Evaluating the effects of coal seam gas development on farms in the Surat Basin, Queensland

Evaluating the effects of coal seam gas development on
farms in the Surat Basin, Queensland

Previous studies have explored the contentious coexistence of agriculture and coal seam gas (CSG) development, but little research has focused on the implications of the production and profitability of individual farm enterprises and the strategies that could be implemented alongside the financial opportunities arising from coexistence. This thesis aims to address these knowledge gaps by providing insights and indicative scenarios of the potential synergy between farming and CSG operations in the Surat Basin. It is composed of three interdependent studies, which highlight the key features of the overlapping relationship of both sectors in Queensland, Australia.

Study One characterises the biophysical characteristics of the agricultural areas with tenements (leased by gas companies) in the Surat Basin. These areas are classified, through fuzzy logic, according to their current land use (generally as cropping or grazing) and their inherent potential for production intensification. The study identifies these areas based on their productive value. The spatial map (using ArcGIS) is an important tool for landholders to devise management strategies to improve their farm, given the prospect of an additional cash stream from compensation.

Study Two undertakes a case study analysis of some of the typical farming systems currently undergoing CSG development. Data on the spatial extent of CSG infrastructure is combined with long-term simulations of production and cash flow to estimate the possible financial losses incurred from CSG footprint. The results of the study show that both an increase in cost and a reduction in income are less than 10 percent on a farm paddock basis. Increased costs due to decreased machinery efficiency (also affected by the design of well spacing) may constitute a significant impact, which is not considered by gas companies when compensating landholders. These findings highlight important factors for farmers to consider when negotiating agreements with CSG companies.

Lastly, Study Three focuses on the financial opportunity that coexistence between agriculture and CSG presents. This study demonstrates the benefits of the compensation arrangement, for which there is a gap in literature. The results of the study show that the overall financial performance of the farm enterprise improves with the advent of compensation as cash flow becomes steadily positive. The study concludes that the indicative amount of compensation is enough to restore the profitability of a hypothetical farm paddock to its baseline production prior to CSG development, and that farm investment is the most profitable option for both dryland and irrigated farming systems.

This is a novel research, which provides information and documentation of the coexistence of agriculture and CSG development. The thesis serves as an important input for negotiations and contract agreements. It highlights key areas and strategies that can minimisecosts and maximise benefits of coexistence. Further research is recommended on areas of coexistence related to: (a) modelling of other important farming systems within CSG development areas, such as grazing, and (b) valuing intangible impacts.