Santos - Our Activities

Community
1. What is the project timeline and where are we now? How far away are we from production in the area?
  
  Santos has interests in nine Petroleum Exploration Licenses (PELs) in the Gunnedah Basin, and operates six. In 2008, the company began an 18-month exploration program for coal seam gas (CSG). In 2010, a second phase of exploration and appraisal began, and will involve drilling of additional core holes and operation of pilot wells for testing purposes.
  Before coal seam gas could be commercially extracted in the Gunnedah Basin area, several more years of testing, analysis and planning would be required. At the moment, Santos only has NSW Government approval to explore for coal seam gas. No approval has been sought for commercial extraction of gas.
2. Will Santos continue to consult at each stage of the project if it continues?
  
  Santos intends to continue to consult with the community throughout the exploration, appraisal and development phases.
  The ways we currently consult are: community consultation sessions and presentations (twice yearly); attendance at AgQuip (annually); field trips to drill sites (ongoing); presentations to community groups (when requested); a newsletter, website, 1800 numer, email and Gunnedah office (ongoing).
  Santos also participates in the Namoi Catchment Water Study Stakeholder Advisory Group and the Namoi ROC Mining Working Group.
3. What are the commercialisation options?
  
  CSG can be used for a range of domestic and industrial purposes. NSW has very limited gas production and demand for gas in NSW is strong.
4. During a recent investor presentation (Sydney 2008) a Santos representative stated that Santos expected to be able to book CSG resources in the Gunnedah Basin by 2009. If Santos is only exploring in 2009, how it can book resources?
  
  The exploration program, which will finish at the end of 2009, is collecting baseline data on the local environment, including groundwater. Resources are initially booked as contingent resources and not as Proved, Probable and Possible reserves, which require a higher level of geological and commercial confidence.
5. What vehicle movements are associated with CSG exploration and operations?
  
  During the exploration phase, landholders will see daily vehicle movements while drilling rig and support personnel are on site for 2-6 weeks. Once a field reaches production, very few vehicles monitor wells and pipes because operations are monitored remotely using a telemetry system. Occasional vehicle movements are associated with routine operator maintenance.
6. How can we be sure a Banjar-Panji style incident won’t occur in the Gunnedah area?
  
  It is important to remember that while the cause of the Banjar Panji incident in Indonesia has not been determined and remains subject to investigation, the geology of East Java is very different to that of the Gunnedah Basin and the two situations cannot be compared.
  Landowners have drilled hundreds of water bores in the Gunnedah Basin – and coal miners thousands of coal bore holes – all with no incident that relates to a Banjar Panji situation, or any evidence of over pressuring in these wells.
  Santos has drilled over 2,500 wells onshore Australia over the last 40 years without any incidents that have caused any environmental or property damage.
7. There has been talk of a social contract in Santos’ dealings with the community. What does this mean?
  The resources and minerals industries refer to a social license to operate in areas and communities. This is a direct acknowledgement that:
  - Community and stakeholder consultation are essential.
  - Environmental and social performance should be measured and the results made public in Santos’ annual Sustainability Report.
  Santos recognises that identifying the social effects of its operations and seeking to manage these effects is an essential part of doing business in a responsible manner.
8. If the community is violently opposed to the project, will Santos abandon it?
  
  Santos is committed to staying in dialogue with the community and answering questions about our work as they arise. We are confident that the community will agree that gas has an important role to play in the energy future of NSW, Australia and the Asia-Pacific region, and that our work in the Gunnedah Basin is an important part of that.
9. Will Santos make good the damage that large-scale truck movements do to roads, bridges and other infrastructure?
  
  Santos has no intention of inflicting costs on councils and ratepayers, and will plan work to avoid causing damage. In the event that any damage is shown to be Santos' fault, it will be repaired.

Drilling and Fraccing
1. What methods do you use to prevent aquifers leaking one into the other underground? If this is possible – how can you prevent cross-contamination between aquifers?
  
