Towards the end of Pip Courtney’s Landline program on coal seam gas (CSG) there is a good news story depicting a group of happy landholders. The cattle graze contentedly near the well pads, the CSG company is co-operative and the 60-70 wells provide a handy earner for the farmers.

Yet, she reports, another farmer cried when told he was going to have wells on his farm. Why such vastly different responses to the potential and impacts of CSG on farmers’ land?

As Landline reported, the Queensland Valuer General found even one well could mean a reduction of 12% in the value of a property. The situation appears not to have improved, but is complicated by a depressed property market and insufficient sales data to provide definitive evidence about the impact of CSG operations on land values. The interim Senate inquiry report was told that compensation agreements do not take into account potential loss of land values, only loss of annual production.

At the Dalby Senate inquiry hearings, Ian Hallyor, chair of the Basin Sustainability Alliance, spoke for farmers generally when he said:

“What we are saying is that when we see properties advertised as an asset to the business you will know that the compensation is about right and the environmental impacts are being managed.”

Many farmers believe the market is telling them they are not getting a fair deal.

In this article I have concentrated on the Queensland portion of the Surat Basin, which has witnessed dramatic development in recent years. I grew up on a farm in the northern part of the basin, still have relatives there, know some farmers there and have maintained a general interest in issues relating to the production and trade of agricultural goods.

I’ve combed through the interim report of the inquiry into management of the Murray-Darling Basin impact of mining coal seam gas, conducted by the Senate Rural Affairs and Transport References Committee (hereafter Senate report), several submissions, the record of hearings at Roma, Dalby and Brisbane and other material in order to try to capture the divergent views from farmers on this issue — I’ve also spoken to several farmers and some representatives of farmer organisations.

Farmers in this area are mainly engaged in growing food or fibre in broadacre cultivation and in cattle grazing, or a combination of the two, some with feedlots. There is some more intensive development, such as horticulture (Chinchilla is famous for watermelons, for example). Some hundreds are irrigators, including those drawing from underground aquifers.

Irrigation channels on cotton farm

There are four phases in CSG extraction — exploration, development, operation and finally decommissioning and restitution. It can also be looked at from the perspective of what happens on the ground, under the ground and above the ground. The surface is where agriculture happens, so we’ll start there by looking at the impact when the extraction is operational.

In the following piece I document the physical changes that appear on the land and the nature of operations is identified. While disciplined research should be done to document and quantify these factors more precisely, it is evident that agricultural production is adversely affected and that there are changes in amenity and other less tangible impacts.

Land surface impacts

Whereas open-cut coal mining is concentrated in its footprint, alienating the land surface completely, CSG extraction spreads like a web over the land. This aerial photo from the ABC taken near Chinchilla will give some idea:

On the land you can expect to find well pads, pumps, connecting roads, high-point vents, low-point drains, compressor stations (one to every 10-40 wells) and screw compressors.

Wells are mostly spaced 400-600 metres apart. Where a larger span such as 750 or 1000 metres is used, additional wells may be sunk later to fill in the spaces. It is possible by using “horizontal” or “directional” drilling to sink multiple wells from each pad, although this is more expensive. These are possible later developments as the last gas is extracted.

Well pads are made of gravel or cement. Well pad size varies, but one hectare (100 metres squared) is often given. The protest group Lock the Gate claims the pad is the full hectare, industry advertisements suggest 25 metres squared. I gather what normally happens is that an area of about one hectare is fence off to drill the well and create a smaller pad. The fence is subsequently pulled in closer to the pad. Initial or subsequent fracking involves the injection of huge quantities of sand and water, which have to be assembled on site, requiring a significant area. The Senate report tells us that the water injected in a well is 100 to 10,000 cubic metres (para 1.28). A cubic metre is 1000 litres.

The roads are about six metres wide. Underneath the roads are pipes for water and gas, mostly 10-12 inches (300mm) in diameter, dug in about 18 inches to three feet (450-900mm). However, some of the early ones are so shallow that the area has been designated an exclusion zone, meaning you couldn’t drive a tractor over the road. Power lines are mostly underground also.

From the outset the practice was employed to create evaporation ponds to evaporate the saline water resulting from the dewatering process to produce gas. These range up to 100 hectares in area. At one point Agforce estimated that 50,000 of 750,000 hectares of agricultural land (15%) would eventually be covered in such ponds. The Queensland government has now adopted re-injection as its preferred strategy, or “beneficial use” after treating by chemical cleaning and reverse osmosis. However, this strategy has not yet been implemented on a widespread basis. If and when it is, holding ponds are still likely to be necessary to hold water for processing and injection at concentrated points under pressure as an industrial process. The water cannot be re-injected back to the aquifers it came from as this would defeat the purpose of dewatering.

