- There has been no fracture stimulation (commonly referred to as “fracking”) to date in the South East of South Australia, nor has there been any proposal made to government for fracture stimulation in this region of the State.
- The existing regulatory framework for upstream petroleum industry in South Australia, administered by the Department of State Development (DSD) through the Petroleum and Geothermal Energy Act, 2000 (PGE Act), continues to ensure the protection of natural, social and economic environments, including public health.
- DSD regulates in close consultation and under existing administrative arrangements with Department of Environment, Water and Natural Resources (DEWNR) and the Environment Protection Authority (EPA), Primary Industries and Regions SA (PIRSA), SA Health and Safework SA.
- Fracture stimulation will not be permitted in the South East of South Australia unless a proponent can demonstrate to DSD that:
* All risks that adversely affect other users of the land will be avoided; and
* All concerns from potentially affected stakeholders (including land owners, enterprises, cultural heritage and native title groups, community groups, and other government departments) have been adequately addressed under the consultation requirements of the PGE Act.
- The most recent (2014) exploration drilling for gas in unconventional reservoirs in the South East entailed low risk operations as demonstrated by conventional drilling that has occurred in the region over the last 100 years (to date over 100 petroleum wells have been drilled in the South Australian Otway Basin).
- Shallow coal seam gas (CSG) is not the target of exploration drilling in the South East. The potential unconventional reservoirs in the South East are in shale that is greater than 2,500 metres below the surface.
- Fracture stimulation has been demonstrated to be safe and without harm to social, natural or economic environments in more than 800 wells in the Cooper Basin of South Australia.
Frequently asked questions
No, at this point in time the potential for unconventional gas or oil (defined in Appendix 1) in the South East has yet to be determined. The recent exploration drilling being undertaken by Beach Energy near Penola is seeking to determine whether any such resource is present. This is the first stage of the exploration phase and comprises of nothing more than conventional oil and gas drilling operations which are low risk, as demonstrated by the thousands of such wells drilled here in South Australia including over 100 petroleum wells already drilled in the South East over the last century. For a map of conventional oil and gas wells drilled in the South East since 1910 refer to Appendix 2 at the end of this information sheet.
The potential risks relating to the drilling and well operations stage of Beach Energy’s exploration program have been adequately addressed through the environmental assessment and approval process under the Petroleum and Geothermal Energy Act 2000 (the PGE Act) culminating in the publicly disclosed Environmental Impact Report (EIR) and approved Statement of Environmental Objectives (SEO). Included are hyperlinks to these documents on the petroleum pages of the State Government’s websites.1
In the event that a potential unconventional gas or oil resource is discovered through this current drilling program, the next stage may require the company to undertake fracture stimulation activities to determine whether the discovered resource can flow at commercial quantities. In the event that the company proposes fracture stimulation, under the PGE Act a comprehensive and extensive public consultation process will need to be undertaken demonstrating how all risks to aquifers are addressed to as low as reasonably practicable
Only at such time that community concerns have been adequately addressed and all significant risks are effectively managed to protect: (1) the natural environment (including the precious water resources of this region); (2) social environments; and (3) enterprises that are also land users – does the government then consider granting approval. Again, as with drilling and well operations, it is an offence for any such activity, including fracture, stimulation to cause aquifer contamination and adversely impact on land owners.
* Avoiding aquifer contamination (objective 1); and
* Avoiding impacts on other water users (objective 2).
|Environmental objectives||Assessment criteria||Guide to how objectives can be achieved|
|1. Avoid aquifer contamination|
No undesired flow between geological units or to surface.
No contamination of aquifers as a result of fracture stimulation operations.
Casing and wellhead designed to meet pressure, temperature, operational stresses and loads. Well pressure tested prior to fracture stimulation.
Monitoring programs implemented (e.g. through well logs, pressure measurements, casing integrity measurements and corrosion monitoring programs) to assess condition of casing and cross-flow behind casing.
Fracture Stimulation Planning and Monitoring
Assessment of geological and geomechanical settings undertaken during design of fracture stimulation treatments to avoid growth into undesired strata.
