AJ Lucas Group annual report 2007-08

Left: A coal seam gas well
at Gloucester. Each well
includes a pump, water
separation, telemetry and
safety equipment.
“The pressing need to
reduce greenhouse
gas emissions, plus
the sheer value of
the resource, will make
coal seam gas a major
resource for the future.”
Lucas annual report 2000
CASCADES
Lucas HDD was again the solution
to an intractable environmental
problem. Sydney Water needed to
install two new sewer mains as
part of its Upper Blue Mountains
sewer upgrade. The trouble was,
it had to get from one side of the
Middle Cascade Dam (above) to the
other, through precious wetlands
in Blue Mountains National Park.
Conventional trenching would be
virtually impossible without drastic
environmental consequences. Lucas
HDD was able to take the two
pipelines 2.4 km to meet the main
sewer tunnel 60 m underground,
travelling directly below the dam
wall. The environmental footprint
A single small work site, now
rehabilitated. Incidentally, this
project set a new world record for
an HDD sewer installation and an
HDPE pipe installation.
Coal seam gas
The Australian coal seam gas (CSG) industry
has performed as we’ve consistently predicted
since 2000, becoming a key energy resource
for Australia. According to energy economists
EnergyQuest, Australian CSG production in the
year to 30 June 2008 was 133 petajoules—up
nearly 40% on the year before.
Confirmed CSG reserves in NSW and
Queensland have also grown dramatically,
with proved and probable (2P) reserves almost
doubling to 12,400 PJ—about ten years of
current east coast gas consumption.
The increasingly urgent need to address
Australia’s greenhouse gas emissions,
highlighted by the Garnaut Climate Change
Review, has made cleaner energy sources a
national (and international) priority.
A number of parties, including ERM Power
and Origin Energy, are planning new CSG-fired
power generation. Five consortia of Australian
and international companies are proposing
export LNG plants at Gladstone in Queensland.
These plans alone will need around 14,000
wells over the next four years. A ten-fold
increase on the current annual rate of drilling.
Lucas’ involvement in coal seam gas has two
dimensions. First, as an investor, through our
participation in the Gloucester CSG Project
and our stakes in Sydney Gas, ATP651 and
Arawn. Second, as a service provider, delivering
Australia’s most comprehensive coal seam gas
service to virtually all the major companies in
the industry.
Drilling and CSG services
Lucas is the only company in Australia that
can undertake a full CSG project from initial
exploration through field development to gas
processing and delivery to the market.
Lucas began the year as a major player in the
coal seam gas drilling industry, and Australia’s
only vertically-integrated CSG service provider.
This was expanded in August 2007 with the
acquisition of Queensland drilling company
Capricorn Weston, who quickly integrated with
our existing operations and gave us substantially
more capacity in Queensland.
Continuing growth in demand for CSG and
our strong market position encouraged us to
negotiate to acquire Mitchell Drilling, another
leading drilling and services provider to the
CSG and resources sector. This was successfully
concluded in August 2008 for $150 million,
doubling our capacity.
The acquisition consolidates Lucas’ very strong
market position as the premier CSG service
a year of milestones 9