Coal seam gas—an increasingly significant source of natural gas in eastern Australia
Authors: Baker G. , Slater S. 
Published: August 2017

The commercial production of coal seam gas (CSG) in Australia commenced in 1996. Since then its production has grown up significantly, particularly in the last five years, to become an integral part of the upstream gas industry in eastern Australia.
The major growth in both CSG reserves and production has been in the Bowen and Surat basins in Queensland. Active exploration and appraisal programs with the first pilot operations were established in the Galilee Basin in 2008; however, an important reserve base has been built up in New South Wales in the Clarence-Moreton, Gloucester, Gunnedah and Sydney basins. There has been modest CSG production from the Sydney Basin for some years with commercial production expected to commence in the other three basins by or during 2010.
Exploration for CSG has been undertaken in Victoria and Tasmania while programs are being developed in South Australia focussing on the Arckaringa Basin. Elsewhere in Australia planning is being undertaken for CSG exploration programs for the Pedirka Basin in the Northern Territory and the Perth Basin in Western Australia.
CSG was being supplied into the eastern Australian natural gas market at 31 December 2008 at a rate of approximately 458 TJ per day (167 PJ per year). Queensland is currently producing 96.7% of this total. Approximately 88% of the natural gas used in Queensland is CSG. Currently, CSG accounts for nearly 25% of the eastern Australian natural gas market, estimated at 670 PJ per year.
The production of CSG is now a mature activity that has achieved commercial acceptability, especially for coal seam derived gas from the Bowen and Surat basins. The recent proposals by a number of local CSG producers—in joint venture arrangements with major international groups—to produce liquefied natural gas (LNG) from CSG along with a number of merger and acquisition proposals, is testimony to the growing economic and commercial significance of the CSG sector.
Should all of the proposed CSG based LNG projects eventuate, LNG output would be approximately 40 million tones per year. This will require raw CSG production to increase to approximately 2,600 PJ per year, resulting in a four fold increase from the present natural gas consumption in eastern Australia.
The proved and probable (2P) reserves of CSG in eastern Australia at 31 December 2008 were 17,011 PJ or 60.2% of the total independently audited 2P natural gas reserves of 28,252 PJ. The Bowen and Surat basins with 16,120 PJ have the largest onshore gas reserves eastern Australia. In New South Wales, the 2P CSG reserves at the end of 2008 were 892 PJ, though this is expected to increase significantly over the next 12 months. Major upstream natural gas producers such as Origin Energy Limited and Santos Limited both hold over 50% of their Australian 2P gas reserves as CSG.
The 1P reserves of CSG in eastern Australia at 31 December were reported as 4,197 PJ while the 3P reserves of CSG at the same date were 40,480 PJ. Most companies in the CSG sector are undertaking development work to upgrade their 3P reserves (and contingent resources) into the 2P category. The CSG resource in eastern Australia is very large. Companies with interests in CSG have reported in excess of 200,000 PJ as gas in place in the Bowen, Clarence-Moreton, Galilee, Gloucester, Gunnedah, Queensland Coastal, Surat and Sydney basins.
The 2P reserves of CSG are expected to exceed 20,000 PJ by the end of 2009. A significant part of the expected large increase in 2P reserves of gas initially will be dedicated to the proposed LNG projects being considered for Gladstone.
The major issues confronting the CSG industry and its rapid growth are concerned with land access, overlapping tenure (particularly in Queensland with underground coal gasification) the management and beneficial use of co-product formation water and gas production ramp up factors associated with the proposed LNG projects.