Legislative Council

QUESTION: Environmental impacts of underground coal gasification

July 6th, 2016

On the 6th of July 2016, Mark asked the Minister for Sustainability, Environment and Conservation questions about the environmental impacts of underground coal gasification.

The Hon. M.C. PARNELL: Yesterday Leigh Creek Energy Ltd notified the Australian Stock Exchange that it is commencing drilling operations at Leigh Creek. Their project involves underground coal gasification which is an industrial process which converts coal into gases and liquids. Members might recall that Leigh Creek Energy was listed on the Australian Stock Exchange last year using the shell of the former Marathon Resources, a company that was mentioned often in dispatches in this place.

The underground coal gasification process was banned by the Queensland government on 18 April this year. The ban was introduced one week after the underground coal gasification company Linc Energy went into voluntary administration after being committed for trial for five counts of wilfully and unlawfully causing serious environmental harm. They were facing fines of $56 million. Queensland’s environment minister, Steven Miles, said:

"What we have in Hopeland near Chinchilla is the biggest pollution event probably in Queensland’s history. The underground coal gasification projects in Queensland have leaked poisonous gases across the Hopeland community, contaminating their soils and water with toxic chemicals, such as carbon monoxide, hydrogen and hydrogen sulphide."

Queensland’s natural resources minister, Dr Anthony Lynham said:

"The potential risk to Queensland’s environment and our valuable agricultural industries outweigh any potential economic benefits from this particular industry."

The three sites in Queensland are now being completely decommissioned and the Queensland government’s policy to immediately ban underground coal gasification will be introduced as legislation by the end of the year.

My questions of the minister are:

1. As Minister for Sustainability, Environment And Conservation, what steps are you taking to prevent an environmental disaster from occurring in South Australia as a result of underground coal gasification projects?

2. Will the South Australian Labor government follow the lead of the Queensland Labor government and ban underground coal gasification in this state?


The Hon. I.K. HUNTER (Minister for Sustainability, Environment and Conservation): I thank the honourable member for his most important question. The development of oil and gas resources is part of the South Australian government’s economic priority to unlock the full potential of South Australia’s resources, energy and renewable assets. It is important that these oil and gas developments progress in ways that balance with the needs of all water users and the environment. Community concerns exist in relation to exploration, development and production of gas from unconventional gas resources in the South-East of South Australia, and in particular there are concerns in relation to hydraulic fracture stimulation, also called fracking.

The Hon. M.C. Parnell: Different topic.

The Hon. I.K. HUNTER: Well, it is similar. As part of gas extraction.

Members interjecting:

The Hon. I.K. HUNTER: If you ask a question, you will get an answer. In response to community concerns information sessions were held for the local councils and the broader community by the Department of State Development in conjunction with the Department of Environment, Water and Natural Resources, the Environment Protection Authority and the South East Natural Resources Management Board. These sessions provided a valuable opportunity to discuss community concerns and exchange information. In November 2014, the Natural Resources Committee of parliament started an inquiry, I am advised, into the potential risks and impacts associated with the use of—

The Hon. M.C. PARNELL: Mr President, point of order. I rarely take points of order but honestly the minister is reading in relation to unconventional gas extraction in the South-East when my question was about underground coal gasification at Leigh Creek, which is the other end of the state.

The PRESIDENT: Minister, if you would try to direct your answer to the question.

The Hon. I.K. HUNTER: Mr President, there are some general principles here and I am going to the general principles and canvassing the government’s policy across the state.
Members interjecting:


The Hon. I.K. HUNTER: The honourable member does not like it, but that is tough, he will have to listen to the answer. The South Australian government provided submissions to the inquiry outlining the current regulatory approach to unconventional gas exploration. An interim report of the inquiry was published in November 2015 and indicated that the submissions had expressed that the make-up of the fracturing fluid is of great concern to many people. The final report is anticipated to be tabled in 2016 and will address some knowledge gaps in information received so far. At this stage, it is important to note that no fracking has been proposed in the South-East.

Now, moving on to regulation of petroleum, oil and gas and mining activities, South Australia has a thorough risk-based regulatory framework to ensure that any environmental impacts are avoided or minimised so that the sustainable development of these resource industries can occur. The Department of State Development regulates petroleum, oil and gas and mining activities under the Petroleum and Geothermal Energy Act 2000 or the Mining Act 1971 respectively. Oil and gas operations and mining developments are also subject to the requirements of other legislation, such as the Natural Resources Management Act 2004 and the commonwealth’s Environment Protection and Biodiversity Conservation Act 1993.

Should a proposal be put forward, I am advised that all health and environmental risks will be addressed through existing processes for the environmental impact report and the statement of environmental objectives under the Petroleum and Geothermal Energy Act 2000. It will also entail extensive public consultation and will ensure that it is scientifically justifiable and that valid baseline work is developed and assessed. As key stakeholders, the Department of Environment, Water and Natural Resources and the Environment Protection Authority will be consulted by the regulator to ensure that environmental risks have been adequately identified and assessed and that appropriate mitigation strategies are in place to achieve acceptable environmental outcomes.

A framework providing an overview of water-related policies and legislative requirements for petroleum, oil and gas or mining activities is currently being developed and is due for formal consultation later this year, I am advised. This framework also outlines the responsibilities of petroleum, oil and gas and mining project proponents, the Australian government and various South Australian government departments involved in environment assessment and approvals processes.

The South Australian government welcomes the extension of the water trigger to shale and tight unconventional gas formations. It is important that all such developments progress in ways that do not impact on critical water resources, and of course any proposals to mine in South Australia have to undergo a very thorough environmental assessment process before they are given the go-ahead.

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