Trip systems installed to shut off stimulation pumping units if pre-set operational maximum pressure is reached.
Injection pressures monitored and compared to expected fracture initiation pressure. If initiation pressure is significantly lower, injection is stopped and casing integrity is assessed.
Investigation undertaken if unexpected water flows occur during production testing, to determine source (e.g. may indicate communication with aquifer).
Microseismic monitoring to be used to monitor height growth, if required, due to thinning of geological strata or evidence of unsuitable geomechanical conditions.
|2. Minimise impacts of groundwater use.|
No reasonable stakeholder complaints left unresolved.
No impact on groundwater dependent ecosystems resulting from extraction of groundwater.
Potential impacts to existing bores assessed where new water bores are to be drilled within 5 kilometres of existing water bores. Options to access deeper aquifer sands and to undertake monitoring of existing bores (where applicable) investigated to confirm that water extraction does not impact adversely on existing users.
Water extraction for fracture stimulation in accordance with licensing and water allocation plan where applicable.
Options for alternative water supplies investigated / used where feasible (e.g. produced formation water, recycling, reuse).
Extraction of large volumes of water from aquifers that provide base-flow to nearby waterholes (e.g. aquifers in sandy sequences underlying and adjacent to the Cooper Creek) avoided. For water bores proposed in close proximity to waterholes - location, depth and aquifer properties assessed and, where necessary, deeper intervals targeted or water wells relocated (where appropriate). Requirement for monitoring bore near the waterhole addressed.
It is important to know that shallow aquifers that are essential to people and valuable enterprises in the South East are separated from the deep gas resources by thousands of metres of sealing rock, which prevents natural upwards migration of fluids and gases.
Prior to any well operations being undertaken such as fracture stimulation, appropriate baseline studies must be undertaken. As part of these baseline studies the existing overall health of the environment needs to be evaluated. In relation to the South East region, the current widespread impacts on the shallow unconfined aquifers (Gambier Limestone) from longstanding industries and poor agricultural practices3 will need to be identified and accounted for.
Furthermore, in the Otway Basin, methane gas present in shallow aquifers is a natural occurrence as was found from government sampling results from water bores in the region back in 19934. In January 1993, 15 water bores were sampled in the South East for headspace gas analysis of which 7 provided sufficient hydrocarbons for compositional analysis. Methane values ranged from 25% to 92% of the total gas for these bores with nitrogen and oxygen accounting for the remainder of the gas with varying levels of carbon dioxide. Six samples taken from the 7 bores were analysed for stable carbon isotopic composition for methane and carbon dioxide to provide an estimate of the ratio of biogenic to thermogenic gas. With the exception of one sample, all gases were of bacterial origin although associated CO2 was clearly thermogenic, possibly derived from a volcanic source.
Therefore in the case of the South East, in order to satisfy Objective 1 above, ensuring protection of the surface aquifers entails protection from both potential cross-flow from deep hydrocarbon reservoirs and any potential cross-flow between the polluted unconfined aquifer and the more pristine deeper confined Dilwyn aquifer.
It is important to understand that unconventional reservoirs in Queensland and NSW are all related to shallow coal seam gas (CSG). In South Australia however, there are currently no industry project proposals for developing shallow CSG. Shallow CSG is very different to the deep gas resources that are being developed in South Australia and poses different potential risks.
In general, shallow CSG resources may be near shallow, multiple use water resources generally at depths less than 1,000 metres below surface, while deep gas in South Australia includes targets generally at depths greater than 2,500 metres below surface. The shallow potable aquifers of the Gambier Limestone and Dilwyn Formation in the South East of South Australia are generally at depths no more than 500 metres below surface.
Fracture stimulation has been safely used in wells drilled in both conventional and unconventional reservoirs in South Australia since 1969, regulated under the PGE Act and its predecessor – the Petroleum Act 1940. To date over 800 wells have been fracture stimulated in the deep sandstone reservoirs of the Cooper Basin, South Australia with no evidence of adverse impacts on aquifers within the Great Artesian Basin and other shallower aquifers.
