openbriefing.com
Eastern Star Gas (ASX: ESG) is planning an underground pipeline to carry gas from its Narrabri Coal Seam Gas Project to Wellington. What is the approval process for this pipeline and at what stage are you in this process?

MD David Casey
We are in the early stages of planning a 275 km underground pipeline from the Narrabri Coal Seam Gas Project to the Central Ranges Pipeline, from where it will travel south to Wellington and at a later stage to Newcastle.

The first stage of the pipeline approval process is to complete an environmental assessment of the proposed route. This month the New South Wales Department of Planning issued specific requirements to be addressed as part of this environmental assessment.

We have identified a study corridor for the pipeline which is being progressively narrowed down through landholder consultations and independent studies commissioned by us. We are also gathering information about native flora and fauna along the proposed route and undertaking cultural heritage surveys which will be included in the environmental assessment. The completed assessment will be placed on public display, providing an opportunity for further public comment and consideration.

Once we have obtained New South Wales Government approval for the environmental assessment we will seek a pipeline licence. No decision will be made on the final route of the pipeline until after approval of the environmental assessment.

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The treatment of some landholders along one of the study corridors by ESG has been the subject of recent media commentary. Farmers at Mullaley, who are situated on or near the pipeline study corridor, have expressed concerns. What community consultation processes are you engaged in?

MD David Casey
As a home-grown Narrabri company that plans to have a long-term presence in the region, we are determined to work closely with local communities.

We have engaged with landholders on the study corridor to gather local information to determine a final preferred alignment and minimise the pipeline’s impact on farming and other activities. To date, of the 129 private landholders on the study corridor, 101 have given access for preliminary survey work.

We are disappointed by media claims that a small number of landholders feel they have been treated unfairly by the consultants we’ve engaged for these landholder consultations. We are committed to best practice using the best people, and take any such reports very seriously. We urge anyone with specific concerns to contact us immediately and we will investigate those concerns thoroughly.

We have recently met, and engaged in detailed correspondence, with representatives from the Mullaley Gas & Pipeline Accord. Some members of the group are our shareholders and attended our AGM this month, where we answered further questions. We have invited the group to a further meeting to explore the issues that have been raised. This invitation was rejected by the group but the offer to meet remains.

We will also be holding public information days in conjunction with the public release of the environmental assessment.

As New South Wales first major source of indigenous gas, the Narrabri Coal Seam Gas Project will deliver enormous benefits to the region through capital investment and job creation.

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What options have you considered for the pipeline route? Will landholders be compensated if the final pipeline route goes through their property? How will land values be impacted by the pipeline?

MD David Casey
One option under consideration is to locate the pipeline along the travelling stock route. Consultation with a number of government departments that oversee the route is part of the planning process. We have also employed an ecologist to look at the flora and fauna on the travelling stock routes to ensure we have all relevant information.

Any final decision regarding the location of the alignment will be discussed with landholders once the environmental assessment has been approved and a pipeline licence is being sought.

If the final pipeline route goes through private land, the landholders will be offered compensation. The offer of compensation for the pipeline easement is calculated by a licensed valuer and based on land values in the general area. Items such as loss of productivity during the period of construction and land rehabilitation may be included in the calculation. Landholders will be able to obtain independent advice on the compensation offer, at the cost of ESG, should they want a second opinion. Historically easements provided for underground pipelines have not resulted in adverse valuations for property.

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The proposed pipeline will traverse the Liverpool floodplains. Does this have any implications for the construction and safety of the pipeline? Is ESG involved in any other activities on the Liverpool floodplains?

MD David Casey
Numerous gas pipelines have been constructed across Australia using proven techniques. A gas pipeline (The Central Ranges Pipeline) already crosses the Liverpool Plains, running from Dubbo to Tamworth.

We will be engaging industry leading engineers, geologists and environmental managers to ensure the safety and integrity of the proposed pipeline meets Australian Standards. The pipeline will be regularly inspected to ensure it is structurally sound and it will be clearly marked on the surface for easy avoidance by machinery operators. The pipeline owner remains liable for remediation of any erosion or subsidence issues.

ESG’s license areas do not overlap the Liverpool Plains, and so we have no plans for gas production activity in this area. Our PEL238 operations, where the Narrabri Coal Seam Project is located, are primarily within the Pilliga State Forest, south of Narrabri, on sandy low value land. Our activities in this area will have no permanent impact on the landscape appearance.

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Has the timetable for expansion of the Wilga Park Power Station, or project costs for completion of the pipeline, been impacted by the concerns raised regarding the pipeline route?

MD David Casey
The approval and consultation process needs to be followed and has been factored into the project timetable and costs.

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There has been media coverage regarding fraccing of CSG wells in or near the water table accessed by local communities. Will ESG access the water table used by farmers and the community or engage in fraccing?

MD David Casey
ESG is extremely conscious of the importance of the Pilliga sandstone aquifers used by local communities and farmers as their water supply. The crucial point is that the Pilliga aquifers and the coal seams targeted by ESG are not connected to each other. The coal seams targeted in the Gunnedah Basin are between 550m and 1,100m below ground level, and very much deeper than the shallow Pilliga aquifers.

The Pilliga aquifers and the coal seams are separated by three layers of impervious rock, referred to as aquitards. These aquitards stop groundwater from moving between the deep and shallow layers of the earth. Water in the shallow aquifers, used by local communities and farmers, cannot drain into deeper coal seams. In addition, when drilling a coal seam gas well we cement two layers of steel in place to prevent any cross-flow between water contained in the coal seam and the shallow upper aquifers used by landholders.

We do not engage in fraccing nor do we have any plans to use fraccing in the future. Fraccing is the common name for a process that involves pumping a mixture of fluid and sand into a coal seam at high pressure to create fractures and so improve gas production rates. The fluid used may be either water or a gel comprising material such as polymers, surfactants, oxidants and enzymes, all of which are commonly used in the food industry.

Although fraccing has been carried out by Australian coal seam gas companies for decades and is entirely safe it does not suit the coal structure at Narrabri. We use lateral completions drilling horizontally through the coal seam, which removes the need for fraccing.

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What opportunities are there for ESG to supply the domestic gas market?

MD David Casey
Obvious opportunities would be gas fired power stations and agricultural processing. Perhaps more exciting would be new initiatives like compressed natural gas (CNG) and small gas liquefied natural gas projects (LNG). CNG and LNG are being investigated with potential for material reductions in the cost of existing activities, for example water pumping, cotton ginning or long haul transport.

openbriefing.com
Thank you David.