  The hole design used for both coreholes and pilot wells is explained on page 2 of the Exploration Core Hole Drilling & Pilot Testing Factsheet. It ensures that aquifers are isolated behind single or double layers of steel and pressure cement, which prevents cross-contamination.
  This isolation technique is considered oil and gas industry best practice and has been perfected over decades of operations. These processes have prevented cross-contamination between hydrocarbons and aquifers in hydrocarbon wells worldwide.
2. Are the exploration core holes plugged with cement the whole way through?
  
  Yes. The plug-and-abandon process is explained on page 3 of the Exploration Core Hole Drilling & Pilot Testing Factsheet .
3. How will pilot wells be capped if no longer useful or required?
  
  All coreholes are plugged and abandoned as described on page three of the Exploration Core Hole Drilling Factsheet.
  Pilots are shut in (using the valves on the well head) when the pilot test is completed. Current regulations allow Santos one year to decide whether they will continue to use the well or plug and abandon it as described above.
4. We are concerned that cementing off core holes will not work. A solid block of cement will not move with the underground movements, resulting in cross-contamination of aquifers.
  
  The Hunter Mooki fault line is an inactive geological feature that was last active 200-300 million years ago, prior to dinosaurs. Current stress magnitudes are insufficient to cause reactivation or new faulting.
  Cementing of core holes with single and double steel casing does provide a sufficient barrier to enable formations to be isolated, avoiding cross-contamination of aquifers.
5. How many wells do you envisage will be in this area if successful? How far apart will they be?
  
  Because we are in the initial stages of exploration, Santos cannot say how many wells would be built in the Gunnedah region if the project proceeds to production. In other areas, wells are 0.5 to 1.5 kilometres apart.
  The number of wells will depend on the results of exploration programs and suitable technologies. Technology is particularly important, with lateral and pad drilling offering the opportunity to collect the same amount of gas from less well heads.
6. Have you operated at 800 metres?
  
  Some of Santos’ Cooper Basin wells are over 3,500 metres deep.
7. What if you find something toxic as you drill down?
  
  Biodegradable drilling products and water are the only products introduced to the subsurface during the drilling process. There is no reason to believe that any toxins would be intersected by the drilling program. Even if such contaminants were to be found, they would be isolated behind pressure cemented steel casing.
  Drilling sump water is tested for pH, salinity, anions and cations, and total petroleum hydrocarbons and metals (arsenic, beryllium, barium, cadmium, chromium, cobalt, copper, lead, manganese, mercury, nickel, vanadium, zinc).
8. What are the chemical compounds and formulae in the following drilling aids?
  - CR-650: Acrylic acid/acrylamide co-polymer, sodium salt
  - JK 261: Co-polymer or acrylamide and sodium acrylate (>90%)
  - Fracseal: Cellulose (100%)
  These chemicals have been classified using the NOHSE criteria.
9. What percentage of drilling fluid is lost down the core holes?
  
  Based on Santos' drilling operations in the Gunnedah Basin so far, average drilling fluid loss has been approximately 6% of make-up volume.
  The intention is not to lose drilling fluids, as they are the primary means of controlling the core hold. As soon as fluid loss is detected, a loss circulation material (LCM) is fed into the hold with the drilling fluid. LCM is made of cellulose material and looks like sawdust. It prevents fluid loss by blocking the pores in the host rock with cellulose particles. In cases where LCM does not work, the hole is completely sealed with a cement plug which is re-drilled.
10. Will fraccing crack rock strata? How far will it propagate from the well?
  
  Fracture stimulation refers to fracturing coal reservoirs by pumping water into the coal seam at high pressure. Because the coal is weaker than the surrounding rock (basalts, dolerites, siltstones and conglomerates) it fractures more easily. The solid rock surrounding the coal seam is too strong to crack under water pressure.
  In typical fracture stimulation the fractures extend up to 80 metres into the coal seam.
11. How does the fraccing process work?
  