Table 2 - Likelihood of well casing failure compared to general risks faced by society
|Risk||Life time odds|
|Heart attack2||2x10-1 (1 in 5)|
|Cancer2||1.4x10-1 (1 in 7)|
|Car accident leading to serious injury or death1||1x10-2 to 7x10-3 (1 in 10)|
|Casing failure leading to aquifer contamination3||4x10-5 (1 in 25,000)|
|Airplane accidents1||2x10-5 (1 in 50,000)|
|Shark attack2||1.6x10-5 (1 in 60,000)|
1 Bandolier: Evidence based thinking about health care.
2 31st October 2007: New York Times Health and Science
3 October 2013: Environmental Risk Arising From Well Construction Failure: Difference Between Barrier and Well Failure, and Estimates of Failure Frequency Across Common Well Types, Locations and Well Age: SPE 166142, Table 8. p.13
As with groundwater contamination, the mitigation of any potential contamination of land and soil from spills, whether the contaminant is hydrocarbon or produced water, is explicitly addressed through the SEO. Table 3 below provides an extract from a standard SEO and illustrates typical provisions for protecting land and surface waters in accordance with the PGE Act.
For the purposes of petroleum production, the Lower Limestone Coast WAP, (Principles 215-217, p137) states that co-produced water (water that is taken from the target formation as a by-product of petroleum extraction) can be allocated above the sustainable extraction limit.
- Avoiding contamination of surface water and shallow groundwater (Objective 3); and
- Avoiding contamination to soil (Objective 4).
|Environmental objectives||Assessment criteria||Guide to how objectives can be achieved|
|3. Avoid contamination of surface water and shallow groundwater.|
No leaks / spills outside of areas designed to contain them.
No overflow or escape of flow-back fluids from temporary ponds.
No overflow or escape of flow-back fluids from temporary ponds.
Pond Location: Well sites and pond locations selected to ensure that consequences of a potential pond failure are minimised (e.g. ponds not located in close proximity to the Cooper Creek channel or other significant watercourses such that failure would result in direct release to these watercourses).
Well leases located on higher ground as far as practicable.
Where well leases have potential for infrequent flooding, measures undertaken to ensure ponds are not vulnerable to flooding (e.g. ponds on higher ground, construction of higher pond walls, removal of flow-back fluids off-site either during testing or a completion of operations).
Pond Integrity: Flow-back fluids securely contained in ponds lined with UV stabilised material. Ponds with above-ground walls / bunds to prevent surface runoff into ponds.
Maximum pond fill level not exceeded (allow for rain events and wave effects).
Water balance method used for leak detection (incorporating inflow, evaporation, fluid levels and measurement uncertainty).
Pond operation monitored (e.g. pond wall integrity) and repair / remediation and / or decommissioning / rehabilitation undertaken where appropriate (e.g. if leak evident, recover excess fluid where practicable, repair or decommission / rehabilitate pond).
Monitoring: Program established to monitor shallow aquifers that are accessed by regional stakeholders. Monitoring of Cooper Creek levels at gauging stations upstream of the Nappamerri Trough (e.g. Durham Downs, Windorah, Stonehenge and Blackall) to enable implementation of flood response procedures if flood fronts are identified that are likely to impact on well operability and pond integrity.
|4. Minimise disturbance and avoid contamination to soil.|
No overflow or escape of fluids from temporary ponds.
No soil contamination as a result of fracture stimulation and flow-back operations.
Fuel and Chemical Storage and Handling
No spills / leaks outside of areas designed to contain them.
Level of hydrocarbon and other contaminants continually decreasing for in situ remediation of spills.
Also refer to Objective 12 for remediation of contaminated sites.
Routine inspections of storage ponds, general lease area and equipment.
Flow-back lines from wellhead rated and pressure tested to appropriate pressure and emergency shut-down system installed on well-head.
Spills / leaks cleaned up and remediated.
Flare pit cleaned up and remediated as required following completion of operations. Refer to Objective 3 for criteria related to pond integrity.
