Queensland Govt Chooses Coal Seam Methane Over Resource Boom

Has the government in Queensland quietly chosen a coal seam methane (CSM) future over underground coal gasification (UGC)? It looks that way, at least according to an article in today’s Australian. The article quotes an unnamed official in the office of Queensland Mines and Energy Minister Geoff Wilson as saying, the Queensland government has, “no intention of granting production tenures for underground coal gasification for at least three years”.

We chased up the reporter in the story to see where the quote came from. She produced a Microsoft Word document provided to her by a media spokesperson in the Department of Mines and Energy. The document compiles the various positions from the multiple government parties involved in the whole process.

Under a section titled “Advice from the Office of the Minister for Mines and Energy,” it reads:

“The Department of Mines and Energy has no intention of granting production tenures for underground coal gasification for at least three years. Underground coal gasification is a new technology, untried in Australian conditions, and it poses some potential problems, especially with groundwater systems. We will only do what’s best for Queensland. In this case, we don’t believe it’s in the best interests of Queensland to grant production tenures for technology that is untried. It would have to meet the most stringent environmental standards.”

To our knowledge, this is the first time the Department has made any of those views public, if indeed those are the views of the Department. We phoned them up to verify the documents authenticity, and to determine whether “Advice” meant a tentative position or a policy position. So far, our call hasn’t been returned. We’ll report back tomorrow when we know more.

If Queensland has chosen coal seam methane over underground coal gasification for the reasons listed above, well it would seem like an odd decision, given that UGC is not a new technology and hasn’t posed any problems to groundwater in its trial phases. A behind-the-scenes policy decision would be news to us.

In the meantime, you get the feeling that Aussie governments (at the State and Federal level) are almost looking for a way to derail the boom. The Emissions Trading Scheme, for example, appears to be a way that holier-than-thou bureaucrats can feel good about themselves by imposing costs on Australian business that will make them uncompetitive with their global peers.

Hey, if you want to take a position on climate change that makes you feel morally superior to your neighbours, go for it. But when you start making policy that has a real affect on jobs and economic competitiveness, your moral self-righteousness suddenly becomes a lot less eccentric and a lot more damaging.

The truth of the matter is that aside from the warm and fuzzy feeling it might bring people about “doing the right thing”, Australia’s voluntary reductions in carbon emissions won’t make one whit of difference to anyone, and certainly not the planet. Not when China and India and the U.S. are not on board. Watch the coverage of the Olympics and then let us know if you think China-with its 1.2 billion industrialising new capitalists-will follow Australia’s moral leadership…or continue its breakneck economic ascendancy that requires full employment and continuous growth.

Not that you shouldn’t do the right thing. You should. But in this case, perhaps the right thing is finding non-hydrocarbon sources of energy. That might mean seriously considering nuclear power, which of course goes against the secular orthodoxy of the “global warming” position.

That “the right thing” might come from the marketplace of business experiments to solve the problem does not occur to policy makers (who love making rules to tell you how to live your life). It also tells you that the real motive of policy makers isn’t to “save the planet” at all. It’s to get ever more involved with aspect of private life so they can regulate, tax, and punish.


Dan Denning
Markets and Money

Dan Denning
Dan Denning examines the geopolitical and economic events that can affect your investments domestically. He raises the questions you need to answer, in order to survive financially in these turbulent times.

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14 Comments on "Queensland Govt Chooses Coal Seam Methane Over Resource Boom"

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rick e

What happens to the water that is pumped out?
Isn’t there impurity’s in the water?
If the water is left to dry in pools do they collect the impurities once dry?
I have read there can be uranium waste in the water and other toxic waste.
Please can some one tell me how successful are they removing the waste from the water or do they just put it back in a hole?


This is a helpful post comparing the differences between ucg vs cbm. Also refer to CXY response to the article.



Linc took a big dip, their market statement was like from a girl who talks too much. Nothing more serious than a real threat to groundwater starting in QLD but the QLD govt should have moved more quickly to clarify the position.

Todd M

Rick, CSM water has salinity issues, suitable for feed stock only CSM companies ie Arrow are setting up a reverse osmosis plant to provide potable water for Dalby and also looking to undertake fish farming, QGC is using it for growing crops. I haven’t seen any reports on Toxic or Uranium wastes, Can you provide a reference.