  Santos uses fracture stimulation (fraccing) as part of the completion process. It is used to accelerate the dewatering of the target coal formation, allowing gas to flow earlier. Explosives are not used.
  Before the fraccing campaign, a cemented, steel-ling corehole is drilled to just below the target coal formation.There are two way to get access to the target coal formation sealed behind the steel casing. Santos' preferred technique is to use sand jet cutters (sand and water at high pressure) to perforate the casing. Casing guns perforate the casing by firing molten metal through it.
  The target coal formation is fracced by pumping formation water (taken earlier from the target coal seam), mixed with a vegetable-based polymer and fine beach sand, into the corehole at a low rate but high pressure.
  Fraccing causes fine cracks to appear in the coal. The fraccing fluid carries the fine sand into the cracks, and the sand grains prop the cracks open, allowing water and gas to flow.
  Fraccing is designed to ensure that the target coal formation is completely isolated from the neighbouring rock. This keeps the fraccing fluid in the target coal and leaving neighbouring rock intact.
12. What chemicals are used in fraccing?
  
  The main fraccing chemical used is a sugar-based polymer with some oxidants and enzymes. Santos uses the Lightning Frac Fluid System, manufactured by BJ Service.
  The sugar-based polymer is made from guar gum. Guar gum is made from powdered guar bean mixed with water. It is then mixed with formation water to form fraccing fluid. Oxidants and enzymes are also addeed to act as breakers, forcing the polymers to break down 20-25 minutes after adding. Santos uses BC-6 and GBW-12CD, manufactured by BJ Service. Santos does not use sodium chloride.
  People consume similar polymers, oxidants and enzymes reguarly in food products such as instant coffee and ordinary sugar.
  These fraccing chemicals have been approved by Santos' corporate environmental team and are legally allowed to be used in Australia. They are considered to present low to no risk to people and the environment.
13. What effect does the fraccing process have on residents?
  
  On Santos operations, the fraccing process is not intended to have any impacts on residents. It is completed in one to three days, depending on the number of target coal seams to be fracced.In light of chemical information above, there are no environmental and health impacts are expected.

Environment
1. Will removing gas and water upset the pressure balance and cause subsidence?
  
  The extraction of CSG and water from coal seams does not cause subsidence. The extraction of water and gas does not alter volume of coal and associated rock in the reservoir, therefore there is no subsidence.
2. What environmental management programs will you be implementing during the time that the company is drilling and producing gas, will there be an independent overseer?
  
  Under the EP&A Act, IINSW is required to consider whether or not Santos' proposed activities will affect threatened species, populations, ecological communities and their habitats. To help them do this, Santos must submit a Review of Environmental Factors (REF) identifying risks and explaining how they will be mitigated during work.
  Because we are in the exploration stage, it is too early to develop an Environmental Impact Statement. This will be part of the 3A process if the project proceeds to production.
3. Given increased concerns about a global food shortage, what impact will CSG activity have an agricultural production – the traditional foundation of our region’s economy?
  
  CSG activity has minimal impact on agriculture. Indeed the economic partnership between the CSG producers and farmers may assist in boosting the resources and infrastructure available to the farming community. Coal seam gas extraction is a very different activity to coal mining. With CSG, the infrastructure required and the resulting surface impacts are comparatively small. In other parts of Australia, CSG operations and farming work in partnership for mutual benefit.
4. What pollution is associated with methane production?
  
  Methane is the cleanest hydrocarbon being at least 40% cleaner than coal when used for heating or electricity generation.
5. Will we have pipelines all over our properties? Will you cut down trees?
  
  Coal seam gas (CSG) is extracted from the coal seam using a well which has been drilled from the surface to meet the coal seam. The well carries the gas from the coal seam to the surface, for subsequent collection in buried pipes, before being taken to compression facilities and then transported to customers. The location of the pipe is negotiated with the landholder considering fence lines, roads and existing easements. The impact on vegetation is minimal.
6. How is Santos guaranteeing the safety of endangered species in the exploration area?
  
