Big questions remain over coal seam gas expansion
4th of Jul, 2010
We have been closely following the performance of the LNP in the Queensland Parliament, as they continue to put pressure on the Government over unanswered questions on the coal seam gas expansion in the Darling Downs. A number of questions posed by Member for Warrego, Mr Howard Hobbs, are due for reply this week, relating to the siting of gas wells, the impact on land values and the region's financial security.
- The best overview on the risks of coal seam gas extraction in Queensland is available here at the Larvatus Prodeo blog.
Mr Hobbs, along with other members of the LNP, has previously put the Government on notice with questions relating to unresolved concerns about the CSG industry's impact on the environment and agriculture.
We'll be paying close attention to the answers provided by the Minister for Natural Resources, Mines, Energy and Trade, Mr Stephen Robertson. We'll post the answers, and our own analysis, up here as they come in.
The questions and the dates required for response are detailed below.
Question 1
Will the Minister advise the minimum legal proximity of gas wells to:
- residential dwellings
- schools
- school bus stops and
- coal seam gas work camps?
Read the Minister's response to this question here.
Our Response
So, exactly what is the minimum legal proximity of gas wells to houses, schools and work camps??
Sourcewatch has documented a series of incidents from five states in the US where gas wells located in residential areas have led to fires, explosions, home evacuations, massive pollution releases, contaminated drinking water sources and tainted farmland. Some 270 such instances have been identified in New York State alone.
In response to increasing incidents of such hazards, a review of natural gas development by the New York State Government, reported here in Scientific American, recommended a full scale environmental inquiry, including public hearings, would be required each time a gas well is proposed within 45 metres of a private water well, stream or pond or within 90 metres of a reservoir. An additional environmental inquiry would also be required before gas wells could be hydraulically fractured within 300 metres of water supply infrastructure, or within 600 metres of the surface. Private water wells within 300 metres of a gas well would be tested before drilling begins, to create a baseline for measuring any contamination.
The response provided by Minister Robertson is woefully inadequate and avoids the question entirely. It provides no reassurance to residents in Tara and elsewhere where vast numbers of wells are proposed in close proximity to homes and schools.
Read about the issues faced by Tara residents here.
Question 2
With reference to real estate businesses on the Darling and Western Downs who are reporting a significant reduction of interest in the sale of land with actual or proposed Coal Seam Gas (CSG) activity:
(1) Will a loss of property valuation due to the CSG industry be included in compensation arrangements by CSG companies?
(2) Who will be responsible and/or liable for the reduction in land valuations created by actual or proposed CSG activity?
Read the Minister's response here.
Our Response
Although the Minister says there is insufficient sales data available in relation to the market impact of CSG on property values in the Western Downs and Darling Downs, it isn't like this is the first place where this has ever occurred. There is plenty of national and international precedent - which does not tell a story of 'supplementary income', but of plummeting land values and divided communities.
The issue of reduction in property values is a critical one for residents, farmers and landholders in the Darling Downs and Western Downs. This is an issue for both landholders with a gas well on their property, and those in the neighbouring vicinity who are affected by noise, smell, traffic and pest and weed dispersal and the very real risks associated with disasters.
The actual impacts on property is difficult to assess, partially because the discussions with individual landholders are discussed in confidence with the companies (see the Info for Landholders sheet from Arrow Energy here). According to the companies, compensation negotiations are to take into account reduction in land values.
But how much exactly? An analysis of the impact of coal seam gas on property values conducted for La Plata County in Colorado by BBC Research & Consulting found that for properties sold with wells on them, there was an estimated net reduction in selling price of about 22 percent.
Perhaps a more accurate picture is provided by the story, published in Vanity Fair magazine, of a family who were approached by a drilling company as they were refurbishing their dream home in the Dimock area. Just over 12 months after the gas extraction drilling commenced, the Department of Environmental Protection ordered all the domestic and industrial water wells in the area be taken offline, due to a major contamination of the aquifer. Excessive levels of methane and dangerously high levels of iron and aluminum were found in the family water supply, now not fit for drinking, bathing or washing. The family now relies on water delivered to them every week by the company for these purposes. The value of their land has been decimated. According to the article:
They desperately want to move but cannot afford to buy a new house on top of their current mortgage. “Our land is worthless,” says Craig. “Who is going to buy this house?”
Closer to home, Larvatus Prodeo recounts the story of a farmer who was told by the Queensland Valuer General that the value of his 18,000 hectare cattle property would only decrease by 12%, despite being earmarked for:
for 32 wells, a 25-acre holding pond, a compression plant and a 300-man camp.
Given that the average lifespan of these industrial activities is 30 years, one wonders who would be likely to purchase that land from him, which mind you would be an abandoned industrial site, even at 12% of its market value.
Question 3
As the banking industry is keenly watching the expansion of the Coal Seam Gas (CSG) industry and I understand they already hold great concerns for the many rural assets they hold mortgages over and as even a 10 per cent drop in valuation will have massive ramifications for landholders and their security:
Will he advise what measures are in place to compensate landholders and banks adequately
should there be a drop in valuation due to the activities of CSG companies and their industry
on their land?
Read the Minister's response here.
Our Response
Sadly, dismissively, cynically, the Minister's response is basically a cut-and-paste job from the previous question.
What his response fails to take into consideration is the huge and growing level of rural debt in the areas most at risk from CSG - the Maranoa and Western Downs regions.
The Government's own survey of rural debt, published in early July (and only four days before this response) revealed Queensland’s rural debt in December last year was $15 billion, an increase of $3.24 billion (27%) since 2007.
Their survey also shows that as of December 2009, rural debt within the Maranoa/Western Downs region - the region most affected by CSG - has increased by $702 million (or 29%) since 2007 to reach $3.1 billion. Much of this is explained by rising production costs and drought related expenses.
The three local government areas in the region – Dalby, Roma and Goondiwindi – recorded the highest levels of debt, accounting for 14.9% of total rural debt in Queensland.
At the present time, 76% of the region’s total debt is classified by the banks as ‘A’ and ‘B+’ rated debt, which indicates that borrowers are considered viable or potentially viable in the long-term.
However, given that research suggests that CSG development likely to lead to a reduction in land value by an average of 22%, how secure are these investments? And how secure can the value of the assets held by landholders really be?
It is a shame that the Minister has given so little attention to this critically important question at a time of such global financial uncertainty.
Question 4
With reference to the Contaminated Land Register:
(1) Can land listed for contamination be rehabilitated in the future for food production?
(2) How does the Government propose to rehabilitate prime agricultural land contaminated by CSG wastewater ponds?
Read the Minister's response here.
Our Response
Not much to be said about this, really.
For some reason, the Minister ultimately responsible for the approval of CSG projects has no position on the rehabilitation of agricultural land that has been contaminated by gas extraction. As he so flippantly responds, it's not his job.
It reminds us of that well-worn meme, which perhaps the Minister may as well have employed in his own reply:
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