Refer to Objective 9 for pressure integrity of fracture stimulation pumping equipment.
Fuel and Chemical Storage and Handling: All fuel, oil and chemical storage, handling and secondary containment in accordance with the appropriate standards and guidelines e.g. Australian Standard AS 1940, EPA guideline 080/07Bunding and Spill Management and product MSDSs.
Refuelling undertaken with appropriate drip capture systems. Spill response equipment maintained on site. Spills or leaks immediately reported and clean up actions initiated.
Spill Response / Contingency Planning: Results of emergency response procedures carried out in accordance with Regulation 31 show that emergency response plan in place in the event of a spill is adequate and any necessary remedial action needed to the plan is undertaken promptly.
Personnel trained in correct procedures for use of materials, including refuelling and clean-up procedures.
Any chemicals used in fracture stimulation are at very low concentration by volume in the hydraulic fracturing water (0.1 to 0.5%). Table 1 includes other common uses for the chemicals used in fracture stimulation fluids, but this should not be taken to mean that that all of these chemicals are perfectly safe without proper storage and handling in a concentrated form. A comprehensive on-site chemical safety management plan (addressing transport, storage, use and waste) is required to be approved by the regulators before any proposed fracture stimulation would be approved to prevent impacts to workers, the public and the environment. This would include consideration of all chemicals to be used and their potential cumulative toxicity, as for the use of potentially hazardous substances by any industry.
Table 4 - Typical chemicals found in fracture stimulation fluids – source: US Department of Energy, Modern Shale Gas Development is the United States: A Primer (p63)
|Additive type||Main compound(s)||Purpose||Common use of main compound|
|Diluted acid (15%)||Hydrochloric acid or muriatic acid||Help dissolve minerals and initiate cracks in the rock||Swimming pool chemical and cleaner|
|Biocide||Glutaraldehyde||Eliminates bacteria in the water that produce corrosive byproducts||Disinfectant; sterilize medical and dental equipment|
|Breaker||Ammonium persulfate||Allows a delayed break down of the gel polymer chains||Bleaching agent in detergent and hair cosmetics, manufacture of household plastics|
|Corrosion inhibitor||N,n‐dimethyl formamide||Prevents the corrosion of the pipe||Used in pharmaceuticals, acrylic fibers, plastics|
|Crosslinker||Borate salts||Maintains fluid viscosity as temperature increases||Laundry detergents, hand soaps, and cosmetics|
|Minimizes friction between the fluid and the pipe|
Water treatment, soil conditioner
Make‐up remover, laxatives, and candy
|Gel||Guar gum or hydroxyethyl cellulose||Thickens the water in order to suspend the sand||Cosmetics, toothpaste, sauces, baked goods, ice cream|
|Iron control||Citric acid||Prevents precipitation of metal oxides||Food additive, flavoring in food and beverages; Lemon Juice ~7% Citric Acid|
|KCl||Potassium chloride||Creates a brine carrier fluid||Low sodium table salt substitute|
|Oxygen scavenger||Ammonium bisulfite||Removes oxygen from the water to protect the pipe from corrosion||Cosmetics, food and beverage processing, water treatment|
|pH Adjusting agent||Sodium or potassium carbonate||Maintains the effectiveness of other components, such as crosslinkers||Washing soda, detergents, soap, water softener, glass and ceramics|
|Proppant||Silica, quartz sand||Allows the fractures to remain open so the gas can escape||Drinking water filtration, play sand, concrete, brick mortar|
|Scale Inhibitor||Ethylene glycol||Prevents scale deposits in the pipe||Automotive antifreeze, household cleansers, and de‐ icing agent|
|Surfactant||Isopropanol||Used to increase the viscosity of the fracture||Glass cleaner, antiperspirant, and hair color|
In all cases with good well design, construction and maintenance, the risk of significant (i.e. has an impact on landowners) crossflow between the stimulated reservoir and aquifers can be avoided. In addition, with good work practices all chemicals will also be contained at the surface and disposed of appropriately.