  Under the Environmental Planning and Assessment Act (NSW) 1979, the Department of Primary Industries (DPI) is required to consider whether or not Santos’ proposed activities will affect threatened species, populations, ecological communities andtheir habitats. To help them do this, Santos must submit a Review of Environmental Factors (REF) identifying risks and explaining how they will be mitigated during work.
  The REF for PEL 452 – which includes the Caroona and Blackville areas – shows the results of a search for records of threatened ecological communities, plants and animals. The NSW Department of Environment and Conservation Atlas of NSW Wildlife On-line database was searched for records of threatened ecological communities, plants and animals within the study area. Matters of conservation significance listed under the Environmental Protection and Biodiversity Conservation Act 1999 (Cwth) that are known or predicted to occur in the study area were determined using the EPBC Protected Matters search tool.
  These searches show that, in the areas proposed for corehole drilling, there are no World Heritage Properties, National Heritage Places or Wetlands of International Significance. The area contains one threatened ecological community, 16 threatened species and 7 migratory species. Work has been planned on previously cleared land and to ensure that no harm
  is caused to them.
7. What environmental bond has Santos put up?
  
  For each PEL, Santos is required to and has lodged substantial financial securities to ensure fulfillment of obligations under the petroleum legislation. The amounts required vary from permit to permit, are set at the minister’s discretion and are enough to cover the costs associated with rehabilitating and restoring sites. As activities in the PEL increase, the government directs the titleholder to lodge additional securities as appropriate to cover operations.
8. Have any environmental bonds been repaid?
  
  The NSW Government retains financial securities until Santos completes relevant activities to the satisfaction of relevant government departments. None have been repaid because no activities have been completed.

Geology
1. How representative is the stratigraphic diagram Santos has presented in its community sessions?
  
  The stratigraphic diagram presented to the community is a representation of the strata present in the Liverpool Plains region. The diagram shows the various geological layers likely to be intersected and how a well penetrating those layers is cased. The target for CSG is deep, typically between 500–1000 metres. This is generally deeper than coal that can be mined and deeper than domestic and irrigation bores.
2. Will Santos intersect faults causing interconnectivity between the aquifers and the coal seams from which incidental water is extracted?
  
  Faults in some circumstances can cause a path for groundwater flow. This will be an issue under close investigation in the groundwater impact study. It would not be economically viable for Santos to drill wells in these areas as continual extraction of water would be required and the cost of managing this water would not be cost-effective for Santos.
3. What is the difference between sandstone reservoirs and coal seam reservoirs?
  
  A reservoir is a rock that is capable of containing hydrocarbons (natural gas or oil). Sandstone is one of the world’s most common reservoir rocks. Oil or gas is contained in the small spaces between the sandstone grains. Gas in sandstone is under enough pressure to naturally flow up a well to the surface.
  Gas reservoirs in coal are different, because the gas is attached to the coal at low pressure. To allow the gas to flow to the surface, the water pressure needs to be reduced. This allows the gas to flow up the well and to the surface.

Land Access
1. Can landholders continue normal operations now that Santos is exploring and appraising in the region?
  
  Landholders should continue normal operations.
2. In how many fields located in prime agricultural land does Santos produce gas?
  
  Santos operates in a number of locations throughout Australia, ranging from remote to agricultural to intensively farmed areas. Santos has decades of experience working with landholders, and approaches every landholder on an individual basis. We engage in open dialogue to understand their particular circumstances and needs. Our focus is on working closely with landholders and community members in a constructive and open manner.
3. Will you sign access agreements drafted by the community?
  
  Santos is willing to consider access agreements drafted by the community. Our existing access agreement documents are reviewed regularly and have been successfully used in many other places within Australia.
4. Will Santos provide guidelines on the range of compensation to be offered, and the situations to which it applies?
  
  Santos' base compensation for a core hole is $5,000. Additional payments may be made for water from surficial catchments. Other work undertaken by Santos may include earthworks, on-farm road maintenance and fencing.
  The final amount and types of compensation paid to owners of land accessed by Santos is determined by private negotiation between landholders and Santos, and is based on Santos' impact on the land in question.
  Individual land access agreements are private commercial agreements. Please note that all land access agreements prepared to date have a confidentiality clause.
5. How is compensation calculated?
  
