This paper argues that before Australia jumps into the golden age of gas as a way of combating climate change, it is essential to have a good understanding of the effect that this will have on emissions, which requires measuring the fugitive emissions that occur in the coal seam gas extraction process.
With increasing awareness of the dangers of climate change, the world is hunting for other forms of power generation that produce lower emissions of greenhouse gas. While gas is not a zero emissions energy source, it has come to be seen by some as a 'bridging fuel'. In Australia an increasingly important source of gas has come in the form of coal seam gas (CSG).
While a number of concerns have been raised about the environmental impacts of CSG, including the process of fracking, in Australia most of these concerns centre on water. These include contamination of ground water, disposal of produced water, reduced availability of water for other consumers and the creation of hazardous waste resulting from either treatment of produced water or drilling mud. There is also concern about the chemical cocktail that can be used in the fracking process.
Most of the difficulties in confronting these concerns come from the lack of information that is available on the broader effects of CSG extraction. Very little measurement and research has been done in this area. While concerns about the effects of CSG on Australia's water supply are widespread in the community, the focus of this paper is on fugitive emissions produced during the CSG extraction process.
Fugitive emissions occur when methane leaks during the extraction, processing and transportation of CSG. Leaking at the wellhead during extraction is the most significant source of fugitive emissions and is also the source for which the least amount of measurement has been done. The current default measurement technique for fugitive emissions at the wellhead is the same as that used for conventional natural gas, despite the fact that there is evidence to suggest that fugitive emissions from the extraction of CSG are significantly higher.
While conventional natural gas, particularly offshore production, comes from large reservoirs and so has only a relatively small number of wellheads which are very large and closely monitored, CSG is extracted from many small reservoirs. This means that for any given quantity of gas there are many small wellheads, rather than a few large ones. It also means that each of the wellheads is monitored less closely. For every tonne of natural gas produced from CSG, there is potential for more leakage to occur from the wellhead when compared with each tonne of gas produced from a conventional natural gas well.
Another reason why fugitive emissions from CSG would be expected to be significantly higher than conventional gas during extraction is that the amount of emissions that leak from the wellhead increases when fracking is used. Unlike conventional gas, fracking is likely to be used on 25 to 40 per cent of Australian CSG wells.
The size of the underestimate in CSG fugitive emissions could be substantial. If we use the new United States Environmental Protection Agency estimate for fugitive emissions and apply it to a conservative estimate of Australian CSG production over the next three years then total fugitive emissions are expected to be 125 million tonnes of CO2e. This is twice the emissions that would be estimated if the current default factor is used. This is an underestimate of 62 million tonnes of CO2e over three years.
The consequences of underestimating fugitive emissions from CSG are two-fold: it blunts the efficacy of the recently introduced carbon price, as firms will not be paying the tax on all of their emissions; it also prevents us from correctly calculating Australia's contribution to climate change. This underestimate may be inadvertently making it harder for the world to limit the warming effect of climate change below the environmental tipping point of two degrees.
Under the carbon price, the underestimate also has a flow-on effect in terms of the size of the effective subsidy the government is giving to CSG companies. An extra 62 million tonnes of CO2e over three years is equivalent to giving CSG companies more than $1.5 billion. This figure is likely to be an underestimate; the actual size of the subsidy is likely to be far higher.
Before we jump into the golden age of gas as a way of combating climate change, it is essential that we have a good understanding of the effect that switching from coal to gas will have on our emissions. We cannot do this until we can measure the fugitive emissions that occur in the coal seam gas extraction process.
The solution is to undertake better measurement of fugitive emissions, particularly at the CSG wellhead. With better information from more accurate measurement, we can more accurately calculate fugitive emissions and therefore better measure the impact that CSG extraction is having on Australia's greenhouse gas emissions.
Before the government approves more CSG production it would be prudent to allocate funding from the $200 million it has put aside from the Minerals Resource Rent Tax for scientific research on the effects of CSG extraction towards measuring fugitive emissions.