Operating Onshore vs Offshore

Operating onshore

The size of a well pad (the area you see on the ground) depends on the type of well being drilled, its depth and whether hydraulic fracturing is necessary.

Typically, Coal Seam Gas (CSG) wells are quite shallow and therefore the well pad is much smaller than conventional wells (the size of a tennis court). Only 10% of Queensland’s CSG wells are currently hydraulically fractured. Shale wells can be much deeper and therefore require much larger rigs and well pads.

Before on-ground work or exploration can start, operators need approvals from relevant government departments, beginning with applications for exploration permits. Further approvals are required to undertake activities, which include Native Title and Aboriginal Heritage agreements, a detailed drilling application, an environmental management plan and a safety management plan.

Government departments use the plans as the basis for determining whether any additional conditions are required.

If approval is granted, the company will negotiate an agreement with any landowners based, in part, on fair compensation to the owner for any inconvenience.

The depth of any well depends on the depth of the resource, which varies from well to well. CSG is trapped in coal formations, typically 300-1,000 metres underground, although it can be sometimes found at depths of up to 1,200 metres. Conventional gas is usually found much deeper, sometimes 2,000-3,000 metres underground.

Conventional vs. Unconventional: what’s the difference?

Australia has abundant supplies of both onshore and offshore conventional and unconventional gas.

Onshore conventional gas reserves are primarily concentrated in the Cooper and Eromanga basins in South Australia and Queensland, while offshore resources are found in waters off Victoria (Gippsland, Otway and Bass basins) and Western Australia (Carnarvon, Browse and Bonaparte basins).

The development of unconventional gas resources reached commercial levels in the mid-1990s with the commencement of coal seam gas production in Queensland. More than 90 per cent of Queensland’s gas supply is now sourced from coal seams in the Surat and Bowen basins.

In New South Wales, around 5 per cent of the State’s gas supply is provided by the Camden Gas Project near Sydney, with large reserves identified in other areas.

The first shale gas well was drilled in the Cooper Basin in 2012. Unconventional resources have also been identified in Western Australia, South Australia, the Northern Territory and Victoria, with varying levels of exploration and development taking place.

In some jurisdictions, government-imposed restrictions on unconventional gas activities have slowed the development of a responsible and sustainable natural gas industry, while in Western Australia and the Northern Territory, extensive independent inquiries have either been completed or are still underway into the use of hydraulic fracturing to unlock the gas reserves.

For example, the final report from the Scientific Inquiry into Hydraulic Fracturing in the Northern Territory concluded that; ‘the challenges and risks associated with any onshore shale gas industry in the Northern Territory can be appropriately managed’. As a result, the Northern Territory Government lifted the near two-year moratorium, allowing companies to continue to develop the much-needed energy supply for the NT and the nation.

Operating offshore

Much of Australia’s oil and gas production comes from offshore fields and the country’s prosperity and energy security depends on these offshore projects, with industry recognising its responsibility to develop these resources safety and sustainably.

Before beginning any offshore oil or gas development, the project operator must undertake research to establish baseline environmental data and to clearly identify potential risks. The company must then develop detailed management plans to avoid, prevent or minimise its impacts. The same process applies to operators onshore.

Offshore operations are highly regulated by Commonwealth, State and Territory legislation. The primary regulator in Commonwealth waters (greater than 3nm from the coastline) is the National Offshore Petroleum Safety and Environmental Management Authority (NOPSEMA).

These laws and regulations are aimed at protecting the marine environment, including cultural and historic values, as well as biodiversity and air and water quality. Controls are placed on all aspects of offshore operations, and licences defining limits are required for various discharges. Strict limits are imposed on discharges to the air and ocean environment.

Cross section of a typical coal seam gas well