A novel model to estimate the impact of Coal Seam Gas extraction on agro-economic returns

Abstract

There is an ever growing demand for energy worldwide and the demand for gas alone is predicted to double between 2010 and 2035. This demand together with concurrent advances in drilling technologies caused the production of unconventional natural gas such as shale gas and coal seam gas (CSG), which is in the focus of this paper, to grow rapidly in the last decades. With the gas bearing coal seams extending across vast areas within their respective basins and with CSG production having to follow these seams through a network of production wells, pipelines and access roads, CSG activity affects large areas and therefore interferes with existing land uses, predominantly agriculture. For the eastern Australian Surat Basin and the southern Bowen Basin alone there are projected well numbers in excess of 15,000 to 20,000 between the years 2020 and 2030. The interference of CSG with agriculture on a large scale has raised concerns about the impact of CSG on farmland, food security, water resources and the socio-economic environment within the affected regions and beyond. This paper presents a newly developed spatial model which provides order of magnitude figures of the impact of CSG activity on gross economic returns of current agricultural land uses in a given region over the time of CSG production. The estimated gross figures do not account for any compensation payments received by farmers. The model is capable of accounting for a variation in a variety of parameters including impact frequency of distinct infrastructure elements, differences in soil types and associated varying responses of soil productivity, varying length of the CSG production phase and more. The model is flexible in that it can be transferred and applied in other regions as well. Based upon a literature review and given that CSG is an industry that started operating at larger scales relatively recently, we claim that the presented model is the first of its kind to provide these important agro-economic indicators.