  Santos' compensation structure was developed with the independent professional advice and is continually refined and tested against current market conditions.
  Compensation payments comply with the legislative obligatino to compensate landholders and include payment for disturbance to land, landholders' time and other consideration. In all cases, efforts are made to work directly with landholders to design works so as to minimise or prevent disturbance to land and normal operations.
  The question of diminution in land value is very difficult to accurately assess with the market evidence available today. For devaluation to occur there must be ongoing negative impacts on the land. Santos does not expect to negatively impact land in the short or long term, and does not anticipate devaluation. Our activities can have positive impacts, such as access to treated water and passive income.
  Santos will meet landholders' reasonable professional legal costs if required to complete an access agreement. If further independent expert advice is required, for instance a valuer, Santos is willing to meet the reasonable professional costs of a single engagement. This is on the condition that the suitability of the expert and the aims and objectives of the engagement are agreed by the parties before commencement.
6. Are sites undergoing rehabilitation still subject to access agreements? Are we able to see the rehabilitation work Santos has undertaken on these sites?
  
  Santos ensure that sites are rehabilitated within two months of the corehole being plugged and abandoned. Sumps are refilled, topsoil is replaced, ground seeded and fencing removed. The recovery of the site is monitored until the landholder and Land Access Representative agree that restoration is satisfactory.
  Santos plans to put photographs of site rehabilitation on this website's photo gallery section (with landholders' permission).
7. What is involved in terms of rehab for a core hole site?
  
  Once work at an exploratory core hole is completed, the hole is filled with cement to the surface, the steel casing is cut off just below surface level and the site is fully rehabilitated. The location of the site is recorded via GPS and a small identification tag is put in place.
8. How will the property be returned?
  
  Property is returned to the landholder, and Santosno longer has access, when the landholder and the land access representative agree that rehabilitation is satisfactory.
9. Who signs off on the restoration?
  
  The landholder and the Santos land access representative sign off on the restoration.
10. What rights do landholders retain and does this operation happen only by agreement?
  
  Landholders forego rights to use the section of land covered by the access agreement while work and rehabilitation are being carried out. They are financially compensated for this.
  To date, Santos has only operated on land by agreement and this is always our preference. The Petroleum (Onshore) Act 1991 allows for land access by arbitration if mutually agreed land access cannot be negotiated.
11. What documents are landholders required to sign and will Santos cover legal costs in reviewing documents?
  
  If the landholder agrees to allow Santos land access, a contract is drawn up by Santos. Santos pays for the landholder to get independent legal advice from a legal practitioner of their choice.
12. Does Santos retain any interest in the land on title?
  
  Property is returned to the landholder, and Santos no longer has access, when the landholder and the land access representative agree that rehabilitation is satisfactory. Santos retains no access or other rights after the land has been handed back.
13. Are access agreements for exploration core holes relevant to further testing activities?
  
  Access agreements to drill core holes relate to a single core hole only. They are valid until the core hole has been completed and the landholder and land access representative agree that rehabilitation is satisfactory. If Santos wished to return to the property for further work, a new land access agreement would have to be negotiated.
14. Who decides where access roads are positioned? How will livestock be protected from speeding personnel?
  
  Santos is committed to working with landholders whenever possible. It is in our interests to ensure that access roads are in mutually agreeable positions.
  If any community member believed that Santos staff were driving unsafely, we would be grateful if they reported the vehicle registration, event and time to 1800 071 278.
15. What structures might be built on landholders' property and what tenure will be required to protect these assets?
  
  If the project proceeds to the pilot phase, structures that may be built include well heads and associated compounds, roads, tracks, telemetric monitoring stations, water handling facilities (above-ground tanks and dams), reverse osmosis facilities and lines for water and gas (above and below ground). If it proceeds to the production phase, compressors and high-pressure lines would also be built.
  Compensation for these facilities in NSW is yet to be calculated.
16. Would the gathering lines meet 1.2-metre cover levels (required for maximum stability and the possibility of putting gas and water pipelines in the same positions)?
  
  At Santos' Queensland operations, gas and water pipes in the gathering system are 110-500 mm, high-density polyethylene (usually called HDPE or poly-pipe). The standard depth of cover for gathering systems is 1000mm, deepening to 1200-1400 millimetre cover at foreign or road crossings. Gas and water lines are laid in the same trench whenever possible.
17. If the project goes to production, will landholders be compensated at a per well per year rate until final restoration?
  
