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GENERAL PURPOSE STANDING
COMMITTEE No. 5 27 MONDAY 31 OCTOBER 2011

ANNA KALISKA, Quality and Environmental Impact Manager, MidCoast Water, and
ROBERT JAMES LOADSMAN, General Manager, MidCoast Water, sworn and examined:

CHAIR: Before proceeding to questions, would either of you like to make an opening statement?

Mr LOADSMAN: I would like to make an opening statement. MidCoast Water is the water authority responsible for the reticulated water supply and sewerage systems in the Greater Taree, Great Lakes and Gloucester Shire local government areas, and covers a geographical area of over 10,000 square kilometres.

MidCoast Water has a responsibility to deliver high quality, safe drinking water to 35,000 households and over 75,000 people in towns and villages within our area. This responsibility extends to managing water quality at all points of the delivery path from the catchment to the taps of our customers.

MidCoast Water strongly supports this initiative to investigate the environmental, health, economic and social impacts of coal seam gas mining in New South Wales, and recognises the efforts of the Government, mining industry and other stakeholders to work together to introduce a more balanced approach in the management of impacts from this industry's rapid development.

However, we believe that current regulation is not adequate to ensure sustainable development of the coal seam gas industry in New South Wales. Our opinion is based on recent experiences gained during assessment and approval of the major coal seen gas operation in the Gloucester Basin.

This coal seam gas development is located in the Manning River catchment, which is a drinking water catchment. The Manning District Water Supply Scheme draws water from the Manning River downstream of the Gloucester Basin.

We believe the approval process under part 3A of the Environmental Planning and Assessment Act was not robust enough to allow for a fair assessment of the coal seen gas project in the Gloucester Basin and its impacts on the downstream water supply system.

MidCoast Water was not included in the consultation process during the preliminary design stage, which led to the approval of this project.

Representatives from a number of government bodies were invited to the planning focus meeting setting out the requirements of the Director General for the project's environmental assessment in July 2008, but the need to assess the potential impacts on drinking water quality downstream of the proposed wet weather discharge point was not raised.

Our particular concerns with the approval are that: MidCoast Water operates a drinking water scheme that draws water from the catchment downstream of the proposed development; the Manning District Water Supply Scheme is a major regional water supply system; and the project approval included provision for a river discharge.

The environmental assessment report prepared for the project approval not only failed to consider impacts on drinking water quality downstream of the proposed discharge, but made no mention of the Manning District Water Supply Scheme at all.

The fact that there is no State legislation dealing specifically with this issue is a real concern for MidCoast Water, as we believe drinking water catchments should be given special protection status when large-scale coal seam gas projects are considered.

We are very concerned that the recently approved project in Gloucester provided for a limited discharge into our water supply catchment and that the decision to approve the project was given without consideration of the impacts of coal seam gas operation on the drinking water supply.

The assessment process has to be based on comprehensive studies and accurate scientific models. More resources have to be committed to progress scientific knowledge in the area of coal seam gas impacts.

Until sufficient scientific knowledge is developed, the precautionary principle has to be used.

Currently it appears that each project is considered separately. There is a need to introduce measures to address cumulative impacts of coal seam gas projects on a regional scale. In particular, the cumulative impact on groundwater and surface water resources resulting from multiple mining and coal seam gas developments should be considered during the approval process.

Environment, community and heritage impact assessments need to be completed before exploration and the process of using an expression licence should incorporate community and local government participation. It is acknowledged that regional strategic plans are proposed to be developed.

Our concern is that Gloucester is included in the Hunter region, which is quite different from our region.

The Gloucester region may be close to the Hunter but it has different water catchments: the Karuah and the Manning. These catchments are much greater remnants of biodiversity than the Hunter. We believe that the Gloucester area is unique and should not be included in the upper Hunter; it should be included in a region that includes Great Lakes and Greater Taree.

These areas are rich in food production, tourism and include the Barrington Tops world heritage area. It is hoped that the information gathered during this inquiry will assist in providing a balanced approach to the coal seam gas debate, and that it has as its core value the protection of our environment and our drinking water catchments.

CHAIR: Ms Kaliska, do you wish to make an opening statement?

Ms KALISKA: No.

The Hon. SCOT MacDONALD: I asked the councillors from Greater Taree, Great Lakes and Gloucester Shire councils about how many water bores are sunk at the moment. Do you have any idea of the number of water bores we are talking about?

Mr LOADSMAN: I will pass that question over to Ms Kaliska. She is more informed on technical detail.

Ms KALISKA: Do you mean in the Manning Valley or in Gloucester Basin?

The Hon. SCOT MacDONALD: I was thinking of the whole area.

Ms KALISKA: In the Manning Valley there will be a lot of bores.

The Hon. SCOT MacDONALD: In the dozens or hundreds?

Ms KALISKA: Yes, I think so.

