Exploration for natural gas

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1 FACT SHEET NO. 42 Exploration for natural gas Quick facts QGC holds licences from the Queensland Government called Authorities to Prospect that allow us to explore in areas known as tenements We work with landholders and others on the location of infrastructure as projects develop Queensland natural gas explorer and producer QGC is assessing the potential to further develop its reserves in central and southern Queensland for domestic and export markets. QGC s natural gas exploration program will be undertaken predominantly by specialist contracting companies This fact sheet outlines the activities involved in exploring for natural gas in coal seams and sandstone formations in these areas. An overview of our project QGC was among the first companies to recognise the potential role of Queensland s significant natural gas resources in meeting increasing global demand for cleaner sources of energy. Today we are constructing Queensland Curtis LNG (QCLNG), one of Australia s largest capital infrastructure projects, to turn our natural gas reserves in the Surat and Bowen basins into liquefied natural gas (LNG). QCLNG involves expanding QGC s existing gas operations in southern and central Queensland and transporting the gas through a 540km one-metre buried pipeline network to a liquefaction plant on Curtis Island near Gladstone. At the plant, the gas will be cooled to -162 C, at which point it becomes a liquid, or LNG, making it easier to transport great distances in specially-designed ships. QGC already has LNG sales agreements in place to supply Queensland, China, Japan, Chile and Singapore. QGC is committed to negotiating in good faith to reach voluntary agreements with landholders so we may enter their land

2 Our exploration activities For more than 10 years, QGC has been successfully exploring for natural gas in the Surat and Bowen basins. QGC is now exploring for natural gas the same methane we use for heating our homes, powering our cars and buses and generating electricity in our power stations that is trapped in coal seams and sandstone rock in the central and southern parts of the Bowen Basin. QGC holds licences from the Queensland Government called Authorities to Prospect that allow us to explore in areas known as tenements. We carefully identify suitable sites for exploration using existing information, satellite images, aerial photographs, field surveys and assessments of landholder and community requirements. Our exploration activities involve seismic surveys and drilling a small number of wells to test whether it is economical to produce the gas. Liaising with landholders QGC is committed to negotiating in good faith to reach voluntary agreements with landholders so we may enter their land. This involves a comprehensive land liaison procedure based on integrity, fairness and respect. We work with landholders and others on the location of infrastructure as projects develop. A key factor in deciding the most suitable location is our ability to minimise impact on individual landholders. We appoint personnel to work individually with landholders and where possible, these same people will work with the landholders throughout the land access process. We provide landholders with information about the activities we are proposing and will seek their views about the operational and commercial activities that we might affect. We offer fair and appropriate compensation for all unavoidable impacts. We also work with environmental and cultural heritage experts on proposed exploration areas before final decisions on site selection are made. Where properties are occupied or used by people who are not the owners, we inform, consult and reach agreement with the owners and occupiers. Seismic surveys Oil and gas companies use seismic surveys to produce a detailed image of the geology beneath the earth s surface. Data from the surveys is used to plan well locations, allowing companies to avoid drilling unnecessary wells and helping to minimise land disturbance. Seismic surveys have two main components. In the first step, special trucks vibrate the earth s surface to send acoustic waves into the earth. The vibration lasts eight to 12 seconds at intervals of 10 metres to 25 metres along straight lines and is unnoticeable more than 20 metres from the truck. In the second step, receivers record a reflected signal in a central recording truck that is connected to the receivers by wires that run along the seismic line.

3 1 2 3 Noise QGC understands that noise is a sensitive issue for landholders. During operations we take precautions to ensure noise associated with our activities is kept to a minimum and within acceptable limits. Potential noise impacts from our activities on nearby landholders are identified early in QGC s planning with detailed noise modelling helping to determine the extent of the impact and allowing mitigation plans to ensure the impact is kept below acceptable limits. Noise modelling involves placing contours on a map to illustrate the direction and volume of the noise. If noise is expected to exceed acceptable limits action is taken to reduce the noise emissions. This may involve relocating the machinery or activity or negotiating arrangements with potentially affected landholders. Noise is measured in decibels perceived by the human ear. There may be 40 decibels generated in a quiet living room while a rock band may perform at a level of 110 decibels. Acceptable limits for day and night time noise are set above the respective background noise levels by regulators. Hydraulic fracturing QGC will be hydraulically fracturing exploration wells to test whether the rate at which natural gas is released can be improved. The technique, widely used in the oil and gas industry since the 1950s, can increase the gas flow rate of an exploration well by two or three times. The process involves pumping water, sand and some additives into tiny cracks in the rock. The sand grains hold the cracks open to enable gas flow more freely. The water used for hydraulic fracturing is drawn out of the storage pond built at the well site. Small amounts of additives are put into the watersand mix to help carry the sand into the rock. For a list of additives typically used by companies contracted to QGC, please read our hydraulic fracturing fact sheet on our website

