At the production stage the petroleum producer will extract petroleum from the area of their production lease by drilling wells and constructing associated infrastructure such as pipelines to connect different wells.


What is coal seam gas and how is it extracted?[i]

What is coal seam gas?[ii]

Coal seam gas is also known as ‘coal bed methane’ and can also be referred to as ‘unconventional gas’.


Coal seam gas is typically extracted from coal seams at depths of between 300 and 1000 metres. The gas produced is a mixture of a number of gases, but is mostly methane (generally 95-97 per cent).


Coal seam gas is entirely absorbed into the coal matrix and movement of the gas to the surface through a vertical well requires extraction of formation water from the coal seam.


Coal seam gas is a form of unconventional gas. The difference between conventional and unconventional gas is the geology of the reservoirs from which they are produced.


Coal seam gas production normally requires a higher density of wells than conventional gas production, and wells which target coal seam gas are typically shallower than conventional wells and cost much less to drill.


Other than coal seam gas there are other types of unconventional gas such as shale gas and tight gas.


Shale gas

Shale gas is generally extracted from a clay-rich sedimentary rock which has naturally low permeability.

The gas it contains is either adsorbed or in a free state in the pores of the rock.


Tight gas

Tight gas is trapped in ultra-compact reservoirs characterised by very low porosity and permeability.


The rock pores that contain the gas are minuscule, and the interconnections between them are so limited that the gas can only migrate through it with great difficulty.


How is coal seam gas extracted?

The coal seams targeted for coal seam gas production are generally located 300-1000 metres below the ground surface.


Production of coal seam gas normally requires the drilling of many wells at a more dense spacing than usually required for conventional gas production. Vertical wells are drilled along with horizontal or directional drills instigated from vertical wells.


Coal seam gas is absorbed within the coal matrix and is held in place by the pressure of formation water. To extract the gas, a well is drilled into the coal seam and formation water from the coal cleats and fractures is pumped and withdrawn from the seam. The removal of water from the coal seam reduces the pressure which enables the gas to be released.


The water pumped from the coal seam is known as ‘produced water’ and is carried to the surface via the coal seam gas well along with the gas where the two are separated.


Once separated the gas and produced water are transported via pipelines to separate processing facilities where the produced water is treated and the coal seam gas is compressed then stored and transported for sale.


In some cases the flow of coal seam gas is enhanced through a process known as hydraulic fracturing.


Coal seam gas produced water

Produced water is the water that is pumped out of coal seams in order to release the coal seam gas.


Over time, the volume of produced water normally declines and the volume of produced gas increases.


Water production will be different in each coal seam and coal seam gas well. Water production can vary from a few thousand to hundreds of thousands of litres a day, depending on the underground water pressures and geology.


In Queensland, where coal seam gas production is advanced compared to NSW, water production averages about 20,000 litres per well per day, although the volumes of produced water extracted from coal seams will be less the further south the coal seam gas wells are located.


Whether or not the process of water extraction poses a problem will depend largely on the interaction, if any, between coal seam gas production and aquifer systems and on what is done with the produced water.


The water that is produced from a coal seam has generally been underground for a long time with very little fresh water penetration. As a result, the water often contains salt, mainly sodium chloride (varying from 200 to more than 10,000 milligrams per litre), sodium bicarbonate and traces of other compounds.


Again in Queensland where coal seam gas production is advanced compared to NSW, total dissolved solids in produced water averages about 6 grams per litre (g/L), which is about one sixth that of sea water.


Produced water quality is highly variable from site to site, but it is generally not fit for human consumption without treatment. Depending on its intended use and quality, produced water can be used directly, treated and then used, or directly reinjected.


The treatment of produced water depends on the quality and quantity of the water, the intended use of the water, and the prevailing environmental laws and regulations.

In NSW, an Exploration Code of Practice for Produced Water Management, Storage and Transfer sets out mandatory requirements and provides title holders with related guidance about the expected performance for the management, storage and transfer of produced water.


This Code serves three purposes:

  • it provides upfront information to industry and the community

  • it facilitates the assessment of exploration activities consistent with part 5 of the Environmental Planning and Assessment Act 1979

  • it sets out enforceable mandatory requirements related to produced water management, storage and transfer.


A key part of the Code is the development of a Produced Water Management Plan (PWMP). The assessment of the environmental impact of the fate (beneficial reuse, disposal) of the produced water and approval by the relevant approval authority is a separate process not covered by this Code.


Produced water management, storage and transfer is typically required for exploration activities regulated by the Petroleum (Onshore) Act 1991, such as those required for coal seam gas exploration and appraisal. In some circumstances, exploration activities regulated by the Mining Act 1992 may also require the management, storage and transfer of produced water (such as hydrogeological pump tests).


The Code applies to exploration activities when the Department identifies a need to manage produced water in connection with a proposed exploration activity.

