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
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
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
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
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.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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