jp morgan report raises concerns about csg

ONE of the world's biggest merchant banks has raised serious questions about the reliability and safety of the $50 billion coal seam gas industry, citing the potential for large, uncontrolled gas releases.

The National Water Commission has claimed Queensland underground aquifers could be depleted and take centuries to recover because of gas extraction.

Now a report by JP Morgan says the industry has significant water risks, an unknown impact from growth and is a potential risk to public safety.

The industry agreed the report raised important issues but said they were addressed in the 1500 conditions imposed on the CSG projects.

The report also warned that the costs involved in developing the projects that will pipe gas from the Surat Basin to export terminals at Gladstone were likely to blow out because of environmental concerns, particularly over water and compensation to farmers.

The detailed report by analyst Garry Sherriff also indicated that it expected the CSG companies would have to pay clean-up costs for salt-affected areas and future legal liabilities to aggrieved landowners.

It cited six key water concerns caused by the industry, including a reduction in the water supply to towns and landowners, reduced quality, gas migration to water bores and the safe storage of salt.

It also warned that the State Government had shown its hand in its overwhelming action against Cougar Energy, an underground coal gasification plant near Kingaroy, which has been shut down for months over a chemical scare despite tests giving it the all clear.

Although Mr Sherriff said well built gas wells could prevent gas moving into water bores, he added there was a potential that "the build-up of gas in water bores can result in large uncontrolled releases of gas, which may pose a risk to public health and safety".