Legislative Council

GREENS MOTION: Ban Underground Coal Gasification in SA

July 27th, 2016

On the 27th of July 2016, Mark moved a motion to call on the the South Australian Government to follow the Queensland Government's lead in banning the practice of underground coal gasification in South Australia.

The Hon. M.C. PARNELL: I move:

That this council calls on the government to follow the lead of their counterparts in Queensland and ban the practice of underground coal gasification in South Australia.

Like a bad zombie movie, the undead have come back to haunt us. Members will remember Marathon Resources Limited. That is the cowboy mining company that was sent packing from the Arkaroola Wilderness Sanctuary five years ago after trashing the natural environment. They are back. Quietly rebranded as Leigh Creek Energy Limited, they now want to get into the UCG business, that is, underground coal gasification. It is nasty, polluting and dangerous, which is why it has been banned in Queensland.

Over the last few weeks, I have been asking questions in parliament of the Minister for the Environment and also the Minister for Aboriginal Affairs about the proposal by Leigh Creek Energy to commence underground coal gasification in and around the former Leigh Creek coal mine. I think it is fair to say that this is a project that has flown under the radar so far, but it does represent a huge risk to our climate and also to the local environment.

I will need to get a little bit technical here to describe what underground coal gasification is. It is a technology that gasifies coal seams in situ underground creating syngas (or synthetic gas), which is mainly a mixture of hydrogen, methane, carbon dioxide and carbon monoxide, to be used for either electricity production or industrial chemical processes.

UCG involves drilling two wells, some distance apart, directly into an underground coal seam. The wells are connected through the coal seam, usually through directional drilling techniques. The injection well is used to pump oxygen, along with an ignition catalyst, into the coal seam. The coal is ignited and then partially combusts with the injected oxygen. Water in the coal seam or the surrounding strata flows into the cavity and is essential for the series of chemical reactions that take place to produce raw syngas which, as I have said, is a mixture of carbon dioxide, hydrogen, methane, carbon monoxide and other contaminants, including sulphur and trace metals.

The gas mixture travels through the production well to the surface gas plant where it is treated and cleaned. As the coal is gasified, the gasification cavity expands and moves along the coal seam. Eventually, this causes the cavity roof to collapse. Pyrolysis, which is high temperature decomposition without oxygen, of the coal also takes place as the coal is heated. Syngas can be used as the base feedstock for a whole variety of chemical products or processes or combusted to produce electricity.

This week, an important international report was released by Friends of the Earth International. The report is entitled 'Fuelling the fire: the chequered history of underground coal gasification and coal chemicals around the world'. Large sections of the report are devoted to Australia, including sections on Queensland and South Australia. In fact, the summary description of underground coal gasification that I outlined a few seconds ago is taken from that report. The foreword to the report commences with the following statement:
In the wake of the celebrated Paris Agreement we are entering the last decade with any possibility of acting to keep global temperature rise below 1.5 degrees Celsius and to avoid some of the most devastating impacts of climate change. These impacts—floods, droughts, storms and rising sea levels—will hit the world's poorest people hardest. To have any hope of keeping within our global carbon budget one thing is very clear: we cannot burn our remaining reserves of fossil fuels, let alone the vastly larger resource. We must keep them in the ground.

The foreword concludes:

"To invest in and open up a new frontier of fossil fuels at this critical stage in the fight against climate change is not just a crime against our planet, but a crime against humanity."

That is the foreword from Jagoda Munic who is the Chair of Friends of the Earth International.
The motion refers to the experience in Queensland. There are a number of case studies we can refer to but the one that has been in the news most recently is Linc Energy's underground coal gasification program in Queensland. That program resulted in a major contamination incident where the contaminants migrated across and beyond the reaction zone during the gasification process. These contaminants included syngas and its by-products, additional gases that were formed as the result of a succession of contaminating events, liquids in the form of contaminated groundwater, solids in the form of tars and oils and also energy and odours, and a combination of liquid and gas mixtures. Hydrogen and hydrogen sulphide have migrated through underground pathways away from the UCG test site.

Now an exclusion zone of 314 square kilometres has been put in place and farmers in the area are not allowed to dig more than two metres deep without notifying the Queensland environment department. The cost of clean-up is estimated at many millions of dollars; however, the fear is that Linc Energy may never pay this clean-up bill as it has now gone into administration.

Australia has been home to three principal UCG projects. They were all in Queensland and they have all ended in charges of environmental damage. As well as the Linc Energy project, there was Cougar Energy's Kingaroy pilot project in 2010 and Carbon Energy's Bloodwood Creek site in the Surat Basin which operated from 2008 to 2012. The Linc Energy project I referred to operated between 1999 and 2013.