  In eastern Queensland, landholders are paid an annual compensation for any land used by Santos and installations on that land. Payment is made until the land is rehabilitated to its original state.
18. Who is responsible for any diseases or weeds transferred onto the property and how will this be addressed?
  
  Santos' Review of Environmental Factors (REF) specifically deals with ways to ensure that weeds are not spread by our staff, vehicles and equipment. If there was evidence that Santos has brought weeds onto a property, we would rectify the problem.

Regulatory
1. Who are the regulators? How are Santos’ operations monitored?
  
  In NSW, CSG operations are regulated by the Department of Primary Industries (DPI) under the NSW Petroleum Act (1991). This is different to the NSW Mining Act (1992) which covers coal mining. Before drilling an exploratory core hole, Santos must submit a detailed Review of Environmental Factors (REF) to the DPI who review it and if approval is granted then release it publicly.
2. Will Santos be adopting world's best practice in all they do? And, what do you regard as world's best practice? Please provide examples of sites.
  
  World's best practice is referred to by the petroleum industry as best oilfield practice. Best oilfield practice is all those industry conventions that are generally accepted as good and safe in the carrying on of exploration for petroleum, or in operations for the recovery of petroleum. Best oilfield practice applies to all Santos sites.
3. Who will become responsible for those production wells once exploration and gas extraction finishes?
  
  Santos has contractual obligations to remediate coreholes and sites to a state that is considered satisfactory by both the landholder and the regulator.
  In addition, financial securities are lodged and reviewed for adequacy from time to time. The amounts required vary from permit to permit. As activities in the PEL increase, the government directs the titleholder to lodge additional securities as appropriate to cover operations.

Technical
1. What is gas production and how does it differ from gas extraction?
  
  There is no difference. Production and extraction are terms that are used within the oil and gas industry to describe the extraction of hydrocarbons (natural gas or oil) from underground.
2. What are the high level implications of gas extraction?
  
  Coal seam gas (CSG) is extracted from the coal seam using a well which has been drilled from the surface to meet the coal seam. The well carries the gas from the coal seam to the surface for subsequent collection in buried pipelines before being taken to compression facilities and then transported to customers.
  Water is usually removed from the coal seam at the same time. Each well produces a decreasing amount of water over time. The volume and quality of water extracted from coal seams varies and can only be quantified after exploration and appraisal testing.
3. Where is the gas collected and distributed?
  
  Coal seam gas (CSG) is extracted, collected in buried pipelines then taken to compression facilities where the gas is compressed to enable it to be sent via pipeline to customers.
4. Is poly pipe used? Isn’t this too brittle?
  
  Santos has used poly pipe for many years in many places. It is easy to maintain, safe to handle and suitable for CSG which comes to the surface at low pressure.
5. Where will the compressor stations be relocated? How far from the well head?
  
  Compressor stations are only built where a CSG field has been discovered and developed. A compressor station can receive gas from a few to several dozen CSG wells. The location of the compressor station depends on the CSG well locations, surrounding land use, topography and many other factors. Compressor stations are subject to regulatory approval processes.
6. What is the difference between sandstone reservoirs and coal seam reservoirs?
  
  A reservoir is a rock that is capable of containing hydrocarbons (natural gas or oil). Sandstone is one of the world’s most common reservoir rocks. Oil or gas is contained in the small spaces between the sandstone grains. Gas in sandstone is under enough pressure to naturally flow up a well to the surface.
  Gas reservoirs in coal are different, because the gas is attached to the coal at low pressure. To allow the gas to flow to the surface, the water pressure needs to be reduced. This allows the gas to flow up the well and to the surface.
7. There seem to be several names for hydrocarbons such as natural gas, LPG dry and wet gas. What are the differences?
  
