clarence moreton basin arrow exploration project - Arrow Energy

CLARENCE
MORETON
BASIN
ARROW
EXPLORATION
PROJECT
Arrow Energy is a leading Australian energy company focussed on the
development of coal seam gas (CSG) resources. Arrow is working to explore the
CSG potential of the Clarence Moreton Basin, with the aim of helping to meet
Queensland and New South Wales energy needs.
This Information Sheet explains the nature of CSG, the exploration process and our
approach to working with landholders and the community.

CLARENCE MORETON
BASIN EXPLORATION
The Clarence Moreton Basin stretches from southeast
Queensland to northeast New South Wales, and is joined,
and geologically equivalent to, the Surat Basin. The main
coal measure common across both the Surat and Clarence
Moreton Basins are the Walloon Coal Measures.
These coal measures are the source of gas that have
underpinned major energy developments in The Surat Basin
and the vast CSG resources of the Clarence Moreton Basin
could help reduce NSW’s current reliance on imports of
energy, either as electricity or gas, from Queensland and
Victoria. In the local area, these resources could underpin
the development of a strong and alternative industry,
providing jobs and helping to expand and strengthen local
communities.
Arrow is currently undertaking exploration in the Clarence
Moreton Basin to identify and assess the potential CSG
resources within its tenure area. This work is at a very early
stage and has yet to identify the extent and characteristics
of CSG resources. The results of the different phases of
exploration works will determine the viability of any future
project.
EXISTING
OPERATIONS
Arrow Energy has been operating since 2000 and was one of the
founders of Australia’s CSG industry. Before that time, CSG was
largely regarded as a safety hazard to coal mining, and otherwise
not capable of supporting domestic gas supply requirements.
History has disproven those early beliefs, and Arrow has been
producing gas commercially since 2005. Production from
Arrow’s gas fields currently provides more than 20 per cent
of Queensland’s overall natural gas needs, and the capacity
exists to supply far more. This gas is produced from five fields in
Queensland: four fields in the Surat Basin near Dalby, and one
field in the Bowen Basin, near Moranbah.
Arrow is highly experienced in all aspects of CSG exploration,
development and production having drilled more than 300 gas
wells in the Surat Basin, and 150 wells in the Bowen Basin. Gas
from these wells is gathered, compressed and piped to industrial
customers, primarily electricity generators. Arrow also has direct
interests in three gas-fired power stations. These activities
are managed within a strong framework of safety, health and
environmental controls.
Arrow’s exploration and development activities are conducted
over wide areas, extending as far north as Proserpine in the
Whitsunday region, west to Charters Towers and south to
the Newcastle region. This geographic spread has provided
Arrow with a very good understanding of landholder and local
community concerns.
Prior to undertaking activities, Arrow will contact the landholder
to explain how the activities are conducted in accordance
with regulations and industry codes and guidelines and work
with individual landholder concerns, timing of activities and
operational practices.
EXPLORATION
ACTIVITIES
All petroleum exploration and development activities require
environmental assessment under the NSW Environmental
Planning and Assessment Act 1979. Under the legislation,
companies like Arrow have a set of rights and obligations with
respect to the accessing of the resource and the land under
which the resources are located.
The exploration process that Arrow uses to explore for CSG is
staged in a sequential process that seeks to progressively obtain
better understanding of the nature of the resource. The basic
steps are:
1. Seismic surveys and stratigraphic drilling are used to
define the extent and continuity of coal seams.
Seismic
Is a surface based activity that uses a vibration
source to produce energy waves that travel underground.
The energy is reflected off the different geological strata
such as a coal seam, back to the surface where it is
recorded by a geophone.
Stratigraphic drilling
Involves drilling a bore to several hundred metres
in depth in order to locate and confirm potential
coal seams. Stratigraphic drilling could be
expected to take several weeks per bore.
2. Exploration bore drilling is undertaken to determine
whether the coal seam contains gas, and the potential of
the coal seam as a gas reservoir. This is done by
drilling bores to obtain core samples. Additional works may be
conducted on the bore to determine the permeability of the
coal – or how readily gas will flow from the coal. This activity
could also be expected to take several weeks per bore.
3. Appraisal drilling or ‘pilot testing’ is undertaken to
confirm whether economic supplies of gas are present.
A pilot test involves drilling five to six bores to test the
production potential on a small scale. Since CSG is held in
coal seams under the pressure of water (hydrostatic
pressure), it is necessary to reduce the water pressure in
order for the gas to flow. The drilling activity generally takes
several weeks per bore, however once the pilot is in
operation (producing water and gas), the production phase of
the pilot test could last up to 12 months or more.
Pilot bores that do not prove viable are shut down and properly
abandoned, and drilling sites are rehabilitated to their original
state. Where a pilot program is successful and shows viable
amounts of gas, Arrow will seek field development approval.
In steps 1 and 2, the drilling process requires the use of water,
sourced locally, which is stored in small ground pits. These
pits are lined with an impermeable liner which is removed and
disposed of at a government-approved waste disposal site, at the
end of drilling. In step 3, during the pilot test phase, the activities
produce water from the bore which is stored in a purpose built
small dam. If, for any reason, the project does not continue,
this land area is remediated as required under government
regulation.
At each of these stages, a decision is made to either proceed
based on favourable results, or abandon further works.

