Thursday 1 December 2011

Coal seam gas may not help climate fight
19 Nov 2011

The federal Minister for Energy, Martin Ferguson, is often criticised but he's right about this: the coal seam gas industry has grown too fast. We have not done our homework before issuing approvals for this $50 billion-plus export industry-on the possible groundwater and land-use impact, on what to do with the millions of tonnes of salt left over, or the impact on Gladstone harbour and the Great Barrier Reef. Crucially, we have rushed to develop coal seam gas reserves as a cleaner alternative to coal, assuming it will help reduce greenhouse gas emissions and tackle climate change. But will coal seam gas reduce emissions? By how much? We don't actually know.

Recent research into fugitive emissions, including peer-reviewed articles by Cornell University's Robert Howarth and the US National Centre for Atmospheric Research's Tom Wigley, both published in Climate Change Letters, have found unconventional plays like coal seam gas or shale gas may deliver no greenhouse benefit at all, or even make things worse.

If that turns out to be right, gas may be an obstacle rather than a bridge to a decarbonised future. With the International Energy Agency warning this month that the energy infrastructure we build over the next five years will determine whether the world is able to limit global warming to 2°, it's hard to think of a more critical climate policy question-or one with more money riding on it. Early this year the oil and gas industry lobby group, the Australian Petroleum Production & Exploration Association (APPEA), commissioned research by engineering consultancy WorleyParsons on the life cycle emissions of coal seam gas versus coal when exported and burned in China.

APPEA did something strange. It only released the executive summary. Why? Because, according to some of its members, there were scenarios which showed how coal seam gas might emit more greenhouse gasses than coal. At worst, if burned in the least efficient ''peaking'' open-cycle turbines, coal seam gas was up to 44% dirtier than the newest, most efficient coal-fired plant. Some inside Worley-and the better coal seam gas companies, too-were unhappy with the association's handling of the report. There was pressure to get it out. The executive director of the think tank Beyond Zero Emissions, Matthew Wright, got wind of the industry disquiet and had an idea: commission a separate study by Worley-in fact, widen its scope-and get the results into the public domain that way. A contract was drawn up and a price agreed: $50,000. Wright believes the work was done and the report drafted. Somewhere, things went off the rails.

Cold feet at Worley, perhaps? All week, starting in Monday's Age and on ABC Radio National's Breakfast program and running from there, the accusations have flown thick and fast. Worley says it and Beyond Zero mutually agreed to drop the contract, no fee being payable. Instead, the same research would be published in a peer-reviewed journal, Energies. Wright flatly denies he ever agreed to that-he still wants the report he commissioned-and claims Worley is suppressing the report to stay on side with the coal seam gas industry which gives it contracts worth hundreds of millions of dollars. Worley rejects that outright and says everything Beyond Zero commissioned-''the full box and dice'', a spokesman told me-will be in the Energies paper. How, asks Wright, when his report had a broader scope than the Australian Petroleum Production & Exploration Association's 80-odd page document, and what peer-reviewed journal would publish all that? As it happened, a fortnight ago APPEA did finally release its own full, original report by Worley. Some media took APPEA's line, saying it proved gas was cleaner; others focused on the previously unreleased information, including less flattering gas-versus-coal scenarios. It's now online.

On Tuesday the Merrill Lynch oil and gas analyst David Heard weighed in with a six-page note to clients titled: ''Green gas debate: who is hiding the fugitives?'' It pulls the APPEA report apart. For a start, the report assumes coal seam gas/liquefied natural gas projects apply best practice in greenhouse gas and environmental management, especially to prevention of venting and leaks in upstream operations. Extreme scenarios for coal seam gas venting and leakage were excluded. Extreme was defined to mean ''other than best practice''. But Heard records his personal observation of a Santos drilling operation in the Cooper Basin (not a coal seam gas well, as it happens) where after fracking and in the flow-back phase ''the well vents a mixture of fracking fluid and gas direct to atmosphere in an unconstrained manner for days''. Heard's colleagues in the US have found likewise.

Then Heard noted how our National Greenhouse and Energy Reporting System (NGERS) allowed the coal seam gas companies to rely on a 2004 US industry-derived document, the American Petroleum Institute's Compendium of Greenhouse Gas Emissions Methodologies for the Oil and Gas Industry, which explicitly stated it was ''neither a standard nor a recommended practice for the development of emissions inventories''. The compendium contains generic assumptions, Heard noted, which may be outdated given the rapid development of unconventional gas extraction, and inapplicable in an Australian context.

APPEA's report admits, on page eight, ''the large-scale CSG/LNG industry in Queensland is new and emissions are only projections subject to high uncertainties in some areas''. Under our emissions trading scheme, carbon price liability is determined according to the emissions reported under NGERS system, including fugitive emissions. Ferguson says leave it to the market, guided by the carbon price. But relying on the Compendium could lead companies to understate emissions and ignore any carbon price signal. If, for example, the coal seam gas companies just use a rule of thumb-a broad average at the end of the year by some junior accountant asked to 'multiply the number of wells we've drilled by a number in a 2004 US document'-there is no price signal.

