Find out more about...Coal Seam Gas (CSG)

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Did you know?

CSG is used by over 1,000,000 homes and businesses in New South Wales.

Queensland relies on CSG for over 90%

of its gas supply.

CSG makes up over 87% of eastern

Australia’s gas reserves.2

CSG has been with us since Australia’s coal mining industry

began over 100 years ago.

CSG is natural gas, generally 95-97% pure methane.1

CSG has been commercially produced in

Queensland for nearly 20 years.

1995

What is coal seam gas?Coal seam gas (CSG) is natural gas mainly composed of methane, the odourless and colourless gas used in homes and businesses.

CSG collects in underground coal seams formed over tens of millions of years from compressed organic material. The naturally occurring coal seam gas bonds to the surface of coal particles.

A combination of water and ground pressure traps the gas in fractures of underground coal seams, typically 500 – 1,200 metres below the surface.

Where is CSG found?Australia’s major coal resources are in a number of basins – the Bowen and Surat in Queensland, the Gunnedah, Gloucester and Sydney in New South Wales and the Clarence-Moreton Basin on the border between those two States.

To build a picture of the coal resource in a particular location, we use special trucks that bounce seismic waves underground to determine the depth and thickness of coal seams.

If we think there is likely to be a commercial quantity of CSG, we drill test wells.

• Over 87% of eastern Australia’s reserves are held in coal seams• Less than 10 years of conventional gas supply remains

Source: EnergyQuest February 2014 Quarterly, as at December 2013

Geology of natural gas

500

0

-500

-1000

-1500

-2000

-2500

-3000

-3500

-4000

6

5

4

2

3

1 Wind Turbine: 65m

Onshore Oil and Gas Drilling Rig: 43m

Gas Wellhead: 1.5m

Typical Coal Seam Gas Well: 500m-1200m

Typical Oil or Sandstone Gas Well: 1200m-3000m

Typical Shale Gas:2500m-4000m

Benefits of CSGNatural Gas from coal seams is used in exactly the same way as other natural gas, for cooking, heating, electricity production and to make products such as fertilisers.

With over 30 per cent of eastern Australia’s gas currently coming from coal seams, it’s likely you are already using CSG.3

CSG’s benefits go beyond its use as a fuel. The CSG industry has created jobs and local business opportunities in regional Australia, helping revitalise communities and reversing the migration of youth to urban areas. For instance, in Roma Queensland, where the CSG industry has been active for nearly 20 years, the local economy grew 120% from 2006 to 2011.4

~88,000 PJ

~1,000 PJ

~50,000 PJ

Australia’s reserves East Coast reserves

Conventional CSG

~6,500 PJ

~43,500 PJ

See next page for industry references to more information

Santos and coal seam gasSantos is one of the CSG industry’s most experienced operators. The company’s Scotia-3 well in Queensland, drilled in 1996, was the first well drilled to test the late Permian CSG play. Santos’ Scotia CSG plant commenced production in 2002.

Today Santos’ acreage in Australia covers approximately 200,000km. Santos’ extensive CSG resources in the Surat/Bowen Basins near Fairview and Injune in Queensland will supply the GLNG project, one of three new Australian CSG-to-LNG plants exporting to Asian markets. The company also has strong CSG prospects in the Gunnedah Basin in New South Wales.

Santos recognises that its success depends on maintaining healthy relationships with local landholders.

Santos GLNG has 850 agreements with landholders and a recent survey has shown that 9 out of 10 landholders would welcome us back on their land.

How do you produce CSG?CSG was first produced in Australia during the early days of coal mining. It was extracted at the Sydney Harbour Colliery in Balmain from the early 1900s and sold as an industrial and motor fuel, with production peaking in 1944.

Modern CSG production has been occurring safely and sustainably in Queensland since 1996 and in south-western Sydney for over 10 years.

To produce CSG, we drill wells deep underground into the coal seams. These wells are surrounded by steel and concrete to ensure they are separate from other underground layers, such as water aquifers.

Then we remove the salty water that is trapping the gas in the coal seam. This water is sent for treatment and reuse. The gas is then pumped through a network of pipes to stations where it is compressed, purified and sent on to customers.

Sometimes we need to use a process called hydraulic fracturing to release more gas from a well. This involves pumping a mixture of water, sand and small quantities of chemicals into the coal seam at pressure to fracture it. The water and chemicals are then pumped out and the sand remains in the coal seam, holding open the fractures to allow more gas to be released.

COAL

GAS TO MARKET

WATER TO EVAPORATION POND

TyPICALLy 500 TO 1200 METRES

SEPARATORPUMP

SOURCE: ENERGyINDEPTH

JANUARy 2000 OCTOBER 2013

U.S. CO2 EmiSSiOnS

(milliOn mEtriC tOnS)

U.S. ShAlE GAS PrOdUCtiOn (billiOn CUbiC fEEt/dAy)

CSG and the environmentNatural gas is the cleanest burning fossil fuel. When used for electricity, it produces nearly half the emissions of coal and uses less water.5

Using gas is one way that Australia and the world can reduce carbon emissions. Emissions in the United States have fallen dramatically in recent years, which many credit to their increased use of gas.

All CSG exploration and production in Australia occurs under strict regulatory conditions enforced by State and Federal governments to ensure it is done safely and sustainably.

Registered and Head Office Ground Floor, Santos Centre 60 Flinders Street Adelaide South Australia 5000

GPO Box 2455 Adelaide South Australia 5001

Telephone: 61 8 8116 5000 Facsimile: 61 8 8116 5050 www.santos.com

Interested in learning more about natural gas?Visit santos.com for more fact sheets on a wide range of gas-related topics.

Santos – an Australian PioneerAn Australian energy pioneer since 1954, Santos is a leading oil and gas producer, supplying Australian and Asian customers. With over 3,000 employees across Australia and Asia, Santos’ foundations are based on safe, sustainable operations and working in partnership with host communities, governments, business partners and shareholders.

Industry references1. Gas Industry Social & Environmental Research Alliance www.gisera.org.au

2. EnergyQuest February 2014 Quarterly, as at December 2013

3. Australian Department of Industry, ‘Eastern Australia Domestic Market Study’ 2013

4. Maranoa Regional Council, Dept. of Employment, ABS

5. U.S. Energy Information Administration, April 2014