in the Namoi subregion. No exploration has occurred on these tenements in the Central West subregion. Similarly, most of PEL 456 is outside the Central West subregion. Currently, Santos is the (joint) holder of all PELs in the Central West subregion, after acquiring Eastern Star Gas in 2011.

Figure 6 Petroleum titles and applications and coal seam gas wells in the Central West subregion

Source data: NSW Department of Trade and Investment (2014c), viewed 21 August 2014

PEL = petroleum exploration licence; PELA = petroleum exploration licence application; PPL = petroleum production lease; PPLA = petroleum production lease application; PSPAPP = petroleum special prospecting authority application

A large part of the subregion is currently covered by Petroleum Special Prospecting Authority Application (PSPAPP) 57 (applicant: NSW Aboriginal Land Council) (see Figure 6). Another PSPAPP partially in the subregion is PSPAPP 62 (applicant Ison Energy Pty Ltd) (see Figure 6). These PSPAPPs are currently (as of August 2014) under consideration by the NSW Government (NSW Department of Trade and Investment, 2014b).

CSG exploration in the Gunnedah Basin in the Central West subregion has occurred in the southern part of PEL 450 (seven exploration wells in the subregion, see Figure 6 for well location and names), PEL 433 (three exploration wells), and the far western part of PEL 456 (one exploration well – Oakdale 1) (see Figure 6). Another exploration well (Coolahville‑1C) is located south of PEL 450 and PEL 12 in a block that is not currently covered by a PEL or a PELA (as of August 2014 (NSW Department of Trade and Investment, 2014d)).

Table 3 Petroleum exploration licences completely or partially in the Central West subregion

Source data: pbEncom (2014)

PEL = petroleum exploration licence

The wells were drilled to determine parameters relevant to CSG operations, such as coal seam depth and thickness, coal quality, rank, gas content, gas composition, sorptive capacity, and in situ permeability. Target coals for CSG in the western Gunnedah Basin in the Central West subregion are the Late Permian coals of the Black Jack Group, with the primary target being the Hoskissons Coal. The Early Permian Maules Creek Formation is either not present in the eastern part of the Central West subregion or only poorly developed. Results from the core wells indicate that the explored area of the Central West subregion is not currently prospective for commercial CSG extraction. The coal seams of the Black Jack Group were found to be either severely undersaturated, with total gas content generally below 1 m³/t, or with maximum gas content of 4 to 5 m³/t but with high levels of CO₂ (ESG, 2007a, 2007b, 2010a, 2010b; Santos, 2008a, 2009a, 2009b, 2009c, 2009d; Strike Oil, 2003a, 2003b).

Regional coal seam gas assessment to evaluate the CSG potential in the Gunnedah Basin was undertaken by Santos which included the licence areas PEL 450, PEL 456, and PEL 462 (Santos, 2009c). In 2008 Santos proposed to drill up to 11 new core wells in PEL 450 (Santos, 2008b) of which eight were to be located in the Central West subregion. However, only two of the proposed wells have since been drilled in the subregion (Tenandra 1 and Wallumburrawang 1 - see Figure 6) and the approval for the core well drilling programme has now expired. The results of the Tenandra 1 and Wallumburrawang 1 wells are included in the summary of exploration results presented above. In 2010 Santos gained approval from the NSW Government to conduct the Windurong Seismic Survey to assist in identifying hydrocarbon potential in PEL 450 and PEL 462 (NSW Department of Primary Industries, 2010; Santos, 2010).

A single exploration well has been drilled to assess the CSG potential of the Cretaceous Rolling Downs Group of the southern Surat Basin. The exploration well Carinda 1, in the north-western part of the Central West subregion currently covered by PSPAPP 57 (see Figure 6), intersected a net coal thickness of 6.92 m (including inferior coals) with individual seam thickness of 0.25 to 1.58 m. Coal was encountered to depths of 270 m. The gas content of the coals was not measured (Cydonia Resources, 2011). Gas content measurements require one or several coal cores to be taken from the seam and analysed in a laboratory. This is an additional expense and thus such analysis is not always undertaken during exploration for coal seam gas.

CSG exploration and commercialisation in the Central West subregion needs to be consistent with the CSG regulations and CSG exclusion zones that apply in NSW. These laws prohibit new CSG exploration and development in and around (within a 2 km buffer) existing residential areas (NSW DPI, 2013a, 2013b). See Figure 10 in companion product 1 .1 for exclusion zones in the Central West subregion (Welsh et al., 2014).