There is significant interest in the development of a liquefied natural gas (LNG) sector in Queensland based on processing coal seam gas (CSG). As the CSG-LNG sector presents both opportunities and challenges, the Queensland Government is conducting a review to help shape its policy response.
Where are the CSG reserves located in Queensland?
CSG is currently produced in the Bowen and Surat basins, however, CSG can be produced wherever coal exists. In Queensland these locations include the Clarence Moreton, Galilee and Cooper basins.
How are gas reserves measured?
There are two measurements of gas reserves that are regularly used:
- the energy value of the gas
- the quantity of gas anticipated to be commercially recovered.
Gas reserves can be measured in terms of the energy value they contain. The petajoule (PJ) (or 1015 joules) value is the usual unit for the measurement. As a rule of thumb, to produce one million tonnes of LNG, around 55PJ of CSG is required.
Another measure is the quantity of gas that can be commercially recovered from known resources. All reserve estimates depend on the reliability of the geological and engineering data available, and the interpretation of this data. Reserve estimates can be adjusted as more data becomes available, and as economic conditions change.
There are three measures (see figure 1):
- production reserves (1P, 2P and 3P)
- contingent resources
- prospective resources.
Production reserves are the amount of gas that can be economically recovered. The reserves are classified as follows:
- 1P (proven)—90 per cent confidence that the gas can be economically recovered
- 2P (proven plus probable)—50 per cent probability that the gas can be economically recovered
- 3P (proven plus probable plus possible)—10 per cent probability that the gas can be economically recovered.
Gas resources are categorised according to the level of certainty about recoverable volumes and then classified according to the potential for the reserve reaching commercial production. Another way of looking at this classification framework is provided in figure 2.
An important distinction between resources and reserves is that the recovery of some resources may not be commercially viable. In order to be classified as reserves, commercial barriers to their recovery must have been addressed. If commercial conditions change, quantities of gas may move from one category of reserves to another or may no longer be considered reserves at all. Generally, if gas prices rise, more resources will be converted to reserves.
Contingent resources are less certain than reserves. They are potentially recoverable but technological or business hurdles may prevent their commercial development. Prospective resources are estimated volumes of gas associated with unexplored deposits.
|1P - Proven reserves||2P - Probable reserves||3P - Possible reserves||Contingent resource||Prospective resource|
|90% probability the recovered gas will exceed the reserve size||50% probability the recovered gas will exceed the reserve size||10% probability the recovered gas will exceed the reserve size||potentially recoverable||estimated values for unexplored deposits|
|Discovered/chance of development||Undiscovered/ chance of discovery|
For consistency, reserves are mainly quoted in terms of 2P reserves and investment decisions are also based on 2P reserves. Total 2P CSG reserves in Queensland amount to 12 174 PJ. To put this into perspective, on the basis that the Queensland power grid currently utilises approximately 560 PJ/annum, the 2P CSG reserves could provide Queensland with 22 years of power.
In terms of the total potential reserves, it is estimated that eastern Australia (Queensland and New South Wales) may have 300 000 PJ of gas in place.
How are reserve measures certified?
Each company undertakes regular drilling programs with independent certifiers providing updates of the reserve estimates.
How quickly are new resources proven?
Generally new resources are proven as additional testing is carried out and it becomes more financially attractive to produce CSG and LNG.
Contact the LNG projects team
tel: +61 7 3404 8206
post : LNG Industry Unit
Department of Infrastructure and Planning
PO Box 15009, Brisbane City East QLD 4002