Australia | Apr 01 2015
By Greg Peel
The jury remains out on coal seam gas and the fractionation, or “fracking”, process required to recover it. Energy companies assure fracking does not threaten underground aquifers but evidence has suggested otherwise. The debate continues in the US while Britain has embraced CSG whole-heartedly, some European countries have banned fracking altogether and in Australia, access to agriculture land has been put on hold pending further qualification.
The biggest issue facing Australia is a trade-off between the need to preserve and exploit our enviable food bowls and the reality of energy prices set to rise strongly very soon. Given east coast states do not have policies requiring the quarantine of a proportion of energy resources for domestic use, Australians are set to pay whatever price is implied by Chinese demand for our energy, as soon as the big LNG projects are up and running and creating an export industry to rival iron ore.
Those LNG projects include east coast CSG, specifically in Queensland. Energy companies have also looked to exploit untapped CSG fields further south, but have run into a ban on new projects in NSW, for the time being. CSG does not sit well with the electorate, and politicians have been forced to listen.
One company may nevertheless be set to change the mindset altogether. The issue with fracking is one of scale, where energy companies split large amounts of subterranean rock in order to tap the gas trapped therein. These are wholesale producers, looking to exploit CSG reserves on a level equivalent to west coast offshore drilling. But were CSG to be recovered on a much smaller but wider scale – let’s say a series of pin pricks as opposed to a sledgehammer assault – the integrity of the rock beneath, and the aquifer beneath or alongside the rock, can be preserved.
At least, that’s what as yet unlisted company Itsa Gas believes. Itsa has been testing this principle for some years now and as a result, has developed a product management believes could revolutionise the household energy market across Australia, and indeed across the world, in the same way household solar panels have done now for some time.
Itsa will soon be launching onto the market a home CSG system, allowing households to directly tap gas beneath their properties with a minimum level of disturbance of the rock beneath. Not all Australian homes are sitting on CSG reservoirs, but when one considers the Sydney Basin, Hunter Valley Basin, Perth Basin and much of mid to southern Queensland, for example, has been targeted by energy companies seeking permission to drill, a sizeable number of households would be able to access this resource.
It’s not renewable, it is a fossil fuel, but CSG is much “greener” than oil or coal-fired electricity. Given many homes already have the infrastructure in place to access “town gas” or LPG, the retrofit of a home CSG system would not be overly expensive. The initially drilling required will come at a cost, as would Itsa’s CSG conversion unit, but so do solar panels, and like solar energy, home CSG would soon pay for itself and beyond after households stop paying their quarterly gas bills.
This is particularly the case given gas prices are set to rise materially.
“It’s taken decades for household solar energy installation to reach a price point accessible to a large number, rather than just a handful, of homes,” said Itsa CEO Charlotte Tunne in an interview last week. “With or without government support and/or subsidy, it’s all about economies of scale. At Itsa we’re convinced we can quickly drop the price point of our CSG units and their installation as the market for our product grows”.
Itsa’s claims have, of course, rankled the country’s big gas utilities, which stand to lose out on home CSG units just as power companies lose out on home solar energy. One unnamed spokesman went as far as to suggest home CSG was a complete furphy. But Itsa has been quietly testing its units now for some time and has reached the point of preparing to launch the first units onto the market.
“One irony is that a home CSG unit would ideally suit farmers,” Tunne noted, “Not only could they power their homes but they could power their farms as well with minimum disturbance to their land. Farmers may be “locking the gates”, but we’re sure they will soon be opening their gates to Itsa”.
If all goes as planned, Itsa intends to move towards an IPO by the end of the year. Capital raised will be used to build a new, larger scale factory for the production of the CSG units, improve efficiencies and, importantly, begin the process of bringing additional unit costs down for the consumer.
“We’re all very excited,” said Tunne.
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