Coal Seam Gas – A Sustainable Australian Energy Source. Mike Moraza | 15 June 2011 | Hunter Environmental Institute

2 NSW is heavily reliant on imported gas. Rosalind Park gas plant, Camden. Cooper Basin » Onshore » Declining production Gippsland Basin » Offshore » Growing importance Bowen / Surat » Onshore CSG » Recently linked through AGL initiated infrastructure (BWP and QSN pipelines) Sydney » Onshore CSG » Modest output close to market. » CSG – A Sustainable Australian Energy Source. » 15 June 2011 » HEI Presentation ˆ East Coast Gas Network

3 The Hunter energy industry. ^ Microsoft Clip Art 2 interdependent challenges: » Expand energy supplies to meet growing consumer demand » Address the social and ecological risks posed by rising greenhouse gas emissions 2 possible solutions: » Large-scale wind Can not provide base load power » Gas-fired power Must underpin the effort. » CSG – A Sustainable Australian Energy Source. » 15 June 2011 » HEI Presentation

4 What is CSG? Methane, natural gas, coal seam methane, coal bed methane Naturally occurring within coal Minimal processing Highly regulated industry at state and federal levels Abundant in eastern Australia: » 83% of 2P gas reserves » 31% of gas sales; >90% of Queensland sales » CSIRO estimates eastern Australia CSG resources are enough to power a city of 1 million people for 5000 years¹ Fuels cooking, hot water systems, heating and electricity generation. » CSG – A Sustainable Australian Energy Source. » 15 June 2011 » HEI Presentation ¹

5 CSG – significant environmental benefits. Less greenhouse emissions than coal Small footprint Coexists with agricultural uses of land Low impact Land rehabilitated to natural state. ˆ Rehabilitation of well site. ˆ Camden well. » CSG – A Sustainable Australian Energy Source. » 15 June 2011 » HEI Presentation

6 AGLs NSW CSG projects. More than $500m investment in upstream equity gas interests in NSW Assets close to market and infrastructure Camden: » Commenced 2001 » 60 kilometres southwest of Sydney » Produces 6% of NSWs gas requirement >Exploring the most prospective areas of the Sydney and Gloucester basins - over 17,500km 2 >Focus on proving independently certified reserves to extract value. ˆ Rosalind Park gas plant, Camden. » CSG – A Sustainable Australian Energy Source. » 15 June 2011 » HEI Presentation

7 The Hunter Gas Project. » CSG – A Sustainable Australian Energy Source. » 15 June 2011 » HEI Presentation

8 Exploration to date: » 16 core holes (plugged and abandoned, P&A) » 6 stratigraphic holes (capped and suspended) » 2 test wells (capped and suspended » 307 kms of seismic data Bulga gas prospect reserves estimates (as at 30 September 2010) » 142 PJ (2P) » 271 PJ (3P) Bulga, Loder and Belford prospects 2P reserves target: PJ Groundwater Monitoring Program established with independent oversight. The Hunter Gas Project. » CSG – A Sustainable Australian Energy Source. » 15 June 2011 » HEI Presentation

9 Future exploration. Not currently exploring, just preparing for activities to be proposed Part 3A approval lodged for 33 wells Exploration activity to continue for at least another 3 to 5 years In 2011, AGL proposes to conduct: » a 2D seismic exploration survey » core and stratigraphic hole drilling An environmental assessment for pilot well testing in 2012 or Each of these exploration activities requires approval under the Environmental Planning and Assessment Act » CSG – A Sustainable Australian Energy Source. » 15 June 2011 » HEI Presentation

10 The future of CSG in NSW. CSG is not mining CSG is an opportunity for NSW to: » Achieve long term gas security » Meet the growing energy needs » Transition to a lower carbon economy Legislation changes to: » Demonstrates the coexistence of CSG » Regulate water management legislation » Provide state-wide consistency » Standardise community consultation. » CSG – A Sustainable Australian Energy Source. » 15 June 2011 » HEI Presentation ˆ Spring Mountain Wine AGLs response and recommendations.

11 Creates and widens fractures to enhance the production of gas and water from coal Uses a slurry of water and sand pumped at high pressure into the target coal seam No fluids contain any BTEX or toxic additives. Fracture stimulation. ˆ AGL fracture stimulation operation in Gloucester » CSG – A Sustainable Australian Energy Source. » 15 June 2011 » HEI Presentation

12 AGLs CSG operations and water. Approach is proactive and precautionary Manage operations to: » Protect beneficial uses of shallow aquifers » Minimise our footprint » Integrate with primary land use AGL is dedicated to the protection of groundwater » Heavy investment into independent research and analysis of groundwater » Ground water monitoring program showed no effect shown during exploration activities in Broke Expansion of research and monitoring programs. ˆ Exploration drilling operations adjacent to irrigated lucerne paddock at AGLs Windermere property, Hunter Valley. » CSG – A Sustainable Australian Energy Source. » 15 June 2011 » HEI Presentation

13 Newcastle Gas Storage Facility AGL is proposing to develop an LNG gas storage facility in Tomago This facility will provide additional gas supplies during periods of peak demand The project will provide emergency backup supply of natural gas to the community, industry and commercial businesses during periods of gas supply interruption The Environmental Assessment for this project will be on public exhibition from June 24 - July 29, Project dimensions: - LNG storage capacity of about 30,000 tonnes - Instantaneous supply up to 120 TJ/day - Proposed to be operational by end of 2014 » CSG – A Sustainable Australian Energy Source. » 15 June 2011 » HEI Presentation