As the coal seam gas industry continues its rapid expansion into agricultural areas, more and more landholders are looking to the experiences of those with first-hand exposure to the industry to learn what they can about living and dealing with gas companies. The CSG industry has been at the centre of negative media attention in recent years from landholders concerned about impacts to land, water and livelihoods. Southern Queensland cattle producer and lot feeder Simon Drury is one who has spoken positively about his family's involvement with the industry to date. In this transcript of a speech Mr Drury gave to the Australian Petroleum Production & Exploration Association's Coal Seam Gas conference in Brisbane recently, the landholder and former Murilla Shire Councillor outlined his reasons for backing CSG.
My wife, Kylie and I, along with our four sons, own and operate a 5500 acre property called Condabri, situated on the Condamine River between Miles and Condamine on the banks of the Condamine, on the western Darling Downs.
We have a 5000 head feedlot and grow various crops on 500 acres of centre pivot irrigation. These crops include wheat, barley, sorghum, corn and we also have c contracts with Peanut Company of Australia and grow peanuts. We also grow dry-land crops and background cattle for our feedlot. We supply grain-fed beef to the domestic market, as well as the international market, and we also supply to our own label called Condabri Beef, turning off around 15,000 head of cattle a year. Over the past 18 years, Condabri has become a highly developed enterprise.
It has been a challenge to overlap one highly intensive industry, CSG, with another highly intensive industry, just being feed lotting and the movements that go on with that. But so far, we have done this successfully.
In 1997, I was elected on to the Murilla Shire Council, as the local councillor, and I was able tosee what was really happening in our shire. It was evident that 10 years of continuous drought was taking its toll on our shire and surrounding shires. One of the big four banks had packed up and left town; local businesses were struggling; and many other local farmers were telling their kids to go to the city and possibly stay there, because they're not going to gain employment in our local area. Our local towns – Miles, Condamine, Dulacca, Drillham – were basically shrinking.
As a council in desperation, we developed an estate. All blocks were watered, and sewered, and curb and channelled. And we put them on the market for $9000 and we hardly got a taker. In the early 2000s, a gentleman named Richard Cottee came to the district, having secured the property Windibri, near Condamine. He was in the gas industry, and there was talk of coal seam gas in our area, and as a council, we invited Richard to come and speak about this industry and explain the pros and cons of having CSG on our doorstep. Of course, we had many questions, you know, what would it do to the aquifers that we all depended on for our stock, and domestic, and irrigation, landowners rights, would it devalue our land, etcetera, etcetera.
So Richard invited us to their newly acquired property to look over the project firsthand, so off we went on a bus to see what this industry was all about. We viewed firsthand, for the very first time, a well with a flame coming out of it, and Richard went on to explain the process, and made a passing comment that one day, this would be a multi-million dollar industry in our shire – I guess he was right. From that time on, things began to change in our area. It was slow in the beginning, but people began to warm to it and get jobs in this new and emerging industry. Maybe there was hope for our children after all. About two years passed by, and one day, Kylie and I were approached by an energy company called Origin Energy.
Origin Energy had tenement over our properties and wondered if we were interested in taking part in a pilot project, and they went on to explain that we would have four wells and a large line and evaporation pond, and that the process would include flaring off for 12 months to prove the field. These were exciting times, we had lots of drill rigs, and lots of equipment, and lots of earth-moving machinery running around. And Origin suggested that we might need a new grid and a gravel entrance road to our feedlot, which certainly made life a lot easier.
They even wanted to purchase water and gravel from us, and that was a bonus. Twelve months passed; the field was proven, and from what we hear, there was lots of gas under us. Sometime after that, we were approached again regarding CSG development on Condabri, so planning and negotiations began with us. It had taken teams of people years of work to gain the necessary environment approvals that had to be undertaken by Origin before a site was turn, let alone FID. In the beginning, I was questioned by neighbours as to the wisdom of embracing CSG on our property. Now, I'm receiving more queries from landholders about how CSG could possibly benefit them.
We also had the unenviable task of working out a fair conduct and compensation package. Our initial compensation package was probably nowhere near where it is now, but we decided to approach the challenge in a positive manner: take a step of faith, sign up, and we will work on the compensation as we went along. So since these preliminary talks, Origin have structured a package that is more appealing, based on property values and property yields, and not on a per-well basis. This package is a good deal more reasonable and very much more acceptable to landowners. We applaud the board for adopting this formula, and in our case, we are satisfied and pleased that the level of compensation for us is fair.
New Years Eve 2010 saw an unprecedented volume of water flowing down the Condamine River. The old timers told us that the flood would probably peak around the same height as the big flood in 1956, where it reached just under the floorboards of our 100 year old home. To our dismay, the flood levels exceeded the 1956, with the final flood peak running 5 foot 6 through our home. Our workshops, machinery sheds, pump sheds were all inundated, and the water came through part of our feedlot. We had to evacuate quite a lot of cattle, a couple of thousand, actually.
