Farmers are pissed off over the ‘natural gas’ rush; the Darling Downs is one of Australia’s most productive farming regions, but it is being overrun with drilling rigs as some of the world’s biggest energy companies try to bank a new resource bonanza – millions of tonnes of methane from coal.

The farmers are now worried that thousands of gas wells are going to damage their ability to grow food. “I think the coal seam gas companies are where we were 100 years ago; come in and rape and pillage, grab what you can and leave,” said Dalby farmer Ian Hayllor. “And we’re not going to let them do that. They’re going to have to be sustainable. If they want to work in our environment, they’ve got to be sustainable. “They can come in, take the gas, but they’re not going to destroy the environment they’re working in. If they can leave it the way they found it, we’ll accept them onto our properties.”

The anger of farmers is mounting as the gas companies begin a push into some of the more productive cropping areas of the Darling Downs. “Mining has always been an activity which directly affected only a small number of landholders at any single time, so there hasn’t often been this kind of uprising before,” said rural consultant George Houen, who represents some of the 200 to 300 farmers who expect to have gas wells or pipelines on their properties. “Now, suddenly, you’ve got this enormous, tremendously increased level of activity and of intruding into properties on a scale never before seen.”

Beneath the Darling Downs is the Great Artesian Basin and seams of Jurassic-age coal that happen to be full of methane.

To release the gas, the coal has to be fractured and the water that is in it pumped to the surface. That water is salty and for the time being it is dumped, by the millions of litres, in large evaporation ponds. And the farmers are worried about where all that salt is going to go. They are also worried that fresh water from their bores will pour into the coal seams, lowering the water level.

Or that chemicals in the coal, when it is fractured, will poison their water or leach into the Great Artesian Basin.

Impact on the Great Artesian Basin makes it one of the great environmental issues of our time; however, gas companies dispute the links between their wells, the water in coal seams and the water held in vast aquifers beneath the Darling Downs. No-one quite knows yet how the aquifers might interact. The Queensland Government is working on a model of this underground water system and wants to use it to make the gas companies produce “groundwater impact reports”. “We understand the concerns that landowners have and we will be open about the impact we’re having if any on their aquifers,” said Matthew Paull, the Queensland director of the the Australian Petroleum Production and Exploration Association, which is representing the gas companies. “And if there is an impact there are laws in place that companies need to make good so that could be drilling them a new bore providing them with another source of water or paying compensation,” he added.

No doubt we can get Obama to read the riot act and turn back the tide of contaminants.

If and when carbon trading arrives, it is likely that natural gas, or methane, will become a more attractive fuel than coal, for generating electricity. University of Queensland, Dr Liam Wagner said ‘you’ll see that, for instance, the government-owned corporations that generate electricity in Queensland, will start to retire some of their older and dirtier power stations because they will become less competitive in the national market’. Even China, which does not import much natural gas at the moment, is gearing up for imports of liquid natural gas (LNG). Australia has half a dozen LNG exporting plants on its books, and the Chinese are building half a dozen LNG receiving plants along its coastline. The questions is: how closely will Australia’s LNG future now be linked to China?

“It’s an interesting question because I think that it’s not just Australia needs China; it’s China needs Australia,” said Adi Karev, the head of global oil and gas for consultant Deloitte and Touche. “If you look at the balancing mix of increasing the amount of gas in their portfolio from 4 per cent to 10 per cent by 2020, to a very large degree that depends on the ability to get into a counter party agreements with stable close proximity predictable supply capable countries and companies; and Australia represents that.”

Most of Australia’s natural gas is being produced from offshore fields, especially the big gas reserves off the West Australian coast. But coal seam gas if big and getting bigger and the farmers protests are getting louder, and more political. “We can see where the green moment was coming from and we’re actually working a lot closer together,” said farmer Ian Hayllor.

And an alliance with the Australian Greens Party is not out of the question. “Who knows?” Mr Hayllor said. “I mean, if they come up with the right policies and are prepared to really back the sustainability of this area, ensure it’s got a future, ensure it’s there for our children, maybe we will start looking at backing the Greens, because at the moment we’re not getting heard too well by the existing parties.”

But then again, allegiances die slow deaths and the National Party talks cow-cockie talk ….

Russian gas supplier Gazprom ships gas via Ukraine to European countries; the Ukraine (last year) paid Gazprom $179.50 per 1,000 cubic meters of gas, less than half of the average price European countries are expected to pay this year. The Ukraine is refusing to pay $600 million which Russia claims is owed plus Russia is also demanding an increase in the price Ukraine pays for its gas. During a similar dispute between Ukraine and Russia in 2006 – which lasted just three days – several West European countries saw their gas supplies drop by 30 percent or more.

