The company advised Queensland state government authorities and landholders Monday that its monitoring tests had detected minute traces of benzene in three of 60 fluid samples taken from wells in the northern Bowen Basin in central Queensland. The preliminary results relate to two wells in the area of Arrow's Moranbah gas project and one well in an adjoining exploration tenement.
Arrow, which was acquired by global majors Shell and PetroChina earlier this year, is developing its Queensland coalseam gas resources mainly to supply a proposed LNG plant on Curtis Island in the port city of Gladstone. The partners are targeting a final investment decision on a two-train plant
which would produce 6 million-7 million mt/year of LNG in 2012, with production startup expected after 2015.
"Water from these wells is managed in accordance with regulations governing coalseam water and is contained in lined, fenced ponds for treatment or removal," Arrow said in a statement. "There are no registered water bores within 5 km [3.1 miles] of the three wells, and coalseam water is not used for feedstock. However as a precaution, Arrow will conduct testing of water from bores closest to the area."
Arrow has not used chemicals containing benzene or other aromatics in its fracture stimulating fluids, the company said.
"Immediate further independent testing will be undertaken to verify the results," Arrow added. "Separately, more research will be conducted to determine if the benzene is naturally occurring, or introduced by another means." The company noted that benzene, toluene, ethylbenzene and xylene can be present in oil-based lubricants, diesel and gasoline.
The findings in Arrow's wells follow the discovery last month of traces of BTEX in fluid samples from eight Queensland coalseam gas wells drilled by Australia Pacific LNG. APLNG, a 50:50 joint venture between Australia's Origin Energy and US-based ConocoPhillips, subsequently cleared water bores around the wells of any contamination.
Benzene, toluene and xylene are known carcinogens and have become a focus of public attention as the Queensland coalseam gas industry has expanded exponentially. That focus was sharpened following a highly publicized incident in July 2010 when traces of benzene and toluene were detected in a monitoring well and saline water production well near an underground coal gasification
pilot project operated by Cougar Energy at Kingaroy.
The Queensland state government introduced legislation into parliament on October 5 banning the use of the chemicals in coalseam gas fraccing operations. Fraccing involves pumping fluid at high pressure into a coalseam to fracture the seam and allow gas to flow readily into wells.
The Queensland government estimates only 5% of wells drilled in the state since the coalseam gas industry took off in 2000 have been fracced, although this proportion is set to increase as development steps up.
In addition to the Arrow facility, Queensland's massive coalseam gas resources are expected to supply at least three more LNG export plants in Gladstone. Work on one of the plants, an 8.5 million mt/year facility being built by UK-based BG Group on Curtis Island, is already underway, with first
LNG targeted for 2014.
A third plant, planned by a consortium led by Australia's Santos, has been given state and federal government environmental clearances and is expected to be sanctioned in December this year, for startup in 2014. APLNG is also pursuing an LNG project, which was given environmental clearance by the Queensland government earlier today and is expected to go to a final investment decision in 2011.