Nevertheless the issue of what to do with the salt, estimated to amount to millions of tonnes, and other residue left after the water is treated, remains essentially unresolved. The ABC site Coal Seam Gas by the Numbers reports the amount of salt to be generated as up to 31 million tonnes, enough to fill the Melbourne Cricket Ground 15 times. They report that QGC has been given permission to build a salt pit the size of four MCGs.

The total footprint per well is commonly given as 10 hectares, but this can vary and become a contested figure. The Senate report cites a case where the company claimed that only one acre in every 250 would be required for wells, roads and pipelines. The farmer, “having regard to the topography, drainage patterns, risk of erosion, plus the need for safety zones along pipelines and around wells” calculated 38 acres in every 250, or 15% of land area (para 4.47).

This is important because compensation is based essentially on the potential lost production from the total “footprint” of CSG activity.

The direction of tillage commonly relates to the contours of the land. The direction of the roads doesn’t, making tillage difficult, even assuming that you can drive machinery over the access roads. Imagine driving a 36-metre wide implement over a road at an acute angle, lifting it in the process and leaving a triangle untilled on each side. This process is exacerbated where controlled traffic farming is used, where the tractor is guided by GPS to run on exactly the same tracks each time. Ms Tydd  (para 4.50) described these problems in detail:

“At an operational level, we carry out controlled traffic farming, confining compaction to permanent traffic lanes, optimising soil conditions and reducing overlap. The machinery we use is up to 36 metres wide, set up on three-metre wheel spacing and equipped with the latest GPS navigation systems. Machinery of this scale requires plenty of room to move and turn around. Fields need to be free of any fencing, ponds, dams and roads. A one-quarter-acre well site every 250 acres with interconnecting gravel roads and pipelines would severely hinder our use of this machinery. Investment in the latest equipment delivers both environmental and economic benefits. For example, the use of GPS navigation delivers immediate production savings of 10 to 12 per cent. That means less diesel, less chemicals and less water.”

One farmer pointed out that they would have to continue to use old-style harvesters, which only weigh six tonnes rather modern 36-tonne machines that would risk compressing the underground pipes.

The roads form a raised surface on the landscape and as such impede the flow of water over the land, leading to pooling, silting and scouring. This is a problem even on flat flood plains. Doug Cush (submission 347) makes a case for wide table drains on contoured lands:

“Because our farms are in ridge country, it is heavily contoured with rollover banks. Each time they cross a bank it will need culverts to run the water from the road plus the water from the up side of the contour bank. If this is not done in a professional manner the next wild thunderstorm will create large-scale erosion. Because of the bare ground along the roads this will magnify the problem topping water over the banks creating gullies between the banks.”

Problems such as these lead many farmers to say that CSG development makes modern broadacre cultivation near impossible.

In the case of grazing, traffic on the roads generates a great deal of dust, which settles on the grass that cattle will not then eat.

The roads and well pads become a work site, so the farmer has a duty of care over spray drift when undertaking mechanical or aerial spraying. Spraying is time-sensitive, that is, when the need is identified and the weather is right it needs to be done that day. Gas workers work to schedules determined by others and property owners are not always informed of their intention to enter. Protocols are being worked on to ease this situation, which has operational as well as occupational health and safety implications.

Landholders consistently report that the cost and availability of labour has been adversely affected with reports of a 50% increase in costs. On the other hand the Western Darling Downs mayor reported that he’d rung 40 properties to find that 20 of them had a family member employed in mining.

These are some of the concerns, there are others, such as leaky wells (Lock the Gate claims that over 50% of them leak), the use of chemicals in fracking, fire safety and the use of CSG water to dampen dust to the detriment of local ecologies. Wells are sometimes flared, especially in the set-up phase. Activity is quite frenzied and noisy during the development phase, which can go on for months. It takes about two weeks working around the clock under floodlights to drill a well. Wells or indeed a noisy compressor can be as close as 400 metres from a dwelling without consultation and 200 metres with consultation, which effectively means they consult, then they drill.

A grazier near Roma records his experiences with CSG systematically on Facebook. At one point he recorded the prospect of 1000 tankers of water coming onto his property for fracking. Dayne Pratsky, in a submission (number 360) to the Senate inquiry representing small landholders of 12-24 hectares (“blockies”) on the Western Darling Downs, catalogues a series of woes and the responses from companies and government, including the astonishing notion the 55db inside a house was acceptable.