We need better science on the emissions from coal seam gas and, ultimately, Heard's note backs Wright, expressing concern at the alleged suppression of Worley's report for Beyond Zero, and concluding such a thorough independent expert assessment of full life-cycle emissions would be worthwhile. This week Ferguson ruled out the government commissioning any such report. A spokesman for the Climate Change Minister, Greg Combet, conceded the NGERS probably relied on an estimation approach to emissions from coal seam gas extraction, but said the system allowed for annual updating of estimation methods as new science came in. Lastly, Heard's note criticises APPEA's assumption that gas substitutes for inefficient coal in baseload generation in China. This may not be correct, he writes, ''gas is not really competing with coal at all''.

Heard's concern, on his clients' behalf, is not so much that the coal seam gas companies could face higher-than-expected carbon price liabilities if we had a truer picture of emissions. Rather, it's that amid an increasingly nasty debate on the roll-out of coal seam gas in Queensland and NSW, and given these projects are on thin ice politically as they push east coast gas prices higher by linking us to international markets, the last thing the industry needs is to lose the one thing it had going for it: an apparent benefit in tackling climate change. The gas projects are counting on expansion, to build second and subsequent liquefaction ''trains'', and approvals may prove harder to come by. If the greenhouse benefit claims turn out to be false, it's bad news for the coal seam gas companies.
Twitter: @gpaddymanning

Geothermal industry eyes NT
18 Nov 2011

The geothermal industry is eyeing the Northern Territory as a key source of inexpensive and renewable energy. Susan Jeanes from the Australian Geothermal Energy Association says the introduction of the carbon tax has made it more worthwhile to invest in exploratory drilling. Geothermal electricity is produced from energy released from superheated rocks lying km below the earth's surface. Ms Jeanes says drilling has already commenced in the Cooper Basin east of Alice Springs.

"What the problem for the industry is in this early exploration phase is that the rigs that we need to drill holes four and five km deep cost about 50 million dollars," she said. "There's only one here in Australia and that's the rig that's owned by GeoDynamics and that's currently located in the Cooper Basin. So anybody else who wants to drill a deep well has to bring one in from overseas."

Ms Jeanes says people need to embrace more clean energy sources. "The government has come and said we think this is a very important energy resource," she said. "They've got a policy program now that's underpinned by a carbon price that will start to move some money for us. The market has to become more interested in clean energy sources. There are lot of clean energy options around but ultimately we're the only renewable energy on the horizon that is baseload."

Two new geothermal power plants on line in Indonesia
20 Nov 2011

Two Indonesian geothermal power plants are coming on stream with a total capacity of 25 megawatts, an official of the state electricity company PLN said. The fourth unit of PLTP Lahendong in North Sulawesi with a capacity of 20 MW is already on trial operation and PLTP Ulumbu in Flores with a capacity of 5 MW is to come on line next month. The two power plants will bring the total capacity of the country's geothermal power plants to 1,205 MW, said Mochammad Sofyam head of renewable energy. PLTP Lahendong, which is jointly owned by PLN and Pertamina Geothermal Enegry (PGE) is already connected to the PLN's system.

Power shifts as Tokyo turns to gas
November 19, 2011

In a direct act of rebellion against Tokyo Electric Power Co, which owns the crippled Fukushima Daiichi nuclear power station, the local government in Tokyo is moving to build a huge natural gas facility. The plant would ensure a stable supply of electricity for the capital in the aftermath of the March nuclear meltdowns. But more important, the city government says, it could spur desperately needed change, breaking the collusion between business and government.

''Now's our chance,'' said Naoki Inose, Tokyo's vice-governor, invoking an ancient proverb about attacking a wild dog only after it has fallen into a river. ''On March 11, TEPCO became the dog that fell into the river. Only then can you fight against such a formidable foe,'' he said. Advertisement: Story continues below So formidable a foe, in fact, that just eight months after Japanese leaders vowed the nuclear disaster would lead to a kind of rebirth, the chances for change are slipping away.

Already, the reformers have lost a crucial ally: Naoto Kan, who as prime minister had called for an end to nuclear power and major changes to the power industry. He was eased out of office with the help of Japan's most powerful industry lobby, a faithful TEPCO supporter that, like many members of Japan's establishment, has benefited from the company's largesse.

''After the accident, I thought there was a real chance for change, but now the move to turn Fukushima into an opportunity for radical reforms is losing steam,'' said economist and author Hiroshi Okumura. ''There's a very big risk that Japan's lost decade, which became the lost 20 years, will now become the lost 30 years.''