History of CSG market development
The first attempts to develop CSG projects in Australia began in the late 1980s and continued until the early 1990s. These projects used techniques that had been successful in CSG projects in the USA but in the majority of Australian cases failed to produce gas at commercial rates.
A number of companies, mainly domestic exploration and production enterprises, persisted with CSG. Innovative technologies and techniques were developed to reduce costs and improve efficiency. As a consequence of research and development conducted at all stages from exploration through to production, CSG is now considered competitive with conventional gas. It is anticipated that CSG development and production costs will reduce further in the future.
Reserves certification has improved the credibility of many CSG producers with gas purchasers and equity investors. Gas reserves certification is an important aspect of gas marketing negotiations and is often crucial in securing contracts.
CSG timeline in Australia – key milestones
Date |
Event |
January 1995 |
First CSG production license awarded over the Fairview field |
December 1996 |
First stand alone commercial production of CSG in Australia |
February 1999 |
First long-term CSG contract signed in the Peat field JV between Oil Company of Australia Limited (“OCA”) and BP for the supply of gas over a 20 year period with total value of A$150—265m — production commenced February 2001 |
August 1999 |
AGL agrees to a conditional purchase of up to 4.5 PJ of gas per year for ten years, produced from first 25 wells drilled by the Sydney Gas Company in the Sydney Basin, near Camden |
May 2000 |
Queensland Government announces the Cleaner Energy Strategy that would require electricity retailers and large electricity users who operate in Queensland to source 15% of electricity from gas-fired generators by 2005. After a process of consultation the target was set at 13%, and the scheme commenced on 1 January 2005 |
June 2000 |
Santos signs contract for supply of 110 Bcf of CSG from Scotia field to Swanbank Power Station |
June 2002 |
CH4 wins contract to supply new gas-fired base load power station to be built in Townsville — 265 Bcf over 15 years. This contract was seen to be the definitive turning point for CSG |
December 2002 |
AGL signs agreements worth A$4.5bn to buy as much as 1,280 Bcf of natural gas over 15 years from diverse sellers, with CSG’s share of the supply agreements being 316 Bcf, including an agreement for 309 Bcf with Origin Energy |
May 2005 |
QGC becomes the first purely CSG-focused exploration and production company to achieve certified gross 3P reserves of over 1 Tcf |
April 2007 |
Arrow becomes the first CSG-focused exploration and production company to attain market capitalisation of A$1bn. QGC achieves the same status in May |
July 2007 |
Santos announces first major LNG project to use CSG at Gladstone, on the eastern coast of Queensland |
February 2007 |
QGC announces alliance with BG Group for LNG project development at Gladstone |
May 2008 |
Santos announces alliance with Petronas |
May 2008 |
Arrow Energy announces alliance with Shell |
| September 2008 | Origin Energy announces alliance with Conoco-Philips to monetise Origin's CSG resource through development of four-time LNG project at Gladstone (Queensland) |
