Economic impacts of coal seam gas mining in NSW
The discussion of coal seam gas (CSG) development in north west NSW rarely focuses on the potential positive economic impacts of CSG development.
The North West NSW coal seam gas debate has so far had very little to say about how the region's economy would be impacted by the development. In 2011, Santos, a major Australian oil and gas exploration and production company, commissioned the Allen Consulting Group to identify and quantify the economic impacts of a proposed CSG development in north west NSW.
ACG’s analysis identified a range of benefits, including:
- a $15.2 billion boost to the NSW economy out to 2035
- creation of 1800 construction jobs, 200 permanent positions, and flow-on employment for around 2900 workers
- access to additional water supplies.
Coal seam gas explained
CSG is natural gas extracted at low pressure from coal and is widely used in Australian homes and businesses today. It is formed through the same natural processes that produce coal over millions of years. The gas is absorbed within the coal by pressure exerted by deep rock layers and aquifers.
CSG is recovered by extracting water from the coal seams which releases pressure, allowing the gas to de-sorb from the coal and flow to the surface through specially designed wells.
Huge reserves
In Australia, large coal resources lie in geological basins over a large area of eastern Australia, extending approximately 2,000 kilometres from Townsville to Sydney. Queensland has Australia's largest known reserves of CSG in the Bowen and Surat Basins.
Many uses, high demand
Like natural gas, CSG is used for space heating, water heating, cooking and other domestic uses, as well as an input for industrial processes. The demand for gas in Australia has increased year on year for the past half century. Demand is projected to continue increasing nearly every year for the next 30 years as Australia seeks ways to reduce its carbon footprint.
Using models to forecast impact of CSG development
ACG uses Monash Multi Region Forecasting model (MMRF) to estimate the impacts of the proposed CSG development. This model accounts for the interconnections and relationships that exist throughout the community and adopts the same framework used by the Australian Treasury and the Garnaut Climate Change Review.
The analysis used information provided by Santos about the scale and capacity of a potential development in the region. ACG’s analysis also used publically available data, such as Census data and other information about the economy.
Key finding: Increased economic activity
The key result of the analysis was the impact the development was expected to have on regional, state and national GDP.
- It was estimated that the proposed CSG development would:
- increase NSW gross state product by 0.20 percentage points each year, adding $15.2 billion to the state economy out to 2035
- increase the gross regional product of Northwest NSW by about 3.2 per cent — equating to an annual increase of around $470 million in today’s dollars
- expand national incomes (gross domestic product) by an expected 0.04 per cent per annum.
Key finding: Increased employment opportunities
The increased economic activity in the region and across NSW as a result of the proposed development would lead to increased employment opportunities:
- 200 direct permanent full time positions
- construction employment peaking at 1800 jobs in 2015;
- an estimated 2900 full time positions due to the flow-on effects of increased economic activity throughout NSW
- reverse recent labour flow trends by attracting substantial labour back to NSW.
Key finding: Greater water resources available for the community
As part of the CSG process, an extra 5 gigalitres per annum of water from deep coal seams would be made available to the regional community. This water, when treated, has the potential to benefit agricultural production in the region by nearly a full percentage point once the project is fully operational.
By Tim Bradley