COAL
SEAM
GAS
CSG is a naturally occurring gas which has been trapped in
coal beds by water and ground pressure. The coal formed over
millions of years as the environment changed from forests,
rivers and lakes to swamps, then to rock and landform. Organic
sediment was left and compressed to form the coal beds that
now lie under the Clarence Moreton Basin.
When extracted, CSG is just like conventional natural gas and
can be used for the same purposes, such as home cooking. One
of the most common uses of CSG is for electricity generation,
with gas-fired power stations producing up to 50 per cent less
emission than equivalent-sized conventional coal-fired power
stations. CSG can also be used for other industrial purposes
such as fertiliser production.
Coal seams contain differing amounts of water. For example, the
seams in Arrow’s CSG production operations in the Surat Basin
of Queensland produce approximately 10 times the volume of
water per unit of gas than operations in the Bowen Basin. Part
of the exploration work in the Clarence Moreton Basin will be
to understand the volume and characteristics of water stored in
the coal seams. Water from coal seams can vary markedly in
composition - from near fresh to very saline.
The drilling of CSG bores by Arrow use proven construction
procedures and processes, and qualified and experienced
personnel. Drilling is conducted within strict regulatory and
environmental management measures. The fundamental aim of
this process is to ensure that the gas well is totally isolated and
secure from overlying strata and aquifers, and that no water or
gas can either enter or escape from the well.
For further information on the construction of CSG bores refer to
the Water and Salt Management Information Sheet.

FOR FURTHER INFORMATION ABOUT
ARROW ENERGY
Visit:
http://www.arrowenergy.com.au/page/Community_Information/
FOR FURTHER INFORMATION ABOUT CSG OR
RELEVANT LEGISLATION
Visit the following websites
NSW regulation of the petroleum industry
Petroleum (Onshore) Act 1991
http://www.austlii.edu.au/au/legis/nsw/consol_act/pa1991224
Environmental Planning and Assessment Act (NSW) 1979
http://www.austlii.edu.au/au/legis/nsw/consol_act/epaaa1979389
Information about minerals and petroleum titles
http://www.dpi.nsw.gov.au/minerals/titles
Commonwealth regulation of the petroleum industry
Environment Protection and Biodiversity Conservation Act 1999
(EPBC Act)
http://www.austlii.edu.au/au/legis/nsw/consol_act/epaaa1979389
Commonwealth Government Environmental Assessment
Department of Environment, Water, Heritage and the Arts
www.environment.gov.au/epbc/assessments/index.html
WORKING WITH
LANDHOLDERS AND
THE COMMUNITY
Arrow Energy recognises and respects the interests and
concerns of landholders and communities. Arrow is cognisant
of the need to establish long term relationships with people,
and to conduct our activities to minimise impact upon others.
It is also understood that not only landholders directly affected
by our activities must be considered, but also their neighbours,
local authorities and relevant community groups.
Arrow is flexible when planning exploration activities, and can
normally adjust locations or timing of planned drilling or other
activities to accommodate reasonable requests. Priority is given
to making early contact with landholders to discuss and agree
the nature and timing of proposed activities, and to set in place
formal agreements to provide certainty and comfort to both
parties.
Prior to undertaking any activities on private property, including
environmental investigations, Arrow communicates with
landholders. When determining temporary and permanent
locations for plant and equipment, all aspects of the property
are considered in consultation with the landholder. Agricultural
activities, stock considerations, seasonal conditions,
topography, drainage lines, service corridors and vegetation and
fauna communities are all taken into account.
Our preference is to develop working relationships with
landholders on whose properties we would like to operate, and
work together with them to resolve concerns. We work with
landholders to gain voluntary access agreements.