  Hydrocarbons are molecules made up of carbon (C) and hydrogen (H). As atoms are added to hydrocarbon molecules, they become heavier. As they become larger and heavier, their form changes from gas to liquid.
  Methane (CH₄) is the smallest and the lightest gas molecule. Ethane (C₂H₆), propane (C₃H₈), butane (C₄H₁₀) and pentane (C₅H₁₂) are progressively heavier molecules.
  Natural gas – mainly methane – is piped into homes and factories for heating and cooking. Liquefied natural gas (LNG) is methane which has been cooled to become a liquid. Ethane is used as a feedstock to make plastics and paint. Propane and butane are gaseous at normal atmospheric conditions but are easily compressed to liquid form – liquefied petroleum gas (LPG). LPG is used extensively as a fuel for vehicles and domestic gas cylinders.
8. Will you produce from core holes?
  
  No. Core holes are abandoned and rehabilitated after work has been completed. They are not used for commercial production.
9. What are the by-products? Hydrogen sulphide? What gets flared?
  
  CSG is predominantly methane with traces of carbon dioxide, nitrogen and ethane. Hydrogen sulphide has not been found in Australian CSG fields. CSG may be flared during the appraisal testing, but during production flaring is rare.
10. What comes to the surface? Hazardous metals or solids?
  
  CSG and CSG water are the only products extracted. The volume and quality of water extracted from coal seams varies and can only be quantified after exploration and appraisal testing.
  CSG water contains mainly sodium chloride, sodium bicarbonate and traces of other compounds. When a field is in production, water samples continue to be routinely gathered and analysed.
  Negligible quantities of heavy metals are present in coal seam water.
11. What will you do if you encounter an uncontrollable well?
  
  All wells are drilled using a design that maximises control. Each well has steel casing cemented in place that is strong enough to handle subsurface pressures. All drilling is protected by a full blow-out prevention (BOP) system as required by the NSW Petroleum Act. The BOP device seals the well in the event of excess pressure, allowing drilling engineers to assess the situation before taking action. It is important to note that the numerous coal and water bores drilled in the Gunnedah Basin have not shown abnormally high pressures.
12. What is the longest seismic line length, and how long does it take?
  
  The longest seismic line in the current seismic survey is approximately 136 kilometres. The seismic crew acquires an average of 10 kilometres of data per day. Thousands of kilometres of seismic data has been collected onshore in NSW. Santos has acquired in excess of 250,000 kilometres of seismic data in Australia.
13. Where has seismic surveying been conducted?
  
  The seismic survey has covered a as far west as Coonabarabran, north to Gunnedah and east towards Quirindi. The locations have been selected to complement other seismic surveys conducted in the area and to minimise the number of core holes drilled.
14. How big is a five-minute graticular block? If Santos applies for a production lease will blocks be joined together or spread across a wide area?
  
  When mapped, a five-minute graticular block is bounded by lines (graticules) that mark five minutes longitude and five minutes latitude. In the Gunnedah region, a graticular block is approximately 9 x 8 kilometres (74 square kilometres, 18,130 acres or 7,300 hectares).
  If the exploration and appraisal phases show that a petroleum exploration licence (PEL) area has a viable resource, the owners of the PEL can apply to the DPI license a maximum area of four graticular blocks (always joined together) to become a production lease.
  The remaining PELarea may be retained for further exploration by the current owner. They may choose to surrender it to the DPI to put out to tender for further exploration.
15. What is the frequency and amplitude of seismic testing?
  
  The surface waves spread outwards cylindrically with typical dominant frequencies and velocities of 5-10Hz and 500-700m/sec.
  The subsurface compressional waves spread outwards spherically with typical dominant frequencies and velocities of 40-60Hz and 2000-3000m/s. Dominant frequencies are between 5 -10 Hz for surface waves and 40-60Hz for reflected waves. Maximum ground displacement is a fraction of a millimetre – approximately 0.1 millemetres from the source, and down to 4 or 5 magnitudes less at the extent of the detector spread from deep targets.

