Environmental Engineering Reference
In-Depth Information
Australia falls short of universal adoption), would require that decommis-
sioning and well abandonment ensure the environmentally sound and safe
isolation of the well for the long term; the protection of groundwater
resources; isolation of the productive formations from other formations; and
the proper removal of surface equipment.
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4 Toward a Comprehensive Economic Assessment of CSG
Development: a Case Study of CSG versus Agriculture on
Prime Farmland
The foregoing discussion has established that CSG development in Australia
is proceeding apace, driven by buoyant export demand but facilitated also by
accommodative mineral rights and taxation regimes, the subordinate rights
position of land holders, and regulatory structures that may be over-matched
in their quest to internalise the industry's environmental impacts and rec-
oncile its large but relatively short-term profits with its continuing adverse
effects on land and water. With all this going for it, the CSG industry is the
800-pound gorilla - it goes pretty much where and does pretty much what it
wants. There is no national land-use policy that might give some geo-
graphical direction to prioritising deposits to exploit, and dominance of sub-
surface rights means opportunity costs on the surface do not weigh heavily
in industry calculations. The CSG industry has, in fact, focused on some of
Australia's relatively scarce prime farmland, especially in the Surat and
Bowen basins of Queensland.
At this stage in its history, Australia is not wondering whether to let CSG in
the door. The facts on the ground are that CSG is so dominant economically
that it has imposed, pretty much on its own terms, co-existence upon agri-
culture, even on prime farmland. As a practical matter, the economic
question now must be posed in terms of ''what, if any, countervailing con-
siderations might challenge the facts on the ground?''. The obvious coun-
tervailing considerations are the environmental externalities, the long-run
impacts of an exhaustible-resource-extraction enterprise with a clear expir-
ation date, and the leakage (from an Australian perspective) of resource rents
due to dominant foreign ownership of the industry. The economic question
is whether, and under what conditions, these countervailing factors might
change the bottom line.
In what follows I summarise the reasoning and some of the empirical
findings of Chen and Randall,
1
who addressed this question in a case study
of Arrow Energy's Surat basin CSG project. The project covers an area of
approximately 8600 square kilometers (3320 square miles) in the Darling
Downs, a region renowned for its agricultural productivity. Sixty percent of
the project area is considered prime cropland and most of the remainder is
suitable for livestock grazing.
68
While Arrow Energy is perhaps an unfamiliar
entity, it is a partnership of two very prominent organisations: Shell Oil and
the government of mainland China.