Also our bottom irrigation circles and pivots were submerged along with some 2500 acres of country. It caused untold damage, and heartache, and we were left without a home to live in. Friends, family, neighbours and staff were fantastic, and came to our aid to help us in the huge mess – the clean up of the huge mess that was left. Approximately 20 Origin staff, also pitched in, and we had several of them for weeks to help us with the clean up and fixing up, and the restoring of the motors, the pumps, the fridges and even the washing machines.
Unfortunately a second flood came and although not quite as high, still caused plenty of damage. And once again, we received the help we needed, and we thank everyone – Origin staff included – for their compassion and assistance in our time of need.
We stayed with close friends in Miles for three weeks and soon realised we needed a house closer to our property and business so that we could continue to put our lives back together. Origin had purchased a neighbouring property which had a vacant house on it, and they offered it to us, rent-free, for 12 months, and we gratefully accepted their kindness. Kylie and I decided to build a new home on higher ground, 16 and a half metres higher, actually, and about 6km from the old site. However, we had a small problem: we had a gas well in the lounge room – or a proposed gas well in the lounge room.
So all the plans and designs for our 47 wells Origin had proposed for our property had to be adjusted to suit, and this, I must say, became no problem at all. You could imagine every single well had to be changed, but it appeared to be no problems on and some road construction, all of which helped in the eventual good management of Condabri. As the field was to be electrically powered, we had peace of mind knowing that the noise levels of the wells would be low. Apparently, this is one of the largest underground electrification projects ever undertaken, and I had a little bit of greediness in it, I tried to place some of the wells near my major pieces of infrastructure, and hopefully we might get some free power out of them, but I'm just not too sure.
That's a conversation we will have to have down the track. Origin has also trialled and used the minimal disturbance rigs on our property. These new MDL Savanna rigs are impressive and can drill a well in a few days. Minimal disturbance also has meant there are no big gravel areas on our property at every well site once the well is drilled, and it sits relatively unobtrusively in the landscape. At present, we are going through the work-over process. These smaller rigs drill the concrete plug out and take the well to completion and production stage. The next phase is the gathering: about 50km of gas and water pipes, as well as electric cables, fibre-optic cables and probably some other things in there. This is meant to start at the end of the year, or early 2013.
Gathering is the most intensive part of the process and will hopefully only take six to eight months to complete. We know it will be intrusive and disturb our typical routine, but I guess that's what compensation is for. Once this part of the process is completed, we expect things to return back to normal. I must say that so far, business has been carried out as per normal, with our daily grain trucks and daily cattle trucks. They come and go and there has not been any real inconvenience to us – nothing that can't be worked out. This will change during the gathering stage, but we are prepared for it, and we know that months and months of planning have been done by Origin to minimise the impact to our operation.
We have also accepted an offer to trial two re-injection wells on our property. This may become a realistic part of the overall water use plan into the future. We have also taken part of the Working Together program, which has been designed by Origin to allow farmers to monitor their wells on their own property, if they so choose. This has a monetary incentive for those interested in maintaining the area around each well, such as slashing and spraying, and generally keeping an eye on things on a regular basis. Origin has put my staff through a training program involving first aid, ChemCert training, 4WD training and even chainsaws, as well as a general gas induction.
We thank them for this initiative, and trust the program worked well for both parties, with our future involvement expanded to enhance our family business. So in the beginning, we were quite naive and didn't realise how big the scale of this development would be, not only on our property, but in the whole district. Those $9000 blocks in Miles have been snapped up, and new house blocks and many more estates are sold in excess of 250,000. There are new houses that are being built in Miles which are being sold from 400,000 to 600,000. Rents have skyrocketed and our sleepy little town has changed into an active, busy place with amazing volumes of traffic going through it, travelling the highways and byways of our district.
Another great community benefit is a full refurb of the Condamine Airport. This will lessen the traffic on the roads and link us by aircraft to Brisbane, and other places.
There has, of course, been a downside, and many people relying on low incomes can't afford to stay. The CSG companies have been addressing this, and are building some affordable housing, accommodation in Miles and Chinchilla, and other destinations. We applaud them for this. Shops in the town have been closing and haven't been filled by other businesses. There really is a two-speed economy happening, with some businesses thriving, who can service the CSG industry, but those who can't are just bumping along. All hotels, and motels, and caravan parks are continually full, so tourism has taken a dive. And those related businesses are suffering somewhat.
These issues will need addressing. Employment for our country kids is secure, and we no longer worry about having to send them away. Our eldest son, who is doing an electrical apprenticeship with a local business, gained an Origin skills scholarship apprenticeship four years ago and is now a qualified electrician working on CSG related sites throughout the Surat Basin. So our journey with CSG has been a positive one. We have seen doors open up, and at the end of the development, our business will be better for it. I believe land values, once farmers are compensated fairly, will be enhanced and many farming family businesses will benefit from CSG activities as well as the towns and local communities. Thank you.
This article was originally published on the APPEA website, Beef Central is seeking comment from other landholders about their experiences in dealing with CSG companies – to share your story email firstname.lastname@example.org or comment in the space provided below.