The Hon. SCOT MacDONALD: I tend to agree with you that the river discharge is an issue. Do you recall what volume of water was being talked about in that environmental impact study?

Ms KALISKA: Two megalitres per day.

The Hon. SCOT MacDONALD: Is MidCoast Water or the Environmental Protection Authority capable of modelling the impact of that? For example, the temperature of the water, the seasonality of the flow, nutrient load or anything else that might be in the water? Is MidCoast Water capable of doing that or do you think that the Environmental Protection Authority should be the gatekeeper?

Ms KALISKA: We have a fair idea about that.

The Hon. SCOT MacDONALD: What is your view on two megalitres per day? I thought the figure would have been higher than that.

Ms KALISKA: That is for stage one.

The Hon. SCOT MacDONALD: That is the 100 bores, is it?

Ms KALISKA: 110 bores. But the water quality is very poor. It is extracted from very deep and it has very high salinity.

The Hon. SCOT MacDONALD: So it is a quality issue for you rather than a quantity issue?

Ms KALISKA: Both. This water is very difficult to treat. It will be a challenge for AGL to work out what to do with that water. It is still to be done. It is not determined exactly what will happen.

The Hon. SCOT MacDONALD: But they did get a licence to do that?

Ms KALISKA: They have conditional approval for the project. Now they have to develop a water management plan. Currently they want to start to run some pilot projects to determine exactly what to do with this water in this condition.

The Hon. SCOT MacDONALD: The produced water?

Ms KALISKA: Yes.

The Hon. JENNIFER GARDINER: Mr Loadsman, I heard you early today on ABC Radio talking about the need for more research and modelling. In the New South Wales Government's submission to this parliamentary inquiry it talks about drinking water catchments and says "... the Sydney Catchment Authority has developed principles to underpin decision making in drinking water catchments". Are you familiar with those principles—there are six of them? If so, do they adequately encapsulate the issues that MidCoast Water is concerned about and how might they be enshrined in regulation or legislation to ensure that they are regarded?

Mr LOADSMAN: I am not specifically aware of those comments you are making, no.

The Hon. JENNIFER GARDINER: I will read the first two principles:
. Protection of water quantity—Mining and coal seam gas activities must not result in a reduction in the quantity of surface and groundwater inflows to storages or loss of water from storages or their catchments; and
. Protection of water quality— coal seam gas activities must not result in a reduction in the quality of surface and groundwater inflows to storages
...
If we provide those to you on notice you might be able to respond as to whether or not you think they are appropriate in your catchment area?

Mr LOADSMAN: Certainly.

The Hon. JENNIFER GARDINER: And how they might be best taken into account in the development of regulatory framework.

Mr LOADSMAN: I will take that on board.

CHAIR: What is the uptake from the river? How much water do you take?

Mr LOADSMAN: We extract 11 megalitres per year, 11 gigalitres per year from the—

CHAIR: That is 11 gigalitres per annum?

Mr LOADSMAN: Yes.

The Hon. JEREMY BUCKINGHAM: I am concerned to hear that you were not consulted prior to the stage one concept approval, particularly with a river discharge. Will you expand on what some of the issues are regarding water quality? The suggestion is that it is not just about salinity but that there are other organic and inorganic compounds that can find their way into the waste water from coal seam gas. Will you expand on what you think some of the risks are to water quality from some of the other contaminants?

Ms KALISKA: What is in the extracted water is what is in the groundwater. So far we only have a preliminary assessment of groundwater for this particular project. Already we can see that there is some heavy metals and there is also some BTEX in the groundwater, but the analysis is not detailed enough to determine exactly what is there. AGL is preparing a more detailed groundwater assessment, but it is not yet ready yet.

The Hon. JEREMY BUCKINGHAM: The Sydney Catchment Authority recently put a submission to the Department of Planning opposing coal seam gas development in their catchment because they could not argue that it would have no impact—which is the first time it has done that. There was an application for test bore holes. Would MidCoast Water consider a submission opposing coal seam gas in drinking water catchments, as the Sydney Catchment Authority has done?

Mr LOADSMAN: At the present time we are not opposed to coal seam gas. Our priority is to put information forward that will assist you people to come up with ways of protecting our water supply—that is our main concern. There is a lot of uncertainty around the whole coal seam gas debate and we are not comfortable that the modelling processes are scientific or have been developed enough to give us enough information to come to that conclusion.

The Hon. PETER PRIMROSE: Following up the question asked by Mr MacDonald, the question of bore water has been put to us on a number of occasions—I am aware you are primarily concerned with reticulated water. It has been put to us that the drilling of water bores may also result in interference with or contamination of aquifers and that has been given almost as an equivalent in the drilling for coal seam gas. Can you comment on that?

Ms KALISKA: There is a difference between drilling for water and drilling for coal seam gas because when you drill for water it is not as deep and you are not dealing with the aquifer, which is 50,000 years old and has a different composition from the normal water you drill to get drinking water supplies. There are no harmful or toxic chemicals in the aquifer you drill for the drinking water supply.