Concerns are generally consistent with those raised regularly in the debate on unconventional reservoir development:
The following extract from a standard SEO illustrates typical provisions for addressing health and safety risks in accordance with the PGE Act.
|Environmental objectives||Assessment criteria||Guide to how objectives can be achieved|
|8. Minimise air pollution and greenhouse gas emissions.|
No reasonable stakeholder complaint left unresolved.
No unplanned gas releases.
Well production diverted to flare as soon as practicable.
Well testing curtailed when test objectives are satisfied.
Equipment operated and maintained in accordance with manufacturer specifications. Well flow-back diverted to separator as soon as practicable to minimise gas not being recovered and sent to flare.
Flaring during production testing kept to minimum length of time necessary to establish resource and production parameters.
Options to connect to gathering network investigated once initial testing is complete and longer term testing is required for reserve definition.
Dust control measures (e.g. water spraying) implemented if dust generation becomes a problem e.g. near sensitive sites.
Appropriate emergency response procedures are in place for the case of a gas leak. Monitoring of well parameters during testing operations to check for fugitive emissions at the wellbore.
|9. Minimise risks to the safety of the public, employees and other third parties.||Reasonable measures implemented to ensure no injuries or health risks as a result of the activities.|
Fracture stimulation activity
All employees and contractor personnel complete a safety induction prior to commencement of work in the field.
All employees and contractor personnel undertake a regular refresher induction.
Signage in place to warn third parties of access restrictions to operational areas, with particular warnings when potentially dangerous operations are being undertaken.
Contractor equipment has valid certifications, is properly secured and pressure tested prior to commencement of stimulation at each site and trip systems are installed to shut off stimulation pumping units if pre-set operational maximum pressure is reached.
All appropriate PPE (personnel protective equipment) is issued and available as required in accordance with company operating requirements and applicable standards.
Monitoring undertaken to confirm / ensure that levels of radioactivity are within acceptable limits.
Safety management plans prepared as required for the activity. Permit to work systems in place for staff and contractors as required.
Effective Emergency Response Plan (ERP) and procedures are in place.
Traffic and journey management procedures followed.
Speed restrictions and appropriate signage to reduce speed and increase awareness of hazards for public, employees and third parties.
Fire and Emergency Services Act requirements complied with (e.g. permits for ‘hot work’ on total fire ban days).
Fire-fighting equipment available as appropriate for location and use.
In South Australia, the adoption of key aspects of “green completions”, in particular the requirement to flare and not vent gas during flow back and well testing stages, has always been a requirement under the PGE Act. In August 2012, consistent with requirements in Australia, the US Environmental Protection Agency published its new emission performance standard banning venting of gas directly to atmosphere during well testing operations. The rule states: “where it is not feasible to store gas, re-inject, use as on-site fuel or if emissions cannot be directed to a flow line, then the emissions must be directed to flare permitting it is safe to do so.”
In South Australia, DSD-ERD has always supported this approach in its approvals and has not permitted, other than in the case of an emergency or in a controlled operational situation (for example, during maintenance of a high pressure gas pipeline) the venting of natural gas (or any petroleum). It has always been a requirement that natural gas be flared where it could not be either used for fuel, injection or directed into a flow line. The USA, through the adoption of this rule in August 2012, have brought themselves into line with what we in South Australia always considered to be a minimum requirement.
Fracture stimulation is just one technology already well regulated under the PGE Act that has been performed in this state safely, and without harm, over the last 40 years. Therefore, in the case that fracture stimulation is considered for the South East, the existing regulatory framework is sufficient to ensure that all concerns and issues raised by the community are addressed to an acceptable level prior to any approval being granted.
