NSW coal seam gas industry coming of age ?  

The SMH has a look at prospects for the coal seam gas industry being talked up in NSW - It's a gas as NSW industry comes of age.

DAVID Casey says the New South wales coal seam gas sector has long been regarded as the ''poor cousin'' of its northern neighbours. While it is a fair and frank assessment by the Eastern Star Gas managing director, it is interesting to note that it was NSW that is viewed as the birth place of the unconventional gas in Australia.

In the 1980s BHP tried to extract gas from its coalfields at Appin near Wollongong. The big Australian installed some gas turbines there, but its efforts floundered when it discovered carbon dioxide seeping into the gas stream. From there most of the hard yards were carried out in Queensland's Bowen Basin. Twenty years on and the Queensland coal seam gas sector is a $50 billion market darling, attracting interest from international oil and gas giants like BG, ConocoPhillips and Shell.

But what happened along the way to NSW?

Some blame a lack of government support, others point to the immaturity of the resources industry in NSW at the time and the different techniques needed to extract the gas.

Mr Casey says the NSW sector is overcoming historical impediments and forging its own path. He believes Eastern Star could be converting coal seam gas into liquefied natural gas for exporting out of Newcastle by 2014 - the same time as its more fancied rivals in Queensland. ...

A look at coal seam gas reserves in Australia shows the head start NSW has given Queensland. The May EnergyQuarterly by consultants Energy Quest rates Queensland's proved, probable and possible reserves (3P) at 47,383 petajoules, or about 89 per cent of the Australian coal seam gas industry. NSW has about 11 per cent of the market, or 5836 petajoules. Even accounting for Queensland's 22,634 petajoules of contingent supply and NSW's comparative 4692 petajoules, the gap is only slightly bridged.

While the Surat and Bowen basins in Queensland house the richest coal seam gas prospects in the state, in NSW it is split among four; the Gunnedah Basin in central NSW, the Gloucester Basin near Newcastle, the Clarence-Moreton Basin in the north-east corner of NSW and the Sydney Basin located around the NSW capital.

Graeme Bethune, chief executive of independent adviser Energy Quest, says unlike the crowded Queensland market where the four major proponents will reside in the Gladstone postcode, the NSW players have some breathing space between each other.

''AGL is in the Sydney and Gloucester basins, there is the Gunnedah Basin where Eastern Star and Santos are and Metgasco is in the Clarence-Moreton,'' he says. ''The NSW producers would say they are a fair way behind Queensland producers in terms of development and understanding.

''In fact, there is basically no production in NSW except by AGL at Camden. There have been some encouraging well flows but none have been able to get into commercial production and they have been working on it for some time.''

Mr Casey believes Eastern Star is ''a good 2½ years ahead'' of other rivals in NSW.

''Camden is the most mature coal seam gas field in NSW. It is the most mature coal seam gas field in NSW but it is limited in size and scope - I don't think even AGL would dispute that. AGL would be more focused on their Hunter Valley assets and for them to get to where we are up there they have a lot of work to do,'' he said. ''We are genuine in our pursuit of a liquefied natural gas (LNG) hub at Newcastle.

''We have the resource base and soon we will have reserves that will underpin major infrastructure development. The time differential compared to Queensland is not as different as everyone thinks. It is not an insignificant task, but we believe we could be delivering LNG out of Newcastle by 2014, which is the same time as Queensland.''

At that point, Eastern Star is looking to start exporting a million tonnes of LNG a year, increasing to 4 million tonnes a year. By then it is expecting to have also started supplying 20 petajoules over 20 years to the ERM Power generator at Wellington, NSW.