There is still a flow of access by CSG company personnel during the operational phase. Farmers are particularly sensitive to having unknown persons on their property, especially when they themselves are going out.

It is perhaps worth noting that an additional factor is used to oppose CSG developments in the Scenic Rim. On local radio the mayor stated that more than 50% of World Heritage-listed national parks in Queensland were within the shire. Tourists, he said, did not want to access such parks by driving through an industrial area.

In decommissioning and restitution, road material and the well pads must be removed, the well heads buried and capped. I understand, however, that the deep alluvial soils once disturbed by trenching and road building can never return to former productivity. The Queensland government, on the  expectation that mining will only last a few decades and that full restitution will occur within 50 years, has allowed CSG activity on officially designated strategic cropping land.

Compensation

Compensation is concluded in a Conduct and Compensation Agreement. While agreements can contain anything the parties agree to the main purpose is to compensate for such loss of productivity. Loss of land value is specifically included in the official Guide to Queensland’s new land access laws (pp. 3-4) but the Senate committee was told at hearings by farmers and by Dalby lawyer Peter Shannon, whose firm assists farmers, that it doesn’t happen. While the Queensland government has published tips for landholders, template agreements and a CSG information project has been mounted within Agforce, in the end each landholder has to do the best they can to make their case after consulting relevant experts for which the CSG company will pay “reasonable” costs. What is reasonable to a farmer in accessing lawyers, accountants and hydrogeologists is likely to be unreasonable to companies.

Furthermore there are reports of companies paying the compensation for legal fees as an incentive not to spend the money on consulting (Roma hearings, p. 13; Dalby hearings, p. 4). Understanding of the issues is inhibited by the confidentiality of the agreements and the marked reluctance of companies to go to the Land Court in case public precedents are set. Facing this, companies so far have always settled.

Confidentiality notwithstanding, subsequent to the Brisbane hearing of the Senate inquiry APPEA (Australian Petroleum Production and Exploration Association) volunteered in writing that the average agreement so far was $2500 per well. This of course includes some low-value early agreements and as APPEA says they vary according to the circumstances.

The underlying structural problem with compensation agreements is a power imbalance between the parties. The government has sold the rights to mineral resources under the land to large companies with unequal access to information and expertise in a situation where the landholder is compelled to come to terms. The Senate committee took note of Dalby lawyer Peter Shannon’s evidence:

The compensation regime at the moment makes no allowance for the social impacts and no allowance for the compulsory nature of the imposition.

The Senate committee suggested there should be loading for compulsion and other effects, such as nuisance, noise and loss of amenity (Senate report, para 4.112).

The Senate committee suggested further measures to bolster the position of farmers (para 4.109 ff), such as more liberal compensation for the costs of independent arbitration, and access to review if the agreement was entered “without proper advice or understanding of its implications”.

Some farmers are inclined to think that CSG and agriculture are ultimately incompatible. Others are working towards the best accommodation. The only body doing detailed surveys of farmer opinions is APPEA (Brisbane hearings). The Senate committee (see para 4.103) believes the industries can co-exist:

“The committee believes that, by making it clear in legislation that the protection of agricultural productivity must be the priority in developing plans for land access for the conduct of CSG mining operations, this will be achieved.”

Legislators and policy makers need to focus clearly on the importance of agricultural productivity and industry best practice needs to be made the norm.

If the worst happens, the committee also suggested (para 4.117):

“It would be  desirable to have a clear statement that where a property suffers irreversible damage due to unforeseen circumstances, for example long-term interruption to water supply or saline pollution over a significant area, the liability of the gas company to ‘make good’ must include a liability to acquire the property ‘… at its pre-market value and consequential damages’.”

Damage to underground aquifers is viewed as more likely than any other factor to threaten a farming enterprise. I look at this in more detail in Part 2, where I examine the issues thrown up in relation to underground aquifers and the considerable implications for risk.

Peter Fray

Get your first 12 weeks of Crikey for $12.

Without subscribers, Crikey can’t do what it does. Fortunately, our support base is growing.

Every day, Crikey aims to bring new and challenging insights into politics, business, national affairs, media and society. We lift up the rocks that other news media largely ignore. Without your support, more of those rocks – and the secrets beneath them — will remain lodged in the dirt.

Join today and get your first 12 weeks of Crikey for just $12.

 

Peter Fray
Editor-in-chief of Crikey

JOIN NOW