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Focus: Coal seam gas water management in Queensland

14 May 2009

In brief: Following the release of its coal seam gas water policy in October 2008, the Queensland Government has now released the Management of Water Produced from Coal Seam Gas Production Discussion Paper, which proposes to 'tighten' Queensland's current coal seam gas water regulatory regime to achieve greater beneficial use. Partner Bill McCredie, (view CV) Special Counsel Philip Murray and Senior Associate Suzanne Westgate report.

How does it affect you?

  • The Queensland Government has committed to tightening current legislative requirements for the disposal and beneficial reuse of coal seam gas (CSG) water.
  • CSG producers with existing evaporation ponds are required to remediate those ponds within three years – although the Discussion Paper provides no detail as to how this is to be enforced.
  • All existing and intending CSG producers must allow for the cost of treating CSG water and the cost of disposal of the saline effluent from that treatment.
  • CSG producers will need to adopt a much broader perspective on CSG water disposal and should expect government 'encouragement' (at the least) to contribute to the development of a system to transport all treated CSG water to locations with greater potential uses.
  • CSG producers – in particular, producers with existing evaporation ponds or proposed CSG operations – should make submissions to the Queensland Government by 1 June 2009 on preferred methods of evaporation pond remediation and saline effluent disposal.
  • Water service providers should follow the CSG water policy developments closely for possible opportunities to participate in the development and operation of new systems.

Existing regime

CSG water disposal has been a heavily debated topic in Queensland for the past few years as the CSG industry has continued to rapidly expand, resulting in the production and disposal of significant quantities of CSG water.

In general terms, the current legislative framework for CSG water extraction, use and on-supply has been criticised by the CSG industry as being overly burdensome, not facilitating the beneficial reuse of CSG water, and not recognising the opportunities for the water industry associated with supply of the CSG water resource.

Currently, CSG water disposal and reuse is regulated by a suite of Acts and policies, namely:

  • the Petroleum and Gas (Production and Safety) Act 2004 and Petroleum Act 1923;
  • the Environmental Protection Act 1994 (the EP Act); Environmental Protection Regulation 2008; Environmental Protection (Waste Management) Regulation 2000; Environmental Protection (Waste Management Policy) 2000; and supported by the Management of Water Produced in Association with Petroleum Activities (associated water) Operational Policy 2007;
  • the Water Act 2000; Water Supply (Safety and Reliability) Act 2008; and
  • for activities carried out off-lease, the Integrated Planning Act 1997.

CSG water is considered to be 'waste' under the EP Act, unless it is otherwise approved as a 'resource for beneficial reuse' by the Department of Environment and Resource Management (incorporating the former Environmental Protection Agency) (DERM). For specific beneficial reuse projects, CSG producers are required to obtain an approval under the Environmental Protection (Waste Management) Regulation, as well as any authorisations required under the various Acts for undertaking any environmentally relevant activities for the use of the water (including amendments to environmental authorities, development approvals, registration certificates and water licences).

Queensland Government's Policy and Discussion Paper

In response to increasing public concern about the potential environmental risk posed by evaporation ponds, in October 2008 the Queensland Government released its CSG Water Policy (the policy). The key aim of the policy is to achieve environmentally sustainable outcomes and facilitate the greater beneficial reuse of CSG water.

The policy recognises that the availability of traditional water supplies in Queensland is declining and that CSG water may provide opportunities for water service providers. However, the focus of the policy is on the potential long-term impacts of evaporation ponds and saline effluent on the state's ecology and agriculture. The Discussion Paper, which supports the Government's policy, reflects this overarching concern.

Despite the CSG industry's criticism that the current regulatory regime does not facilitate the development of beneficial reuse, the Government states in the Discussion Paper that the requirements of the current legislation are considered to be appropriate. In that regard, the Government's preferred option in the Discussion Paper is to tighten the current regulatory requirements to 'achieve a greater beneficial reuse of CSG water'.

However, no detail is provided in the Discussion Paper concerning the proposed 'tightening' of the current regime.

The Discussion Paper identifies that the Government has already made the following decisions:

  • CSG producers are responsible for the treatment and disposal of CSG water that cannot be reinjected or beneficially reused.
  • Unless CSG producers use direct injection of CSG water or have made arrangements for 'environmentally-acceptable' direct beneficial reuse of untreated CSG water, the producers must treat CSG water to the DERM's standards before disposal or on-supply.
  • Evaporation ponds are to be discontinued as a primary means of disposal. Remediation of existing evaporation ponds is to occur within three years.
  • A CSG water management plan is to be incorporated into the environmental management plan required for a level 1 environmental authority under the EP Act.

To facilitate these aims, the Discussion Paper seeks input on the following issues:

  • Under what circumstances should the industry be required to develop and fund a CSG water aggregation and disposal system to deal with excess CSG water? The Government's intention is to encourage cooperation between CSG producers to collectively investigate opportunities to transport CSG water to locations where it may be beneficially reused. While the Government has not mandated such aggregation and disposal systems at this stage, it proposes to 'facilitate' systems through, for example, regional water supply planning in the future.
  • How should existing evaporation ponds be remediated? The Government has already determined that existing evaporation ponds are to be remediated within a three-year period. However, there is no indication in the Discussion Paper as to how this policy will be enforced, or what consequences will ensue if remediation does not occur within that timeframe. The Discussion Paper states that the CSG industry should be in a position to plan the transition of existing operations by the end of 2009. It is proposed that the DERM will consider remediation proposals on a case-by-case basis.
  • What are appropriate disposal options for the saline effluent produced through CSG water treatment?

What next?

Submissions on the Discussion Paper are due by 1 June 2009.

Given the lack of detail in the Discussion Paper as to how the Government proposes to 'tighten' existing controls and 'facilitate' the future development of aggregation and disposal systems, CSG producers, particularly those with existing evaporation ponds, should strongly consider making submissions on preferred methods of remediation and saline effluent disposal.

If you would like further information in relation to the Discussion Paper or assistance with drafting submissions, please contact any of the people below.

For further information, please contact:

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