4 Exploration wells Exploration wells are drilled to target areas where there is a reasonable expectation of finding natural gas. Our aim in drilling a small number of exploration wells is to gather as much information as possible on the nature of the reservoir and its gas. Normally after all the data has been collected, exploration wells are suspended. The water used for hydraulic fracturing is drawn out of the storage pond built at the well site Site set up Landholders are consulted about exploration sites, including selection of suitable access tracks and camp locations. Where possible we upgrade existing tracks or build a new one to minimise interference with a landholder s property and business activities. This includes installing fences, gates or grids where required in consultation with the landholder. Construction is done by professional road-building contractors and takes into account landholder s needs, safety and the environment. Water storage ponds are lined with plastic to prevent spillage into the surrounding environment. Top soil and subsoil are stored separately at one end of the well pad. Water is sourced for dust suppression, drilling activities and ponds where required. Drilling The coal seam gas reserves being targeted are between 300 metres and 1200 metres deep. The gas in sandstone formations is between 2500 metres and 4500 metres below the surface. Drilling for coal seam gas takes up to about 20 days. Drilling for gas in sandstone may take up to 60 days. All wells are drilled in sections. Each section is lined with steel casing that is cemented into place before drilling continues. Securing the well in this way ensures there is no contact with other rock layers and aquifers. When natural gas is found and the well has been fully cased, a wellhead is installed at the surface to secure its integrity and provide a portal for testing activities. Once well construction is completed, the drill rig is taken apart and transported to another location. Shortly afterwards, a smaller drilling rig, known as a workover rig, may come to the site to clean out the well bore, which takes one to two weeks. Access tracks are generally about 10 metres in overall width, with some variation possible due to slope and erosion control measures. QGC s policy is to ensure we leave existing public roads and tracks within properties in at least as good a condition as when work began. The selected well site, up to 200 metres by 150 metres in size, is cleared and levelled in preparation for the drilling rig. Gravel is laid on the hard stand areas of the well site and two pits are dug (35 metres by 33 metres and 12 metres by 6 metres) to store cuttings and water released during well drilling. A pond is built on the pad to store water used during drilling and testing activities.

5 QGC is committed to protecting the quality and quantity of groundwater supplies in the Bowen Basin Well testing When gas is found, we test the rate at which it flows 24 hours a day over a 60 day period to determine its economic potential. The land around the well site is rehabilitated to its original condition in consultation with the landholder and in accordance with regulatory guidelines. Re-seeding and fertilisers are used to encourage re-growth and erosion control measures are put in place. The area is monitored quarterly for weed growth for up to two years after a well head has been removed. This may involve installing additional surface equipment near the wellhead such as hydraulic pumps. Well rehabilitation At the end of a well s useful life, all surface infrastructure is removed, the well hole is securely plugged with cement and a plaque is left to mark the site.

6 When gas is found, we test the rate at which it flows 24 hours a day over a 60 day period Water management QGC is committed to protecting the quality and quantity of groundwater supplies in the Bowen Basin. We use water in our exploration activities as wisely as possible, by carefully storing, treating and re-using it. We ensure that our wells are constructed to safely isolate aquifers from areas where we find gas. We undertake a baseline assessment of bores near our wells. Local business and employment QGC s natural gas exploration program will be undertaken predominantly by specialist contracting companies. However, there may be opportunities for local businesses to supply goods and services to our exploration contractors. There may be more opportunities for local businesses and local employment if our exploration program confirms that our Bowen Basin tenements are commercially viable. Working with communities Throughout the exploration program, QGC will be looking to build relationships with communities in the region. Communities are encouraged to make use of our sponsorships and donations fund. Job seekers, local businesses interested in supplying goods and services and groups wanting to apply for sponsorships and donations can register an expression of interest or download a sponsorship application form from our website: About QGC QGC is a leading Australian natural gas explorer and producer focused on developing reserves in both the Surat and Bowen basins for domestic and international supply. Our headquarters are in Brisbane and we employ more than 3,600 people across Queensland. In 2010, QGC produced about 20% of Queensland s gas demand. QGC is wholly owned by BG Group, a leading oil and gas company with headquarters in the United Kingdom and operations in more than 25 countries. Our commitments We seek to minimise the effects of our operations on landholders and make a positive contribution to the protection of the environment. We run our business in accordance with all government regulations, industry standards and the access rules that we agree with landholders. Our staff, contractors and consultants follow QGC s Code of Conduct, outlined in the Information for Landholders booklet and available at our website: Contact details Please contact QGC for more information (toll-free) community@qgc.com.au QGC Pty Limited 275 George St Brisbane QLD 4000, Australia