The Hon. PETER PRIMROSE: Essentially would you say there is a qualitative difference between drilling for coal seam gas and drilling water bores?

Ms KALISKA: Yes.

The Hon. GREG DONNELLY: On page 6 of your submission you say:
MidCoast Water strongly believes that the quality of environmental, economic and social impact assessments should be improved including full transparency and disclosure of technical aspects and impacts of coal and gas projects.
I take it your view is that at the moment there is not satisfactory transparency in the process. If that is the case, how can that transparency issue be addressed in looking at this whole issue of coal seam gas exploration and development?

Ms KALISKA: The consultation process should start much earlier before the proposal is submitted and agencies such as MidCoast Water should be involved from the very beginning of the process. All the studies and assessments should be done more thoroughly and the community should be involved much earlier so it can exercise its rights to participation in the decision-making process.

The Hon. GREG DONNELLY: I refer to your third paragraph and the current arrangements whereby projects are considered on an individual basis. If I understand your submission correctly, you consider that is really inadequate for what we are looking at and a more longitudinal cumulative assessment needs to be done.
Would you like to elaborate on that point?

Ms KALISKA: Each project is considered separately and if we have a coal seam gas project in an area where we already have several mines we have to make an assessment on the whole area and not each project and its impact on the area separately because the impacts can be cumulative. It should be modelled on a regional scale not just on each project separately.

The Hon. RICK COLLESS: I refer to the water that is coming out of these coal seam gas wells. In your submission you state that the gas operations may contain toxic or carcinogenic substances and the produced water is also highly saline. Have you seen or do you have access to water test results from those coal seam gas wells that show those figures?

Ms KALISKA: Yes, they were in the environmental impact assessment by AGL and also in the preliminary groundwater assessment. I know what the level of salinity is; it is very high.

The Hon. RICK COLLESS: Can you recall how high?

Ms KALISKA: Yes, it is from 3,000 to 9,500 micro Siemens per centimetre.

The Hon. RICK COLLESS: Which is about one-third of the salinity of sea water?

Ms KALISKA: Yes.

The Hon. RICK COLLESS: Did you also say in answer to Mr MacDonald's question that they were planning to discharge two megalitres per day?

Ms KALISKA: That is the amount of water produced during the day. We do not yet know how they will manage this water. It has not yet been worked out.

The Hon. RICK COLLESS: So that was not to be discharged into the river system?

Ms KALISKA: No. They have to store it and maybe try to develop an irrigation scheme.

The Hon. RICK COLLESS: Do you have access to the water bore logs from within the MidCoast Water area? I presume these would be water bores that were probably put down under the direction of the Department of Water for irrigation and so on.

Ms KALISKA: Yes.

The Hon. RICK COLLESS: Can you give the Committee an idea of the range of depths of those bores and the aquifers they are into?

Ms KALISKA: For drinking water supply there are bores in Tea Gardens which are 20 to 30 metres deep. Irrigation bores can be shallower.

The Hon. RICK COLLESS: What sort of geological strata do those bores penetrate?

Ms KALISKA: Those bores usually are in sand in the lower catchment.
The Hon. RICK COLLESS: So they are surface bores.

Ms KALISKA: Alluvial.

The Hon. RICK COLLESS: Can you give the Committee an idea of the range of quality from those aquifers?

Ms KALISKA: From our drinking water aquifers? The salinity will be about 150 and of course there will be no heavy metals or any BTEX. It is good quality water. It can be a little high in iron, just a bit more than the drinking water guidelines. It could have some aluminium in this area, but that is all.

The Hon. RICK COLLESS: Would you be prepared to make available to the Committee some of the test results from the coal seam gas wells that you have access to?

Ms KALISKA: We have the preliminary groundwater assessment and there is one page with water quality results.

The Hon. RICK COLLESS: Are you able to make that available to the Committee?

Ms KALISKA: Yes.

The Hon. GREG DONNELLY: On page 5 of your submission you say that an effective regulatory arrangement should be established to protect town drinking water supply catchments from water pollution caused by upstream coal seam gas developments. In the next paragraph you say there is no State legislation dealing specifically with this issue. Are you saying that at the moment the legislative and regulatory framework in New South Wales is completely inadequate to deal with this specific issue you are raising about the effect on your water supplies?

Ms KALISKA: In general there is no legislation which gives drinking water catchments special status.
Usually legislation deals with environmental issues but not drinking water issues. That is what we were referring to.

The Hon. GREG DONNELLY: And you submit that something specific should be put in place, given the domain of your responsibility, to ensure proper standards are met?

Mr LOADSMAN: That is correct.

CHAIR: Thank you for appearing. Please provide any data that was requested within 21 days.

(The witnesses withdrew)

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