If we fast forward to this year, in April 2016 the Queensland government permanently banned UCG in response to the major groundwater and soil contamination that resulted from one of the Linc Energy trials. The Carbon Energy incident involved that company being charged with disposing of processed water by irrigating it to land without approval. They were fined $60,000 and a further $40,000 in legal and investigation costs.
In Queensland the political reaction to these incidents has been a ban on underground coal gasification. The Australian Associated Press report on 18 April states:

"The Queensland government has immediately banned underground coal gasification in the state, arguing the environmental risks outweigh economic benefits."

Natural Resources Minister Dr Anthony Lynham says the ban, which would apply immediately as government policy, would be made official by the end of the year through legislation introduced into parliament.

The ban came after UCG pilot company Linc Energy, which last week went into voluntary administration, was recently committed for trial in the District Court on five counts of wilfully and unlawfully causing serious environmental harm.

The quote from minister Lynham in the report states as follows:

"The potential risk to Queensland's environment and our valuable agricultural industries outweigh any potential economic benefit from the particular industry."

He went on to say:

"We have to send a clear message…that this industry has not been successful here in Queensland."

Referring to the ban, he said:

"This is a sensible step for the Queensland government [and] it's a sensible step forward for the resources sector."

The other minister who was quoted extensively in this period in April when the Queensland government announced its ban was the environment minister Steven Miles. He was quoted as saying:

"What we have in Hopeland, near Chinchilla, is the biggest pollution event probably in Queensland's history…certainly the biggest pollution investigation and prosecution in Queensland's history."

This is not something that is minor or trifling. This is a seriously dangerous and polluting industry that has been banned in Queensland, and my motion is calling for it to be banned in this state as well.

I will not read further quotes, but it will be of no surprise to you that the quite vibrant Lock the Gate movement in Queensland, whilst they are focusing on coal seam gas deposits, have also reacted positively to the Queensland government's move to ban UCG in that state. Despite the warning of these three failed Queensland projects, there are now two projects planned for South Australia. There is the Leigh Creek Energy Project to which I have referred. That project is looking to produce commercial quantities of gas by the 2018-19 financial year, and the company says it could be operational for 30 years and produce 80 petajoules per annum.

The company already has a gas storage exploration licence, which, if progressed to a gas storage licence, would enable the project to store gas on site. The company has said that it hopes to be flaring gas by the end of the year. The other project in South Australia is the Arckaringa underground coal gasification project, which is a joint venture between Sino-Aus Energy Group and Altona Energy. Their plan is to have gas being produced in the second half of 2016. I think that might be quite ambitious, but that is the second of the projects.

In terms of the community reaction, I have referred earlier in question time to the reaction of the Adnyamathanha people, who are unhappy with the way the Leigh Creek project is progressing. They are particularly unhappy that the Aboriginal Heritage Act may well have been breached, hence their call for the Aboriginal affairs minister to investigate that situation. The South Australian reaction has been interesting. Certainly, Minister Koutsantonis, after the Queensland decision was made, was asked for his response. He provided a response to the online journal RenewEconomy. That journal quotes minister Koutsantonis as saying:
'There is no need to politicise the process—the approval or otherwise of the proposed coal gasification project at Leigh Creek should be based on science,' energy and mineral resources minister Tom Koutsantonis said in a prepared statement for RenewEconomy.

Leigh Creek Energy will need to pass rigorous environmental impact assessments overseen by expert scientists if this project is to go ahead. We have a very effective regulatory framework in South Australia and the merits of the Leigh Creek Energy project will be assessed against that framework, not this decision in Queensland.
My plea to the South Australian minister is to indeed look at the science, but also to look at the track record of the industry so far. I do note that the Leigh Creek project does involve people who are involved in the Queensland Linc Energy project.

For example, if you look at the Leigh Creek Energy statement to investors, their investor presentation, which is on the Australian Stock Exchange website, they refer to their board of management and top of the list is Mr Justyn Peters, whose title is executive chairman. His profile includes that he was a former experienced senior manager with Linc Energy. Whilst I do not want to suggest that Mr Peters is being prosecuted—certainly his former company Linc Energy is being prosecuted; I do not know whether Mr Peters is—the South Australian government needs to pay attention not just to what companies claim they are going to achieve and what they claim is their environmental performance, but have a look at who they are, what they have done, and have a look at how these projects have ended up interstate, because they have ended up in tears.

In relation to this motion, I would expect that there will be more to report once the Queensland prosecutions of Linc Energy have progressed and also once the Queensland government has introduced its legislation to ban underground coal gasification, which is expected later this year. In the circumstances, I would now seek the leave of the council to continue my remarks at a later date.

For more information see Sign the petition calling on the Government to ban underground coal gasification in SA

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