Coal seam methane extraction (CSM) is one of the fastest growing sectors of the energy industry in Australia. With the public and the government's increased concern about the environment and the rising cost of fuel and other sources of natural gas, CSM has been labeled "a strategic energy of the 21st century" due to its stated economic and environmental benefits.
There are two main types of natural gas used in Australia – conventional natural gas and CSM. While conventional natural gas is found in underground reservoirs of trapped rock (often in association with oil), CSM is formed as a by-product during the coalification process where organic matter is turned into coal.
CSM is an odourless gas that is used like any other form of conventional gas to power things such as water heaters, stoves and space heaters in both domestic and business settings. It is also used as a direct source of power for industry and as a fuel for generating electricity. It is well known that Australia has vast CSM resources and accordingly, the development of this industry is essential to meet Australia's demand for environmentally friendly forms of energy production.
Australia's CSM operations are located predominantly in Queensland and New South Wales; exploration is also occurring in South Australia, Tasmania, Victoria and Western Australia. The CSM industry in Queensland is particularly well established with forecasters estimating that 70% of Queensland's gas market will be supplied by CSM in 2010. CSM industries in other States are not as well developed. For example, none of Western Australia's CSM fields are in production, however exploration continues.
Regulation of coal seam methane
There is currently no national legislative framework in place for CSM, with each State having its own legislation and licensing arrangements. However, CSM is a hydrocarbon and hydrocarbons are generally encompassed within the definition of "petroleum" under State and Territory petroleum legislation. For example, the Petroleum and Geothermal Energy Resources Act 1967 (WA) (PA) defines petroleum to include, amongst other things, "any naturally occurring hydrocarbon, whether in gaseous, liquid or solid state". There are exceptions to this such as in Victoria where CSM resources are administered under the State's mineral resources legislation.
Because the CSM industry is still emerging in most States, the legislative regime for regulating the production of CSM is still developing. For example, under Western Australia's petroleum legislation, a potential for conflict exists where petroleum tenements, which are regulated by the PA, overlap with mining tenements which are regulated by the Mining Act 1978 (WA). In these circumstances, questions are often raised as to whether the development of a CSM resource should have priority over the development of a coal resource and vice versa where one development may impact on the other.
Although exploration for coal seam methane has been carried out in some States such as Western Australia fosome time, no mining has begun. When industry is ready to begin production of CSM in these States, it appears that a more comprehensive legislative regime may need to be introduced to avoid potential conflicts and effectively regulate the production of CSM.
The most comprehensive legislative regime for regulating the production of CSM gas has been developed in Queensland which has been producing CSM for a number of years. In 2003, after over ten years of planning and policy development, the Queensland government introduced a new legislative regime to govern the production of CSM. The regime, which is encompassed in the Mineral Resources Act 1989 (Qld), addresses issues that arise where coal seam methane and coal exploration and production activities may occur simultaneously under different tenures granted over the same area.
Conclusion
With the current focus on the environment and the rising cost of fuel and other sources of natural gas, the demand for more environmentally friendly forms of energy production such as CSM will continue to grow. In conjunction with this growth, we should expect to see the development of comprehensive legislative regimes regulating the production of CSM in each State and Territory similar to that which has been developed in Queensland.
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