Coffee Addict
The emissions trading scheme uncertainty had me steering clear of prospective hydrocarbon based energy companies. As for the Linc investors … take this as one of the inevitable delays that can inflicts most resource junior prospectives. If not done already, I would strongly suggest to Linc, Cougar and other UGC prospectives that they GET TOGETHER, table their research, partner the relevant environmental authorities, partner and fund some authoritive university research. Independent research should of course only be commissioned if the companies can be reasonably sure that CO2 emission from controlled coal seam ingitions are within tollerable limits AND that potential… Read more »
‘ajjjj’ at HotCopper.com.au turned up the fact that Lenore Taylor who turned out this top-quality article for The Australian was 2004 Green’s candidate for Moggill. http://elections.nationalforum.com.au/queensland-election-2004/candidates/002219.html Our friend Lenore boasts: Positions I have held in the Queensland Greens are: „h State Convener „h Branch Convener for South Branch „h A Coordinator for the Asia Pacific Conference „h A Campaign Coordinator for the Ryan by-election If you went into the outback and turned over rocks, surely you couldn’t find anyone more disposed to cherish UCG. Besides, if Chinchilla is a no-go because of the Queensland Department of Top Quality Decisions, Linc… Read more »
The question of groundwater appears to arise from the US tests. The Russians, who pioneered this technology, don’t seem to have any problems, but of course, they take a much more robust view of such matters. The Exergy website gives a short, entertaining sketch of the history of this tech. It doesn’t seem to me that UCG does anymore damage to the water table the CSM; indeed, since CSM requires the pumping of considerable quantities of brackish water to the surface, I would say the damage is much less. Since UCG extracts far more energy from a given patch of… Read more »
rick e

Thanks Todd M

In this piece abstracted from his 1995 article “Nuclear Coal” Dr Karl S
Kruszelnicki says:
“Now coal is a very impure fuel. It’s mostly carbon, but there are impurities
like silicon, aluminium, calcium, magnesium, sodium, titanium, arsenic,
potassium, sulphur and mercury and tiny amounts of uranium and thorium. In
fact, 73 different elements have been identified in coal! On average, coal has
1.3 parts per million of uranium and 3.2 parts per million of thorium. (In fact,
until modern analytical methods were invented, these tiny amounts were
simply too small to be measured

I should have read the fine print(parts per mill)

Todd M
Ric, I guess that @ 1.3 parts for million it probable not going to be economic to mine even if the Queensland Govn’t did relax the rules. Thorium is interesting, the Indians did a lot of research using Thorium in Nuc. Reactors. Australia and India have largest deposits of Thorium in the world … it apparently produces very very low amounts of Plutonium. (ie: Ideal for Iran) not sure what happened to the research in India. Sorry got off Topic there. Anyway I personally think that CSM and UCG can co-exist. I am more exicted about the prospects for UCG,… Read more »
Lenore Taylor
I just signed on to see what Dan Denning did with the information I sent him last week and have found this defamatory nonsense from Hotcopper about me allegedly being a Greens candidate. Of course noone stopped to check. Hadthey done so they would have discovered that there are (at least) two people with the name Lenore Taylor in Australia – one regularly runs for the Greens and the other is me – national correspondent for The Australian. Of course no political correspondent would be a member of a political party, let alone run in elections. And Dan, those are… Read more »

My unreserved apology to Lenore for insufficient fact-checking. I should be more careful about re-posting other people’s posts.

This helps us get to the bottom of what is fact and what isn’t.

It still smells like someone’s running a campaign against UCG. And I don’t mean that to imply Lenore Taylor is that someone.

Sean Gough
CSM extraction carries known risks to natural water courses and aquifers both in terms of pollution and depletion. There have also been cases where methane vents unpredictably through soil, causing death of habitat, into creeks which become polluted and even into buildings. The gas has no odour, causes suffocation and is highly flammable and explosive. Despite these known risks which the CSM miners cannot predict, the NSW Government persists in issuing licences for CSM exploration and production to companies, such as Sydney Gas and Lucas Energy, in residential neighbourhoods and environmentally sensitive areas regardless of local council and community objections.… Read more »
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