As Winter sets in, six countries – Bulgaria, Greece, Macedonia, Romania, Croatia and Turkey – all reported a halt in gas shipments from Russia through Ukraine. Croatia said it was temporarily reducing supplies to industrial customers and Bulgaria said it had enough gas for only “for a few days.”  In a strongly worded statement, the EU complained that that gas had been cut “without prior warning and in clear contradiction with the reassurances given by the highest Russian and Ukrainian authorities to the European Union.”

Up to Monday (Jan 5th), the EU has said that the dispute would not affect end consumers in the coming weeks. The sudden drop over the past day
however, increased the diplomatic pressure to find a solution. Ukraine and Russia are locked in a dispute over pricing and overdue payments, and Russia cut Ukraine off on Jan. 1 but had promised to keep gas moving to Europe.  Ukraine’s state gas company Naftogaz said Russia’s gas giant Gazprom had sharply reduced its shipments to Europe through pipelines crossing Ukraine, triggering the cuts.

With the ‘soviet union’ showing real cracks, the economic advisor to the Ukraine president is reported to have said ‘our Russian partners are playing cat and mouse with us, these actions today can lead to serious problems not only for the Ukrainian but also for the European gas transport systems’.
But Gazprom’s deputy chairman, Alexander Medvedev, blamed Ukraine’s Naftogaz for the reductions, Russia’s state-owned RIA-Novosti wire service reported. Medvedev was quoted as saying in London that Ukraine had shut three out of four transit gas pipelines Tuesday morning, ‘and the situation is getting worse’.  Naftogaz denied it was to blame for the drop in supplies and that it shut down the three pipelines. Naftogaz spokesman Valentyn Zemlyansky said Gazprom itself rerouted gas to just one out of the four, while the other three have no gas.  ‘we did not turn anything off, there is simply no gas there, there is zero, how can we shut anything down if there is physically no gas there’.

Russia had earlier said it was cutting gas to Ukraine by 20 percent, to compensate for what it claimed was diversion of gas by Ukraine. As gas shipments dwindled, there were no reports of face-to-face talks Tuesday between Moscow and Kiev. Countries in the Balkans and Turkey saw supplies through the Ukrainian pipeline system cease Tuesday morning, Bulgaria’s energy ministry said. The Croatian economics ministry reported that gas shipments from Russia via Austria and Slovenia had ceased and said it has introduced temporary measures to reduce gas supplies to industrial consumers to ‘a necessary minimum’; it has also called on citizens to rationally use gas in their homes’.

Romania’s gas transport company Transgaz said Ukraine ceased pumping gas at 3 a.m. (GMT 0100) Tuesday. Turkey’s Energy Minister Hilmi Guler confirmed the cut-off and said the country was trying to compensate with supplies from other sources including another Russian pipeline beneath the Black Sea.  Bulgarian pipeline operator Bulgargaz CEO Dimitar Gogov said his country’s reserves were sufficient to cover needs only ‘for a few days’.

Late Monday, Gazprom said it would cut the amount of gas it ships to Europe through Ukraine by 65.3 million cubic meters, or about 20%, the amount it accuses Ukraine of diverting from its transit pipeline network. Russia supplies Europe with about a quarter of its gas, 80 percent of which is shipped through Ukraine. Kiev denies allegations it is stealing gas, saying it is diverting only the Russian-supplied gas it needs to run its pipelines, including
the compressor stations that pump gas west. Each side says the other is responsible for supplying the gas to run the pipeline network, but there is no way to sort out the conflicting claims. Details of the transit contract are secret.

While Gazprom said it was sure that it will be able to provide Europe with enough gas despite disruption of supply to Ukraine, it may just be hot air as fears of a rapidly developing crisis – now in its sixth day – could result in disruption of supplies for consumers in Europe, where gas is used for heating and electricity generation.

Primary source MARIA DANILOVA – Kiev.

A supply agreement this month between Qatar and China “is a diversion” from Europe and the U.S., “not new production”, Abdullah bin Hamad al-Attiyah told reporters as he arrived in Rome for the International Energy Forum. “We are not in the charity business. Whoever will give me the best price, I will follow him.”

PetroChina Co. and China National Offshore Oil Corp., the nation’s biggest owners of liquefied natural gas terminals, signed accords with Qatar on April 10 to import the fuel as early as 2009. Qatar refused to supply Israel with the gas, known as LNG, during a meeting with Israel’s Foreign Minister Tzipi Livni on April 15 because it doesn’t have sufficient extra supply, Attiyah said. “I met her and I told her we are not capable of selling gas to Israel. We are sold out,” he said.

Qatar, which holds the world’s third-largest gas reserves after Russia and Iran, is producing 31 million tons of LNG a year. Annual output will rise to 77 million tons a year by 2010.