The objectives of the PGE Act and its Regulations are to ensure that all risks to the health and safety of the community and to the environment are either completely avoided, or managed and reduced to a level that is as low as reasonably practicable and acceptable to the community. Regulated activities under the PGE Act cannot be carried out unless there is an approved SEO in place, prepared on the basis of an EIR. The EIR identifies all potential risks relating to the activity and describes the appropriate risk mitigation strategies. The SEO identifies the environmental objectives to be achieved and the criteria to be used to assess achievement of the objectives. These documents are required to be developed by the proponent through a consultative process involving potentially affected stakeholders, and are assessed by DSD-ERD through a further consultative process as required by the PGE Act and its Regulations. The extent of DSD-ERD’s consultation is determined on the basis of an environmental significance assessment undertaken in consultation with other Government agencies, discussed further under question 20.
The PGE Act forms one window to government for the industry whereby the SEO incorporates the requirements of other pieces of relevant legislation (for example the National Parks and Wildlife Act; the NRM Act; the Work, Health and Safety Act; and the Environment Protection Act) and these are in turn incorporated into the DSD-ERD approval and compliance monitoring processes. EIRs and approved SEOs are public documents available on the DSD-ERD website.29
In the case of fracture stimulation, the EIR and SEO must address risks associated with fracture stimulation fluid and petroleum cross-flow. This is detailed further under questions 2, 10 and 13. The sustainable use of water for such activities must be also addressed in the EIR and SEO.
That is, the EIR and SEO documents are prepared by the proponent through community consultation where a clear description of the proposed activities and their associated mitigated risks are provided to enable the community to reach an informed decision on both the level of severity and acceptability of such risks. In response, the proponent is required to address any community concerns and issues in the EIR and ensure that relevant measurable objectives are detailed in the SEO that demonstrate how these risks will be monitored and controlled, prior to submitting to the regulator for assessment and approval consideration. Furthermore, in keeping with this openness principle, DSD-ERD as the lead regulator is required through statutory requirement (Regulation 12(4) under PGE Regulations 2000) to assess these documents in consultation with the Department of Environment, Water, and Natural Resources (DEWNR), the Environment Protection Authority (EPA), the Department of Planning, Transport and Infrastructure (DPTI) and Safe Work SA as relevant. This mandated engagement with these agencies is conducted through individual Administrative Arrangements publicly available on DSD-ERD’s website.31
Transparency principle: All approval, compliance monitoring and enforcement documents are available for stakeholders to review and scrutinise. This is achieved through the following:
1. EIR and SEO Assessments
In addition to the public disclosure of the EIR and approved SEO, the environmental significance assessment (ESA) undertaken by DSD-ERD in consultation with other government agencies is also available on DSD-ERD’s website.32
2. Annual Compliance ReportsSince 2006, on an annual basis DSD-ERD publishes and tables in the Parliament of South Australia its annual compliance report detailing all regulatory surveillance and approval activities undertaken by DSD-ERD over the previous calendar year, all enforcement actions taken in accordance with its compliance policy and all serious incidents may have occurred including subsequent corrective actions. These reports are publicly available on DSD-ERD’s website33, and provide an excellent demonstration of how the department transparently reveals industry compliance. This constitutes regulatory best practice addressing any notion or perception of regulatory capture.
3. Company Annual Compliance Reports
Further to DSD-ERD’s annual compliance reports, the PGE Act requires all licensees to submit for public disclosure its own compliance report against the regulatory requirements and SEO criteria. These reports are received and reviewed by DSD-ERD annually and published on its website34.
The role of the regulators who administer the PGE Act and relevant co-regulations is to provide assurance to the community that the design and execution of regulated activities will achieve the approved objectives of the relevant SEO. The aim of the Ministers for all forms of relevant co-regulation, and the aim of all of PGE Act processes and people are to foster the utmost trust that the robust co-regulatory processes combine to provide necessary safe guards from any potential risks associated with activities regulated under the PGE Act, including all unconventional gas operations.
Any and all approvals for the development of South Australia’s natural energy and mineral resources will always be informed by competent and trusted regulators using the best available science and engineering information so that only environmentally sustainable projects are provided with land access. In other words, where a project cannot demonstrate that it can be undertaken in manner which will comply with the regulatory requirements, that is to be environmentally sustainable, then approval will not be granted. For example, in the case of fracture stimulation where a proponent is unable to demonstrate that the undertaking of this activity will avoid contamination of adjacent aquifers, approval will not be granted.