For more information on Exploration Code of Practice for Produced Water Management, Storage and Transfer see:

Exploration Code of Practice for Produced Water Management, Storage and Transfer


Banned evaporation ponds

In the past evaporation ponds may have been used to dispose of coal seam gas produced water.

Evaporations ponds covered large areas of land, were relatively shallow in their construction and were plastic lined to prevent water escaping the pond into the land.


As the name suggests, the shallowness of the ponds allowed produced water to evaporate into the atmosphere.


The NSW Government banned the use of evaporation ponds in 2011 and now requires coal seam gas operators to treat or otherwise dispose of produced water.


In some cases temporary holding ponds or dams may be required for various treatment processes, and these are still permitted.


Hydraulic fracturing[iii]

Hydraulic fracturing is a method used to increase the rate and total amount of coal seam gas able to be extracted from the coal seam.


Without the recent technological advances made in hydraulic fracturing, a portion of the coal seam gas now being targeted for extraction would not be recoverable.


Not all gas wells require hydraulic fracturing. Generally only wells which target coal seams with lower gas flows require hydraulic fracturing and these are usually deeper seams.


The decision to hydraulically fracture a coal seam gas well is often made before drilling commences because the process requires additional considerations in well design and construction procedures.


Hydraulic fracturing typically involves injecting fluid made up of water, sand and chemical additives under high pressure into the well.


As the name suggests, the pressure caused by the hydraulic fracturing process creates fractures in the coal seam typically out to a distance of 20 to 60 metres from the well.


The sand in the hydraulic fracturing fluid acts to keep the fracture open after injection stops, and forms a conductive channel in the coal through which the water and gas can travel back to the well.


What does the hydraulic fracturing fluid contain?

Water and sand make up around 97 to 99 per cent of the hydraulic fracturing fluid and added chemicals make up the rest.


Some commonly used chemical additives, and their uses in hydraulic fracturing fluids, include:


  • guar gum (a food thickening agent) is used to thicken water to create a gel that transports sand through the fracture

  • bactericides, such as sodium hypochlorite (pool chlorine) and sodium hydroxide (used to make soap), are used to prevent bacterial growth that contaminates gas and restricts gas flow

  • ‘breakers’, such as ammonium persulfate (used in hair bleach), that dissolve hydraulic fracturing gels so that they can transmit water and gas

  • surfactants, such as ethanol and the cleaning agent orange oil, are used to increase fluid recovery from the fracture

  • acids and alkalis, such as acetic acid (vinegar) and sodium carbonate (washing soda) to control the acid balance of the hydraulic fracturing fluid.


Some hydraulic fracturing fluids may also contain chemicals that are not commonly associated with domestic use.


How much water is used during the hydraulic fracturing process?

Generally between 0.1 and 10 mega litres (ML) of water may be used to hydraulically fracture a well. A well may be fractured at different depths along the vertical well.


Banned chemicals

The NSW Government banned the use of harmful chemicals known as BTEX in 2011.


‘BTEX’ Is an acronym which stands for benzene, toluene, ethyl benzene, and xyelene, which is a group of chemicals found in petroleum products including lubricants, petrol and plastics.


Benzene is a known carcinogen (cancer causing). Toluene, ethylbenzene and xylenes are not recognized as carcinogenic.[iv]


These chemicals are used in some overseas hydraulic fracturing operations.


Any chemicals used in extraction must be disclosed as part of the application process and are published on the Department of Industry Division of Resource and Energy's website.


Horizontal drilling

More recent techniques such as horizontal drilling are emerging as an alternative to hydraulic fracturing and are increasingly used in NSW.


Horizontal drilling occurs at deep levels underground and reduces the number of visible vertical wells located above ground.


Once the coal seam has been located, the well bore is encased and pressure-cemented at ground level. Smaller holes are drilled horizontally into the coal seam to stimulate pathways through which the gas can flow into the well, eliminating the need for hydraulic fracturing.


What infrastructure can I expect?

For petroleum production, you may expect:   


  • the number of wells will vary depending on the size of your property and the extent of the petroleum operations planned on your property. Wells are typically between 500 metres to 2 km apart[v] 

  • the wells will be connected by underground water and gas pipelines. Some wells may need hydraulic fracturing (or fraccing) as part of petroleum extraction

  • the construction of compressor stations and pipelines to transport gas and produced water for processing and treatment

  • the construction of access tracks or roads so the coal seam gas wells can be accessed for servicing and maintenance.  



[i]       CSIRO Coal seam gas – produced water and site management (April 2012)

[ii]      CSIRO What is Coal Seam Gas? (September 2013)

[iii]     CSIRO What is hydraulic fracturing? (August 2014)

[iv]     Queensland Government BTEX Chemicals (Department of Environment and Heritage Protection, accessed August 2014)

[v]     Australian Petroleum Production and Exploration Association, About CSG: CSG extraction