Mining & Resources

Coal seam gas is long-term

20 Oct 2008, by Informa Australia


DON McMILLAN, Principal Engineer, Oil Gas CBM Services

Oil price fluctuation will have little impact on plans to develop Queensland’s vast coal seam gas (CSG) reserves, says industry specialist Don McMillan.

“[The end product] Liquid natural gas (LNG) is a very long term investment,” he says. “You’ve seen the numbers people have been prepared to pay to get into the action.”

In an interview, Mr Don McMillan, Principal Engineer with Oil Gas CBM Services, was referring to Petronas’ U.S. $2.5 billion and ConocoPhillips U.S. $5 billion acquisition of shares in Santos and Origin Energy respectively.

He says LNG plans are really 20 years or more projects and except for a catastrophic collapse, the latest fluctuations in the oil price will not have much impact on decisions to go forward.

The advantage of CSG is that the capital investment proceeds right through the potential 40 year life of the project. This will substantially boost the state’s and the national economy as it will not only generate considerable employment but will also be highly sustainable.

Mr. McMillan says the Queensland reserves will also lead to stronger links with the Asian energy market due to affordability and the unique advantage of low sovereign risk.

“We’ve noticed in the media that a number of major companies have had trouble in foreign countries and they believe that sovereign risk is minimal here.”

The main challenge is the deliverability of CSG and one of the great things Australia has done so far is to develop the resource with innovative technology at a low price.

“We’ve used a lot of innovation and I suspect that we’re really one of the world leaders in many of the small technologies out there, such as, surface to inseam drilling.”

“Just working with the major companies nowadays, the little improvements that are happening all along the way to make this project work, I feel very comfortable that we’ll be able to deliver.”

At the AJM 8th annual Coal Seam Gas and Coal Mine Methane Conference on 25-26 November in Brisbane, Mr. McMillan will speak on reserves reporting and the multiple standards in Australia that cause confusion among investors. He will attempt to clear up the confusion, and also explain the process of ‘reserves auditing’.

To arrange a media pass, request more information or arrange speaker interviews please
contact Nigel Dique – Informa-IIR 02 9080 4108; 0423 024 819;

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