* Owing to the long supply chains, the job impacts are being experienced across the United States, including in states without significant shale gas or tight oil activity. More than a quarter of all jobs associated with the unconventional revolution are found in states with no appreciable unconventional activity.
* The unconventional revolution increased average household disposable income in 2012 by $1,200 – a number that will grow to $2,700 by 2020 – as a result of savings on utilities and lower costs for goods and services as producers and retailers enjoy lower energy costs.
The Australian Council of Learned Academies (ACOLA)37 Report notes that economic diversification that leverages energy projects is the greatest way of contributing to the long-term wellbeing of a region, though a strategic approach to regional development is vital. The Western Australian onshore gas industry is now considering how to make the most of the local benefits from shale gas production through incentives for regional contractors, farm-friendly working conditions, community development programs and fair compensation payments. In the case of the South East, similar initiatives can also be considered.
In South Australia, individual land owners have rights under the Petroleum and Geothermal Energy Act 2000 (the PGE Act), Part 10, sections 60 to 64, to object to entry and to negotiate any authorised entry and/or compensation.
Notwithstanding this, there is no law in South Australia or Australia, constitutional or otherwise that would preclude responsible development in the public interest. The reason being, the Crown that is the overall community, in South Australia is the owner of the mineral rights including oil and gas, not an individual land owner. Therefore as the owner of those rights, the Crown reserves the right to ensure the general public interest is in no way disadvantaged through vexatious and unreasonable demands from some sectors of the community. However, the government must also in exercising that right ensure that any proposed development delivers net beneficial outcomes, that is, maximise the benefits of projects such as GSP, jobs, royalties, security of energy supply and industry development and minimise any detrimental risks associated with such projects to an acceptable level addressing community concerns. It’s for this reason that legislation such as the PGE Act exist.
The number of wells required depends very much on the size of any resource discovered and the commercial flow rates that can be achieved from each well. In simple terms, the lower the productivity of each well the more wells required to extract the resource. However, taking into account the cost of drilling and completing wells and the value of the resource being exploited, there would be a maximum number of wells that could be drilled at any given time before the project becomes commercially uneconomic.
Furthermore, given the size of the gas markets to which natural gas produced in the onshore South Australian Otway Basin are likely to be competitive – if an early well or three are successful in delineating unconventional rock-reservoirs that can flow at economic rates – then we could envisage possibly tens of development wells to follow –drilled from multi-well pads - with an aggregate surface foot-print similar to what locals have experienced for decades in the South East of our State. We do not envisage gas market growth in the foreseeable future in South East Australia to drive the development of deep gas resources in the Otway Basin to anything approaching thousands of wells quoted in the local media.
The need for prescribed separation distances of petroleum activities from other land uses such as areas of tourism, dwellings and townships is addressed through the environmental impact assessment process under the PGE Act. It is worth pointing out that only after potential risks to social, natural and economic environments during all phases of petroleum operations (including drilling) are robustly addressed, and effective risk mitigation strategies and controls (including separation distances where appropriate) are required to be implemented, are any upstream petroleum operations approved pursuant to the PGE Act.
Being a risk-based regulatory framework, one of the PGE Act’s essential features is that the level of stringency of the required controls need to be commensurate to the severity of the risk at hand. That is, through the environment impact assessment as detailed in the Environmental Impact Report (EIR), it would be determined whether through design, operational control or simply an appropriately determined separation distance that a particular threat to social, economic and/or natural aspects of the surrounding environment can be best managed. If any particular activity cannot be practically managed to meet community expectations for net outcomes – then such activities will not be approved for undertaking.
The PGE Act assessment process entails consultation with potentially affected people and enterprises in developing Environmental Impact Reports (EIRs) and Statements of Environmental Objectives (SEOs). It is through this process that any justification for separation distances to protect features of the environment such as townships, dwellings or other land uses can and needs to be addressed.
For more information, contact:
+61 8 8463 3245