Water
1. What steps will be taken to ensure the water supply and quality is maintained, should the bores that were previously tested be significantly altered following the implementation of CSG drilling?
  Santos' bore testing program allows us to create baseline information about water in the Gunnedah Basin. We do not anticipate any negative impacts on existing bores.
  Santos has committed to performing groundwater impact studies - including risk assessment - for all our CSG exploration, appraisal and development activities. Piezometers are also going to be installed in the region.
  Santos does not anticipate such an event occurring because:
  - During exploration, risks are managed as outlined in the Review of Environmental Factors (REF) document submitted to IINSW.
  - If the project proceeds to production, risks are managed in ways outlined in the 3A application.
  - In addition to contributing to the Namoi Catchment Water Study, Santos will be carrying out its own water groundwater impact study.
  In the highly unlikely event that Santos' operations were to impact the capacity or quality of a useable aquifer, Santos as to adhere to 'make good' requirements.
2. We have heard that Santos is offering to do baseline testing of ground and surface water in our area. Can you explain this offer?
  
  Santos' bore testing program is outlined on page tow of the Incidental Water Management Factsheet.
  Landholders who were offered bore testing but did not take up the offer are still welcome to contact Santos and join the bore testing program.
3. Why is Santos committed to testing bore water within the two-kilometre radius of an exploration site? What is Santos testing for?
  Santos is undertaking a comprehensive groundwater sampling regime - bore testing - in the Gunnedah Basin to ensure that accurate baseline information about groundwater conditions is available. We are using existing privately owned agricultural bores within two kilometres of exploration core holes or pilots to gather baseline data (i.e. water level and quality of groundwater, gas at well-head). Suitable bores will also be selected for ongoing monitoring following drilling.
  Collection of these data will help to:
  - characterise existing groundwater systems
  - identify levels and quality of bore water within the region
  - enable maps and trend plots to be developed
  - identify which areas would benefit from treated water.
  Sampling procedures comply with international and Australian best practice. Analysis is performed by a NATA accredited laboratory.
4. Precisely what elements, ions, metals and organic compounds are you testing for? What is the Limit of Reporting (LOR) of your test results? Are you testing for total presence or merely available?
  
  Total petroleum hydrocarbons, major anions, major cations, nutrients, metals, physicochemical properties.
5. Does Santos test groundwater for radioactivity and the presence of key radioactive series isotopes?
  
  Testing for radioactivity and the presence of key radioactive series isotopes is not undertaken for landholder bores, however, all pilot coal seam gas wells, when drilled, will be tested for α and β activity. Santos has not detected any radioactivity in coal seam gas water to date in our Queensland fields.
6. Is Santos willing to have Caroona Coal Action Group’s water specialists and geologists act as independent testers?
  
  Santos is willing to discuss with the community at large the possibility of having independent monitoring performed by qualified employees of accredited companies.
7. Will water be produced? Can it be given back to the community?
  
  Gunnedah CSG reservoirs contain water and gas, however the amount and quality of water will not be known until pilot testing has been carried out. The volume and quality of water extracted from coal seams varies and can only be quantified after exploration and appraisal testing.
8. How much water will be produced in a success case? What infrastructure is required?
  
  The volume and quality of water extracted from coal seams varies and can only be quantified after pilot testing.
  Once the volume and quality of water is known, the handling method will be decided then infrastructure will be designed.
9. Does Santos have a licence or require a licence to extract water? Does this licence cover the incidental water which will be extracted?
  
  To move water from underground coal seams to the surface, Santos needs approval from the NSW Office of Water.
10. Is there potential for saline water and how will Santos test for salinity?
  
  The volume and quality of water extracted from coal seams varies and can only be quantified after exploration and appraisal testing. Saline water (containing >30 000ppm dissolved salt) is unlikely.
  During exploration, CSG water is being tested by accredited water laboratories to determine salinity and the presence of a variety of elements and compounds. Santos will be building on groundwater data held by the NSW Department of Water and Energy and other government authorities.
11. What does Santos propose to do with the water that is produced during coal seam gas extraction?
  Santos' proposed surface water management systems for associated water are, and will continue to be, designed to:
  - contain all incidental water and prevent escape of salts to any surface water by any route
  - provide water for beneficial uses back to the community with a priority on the supply of water for the irrigation of crops, including leucena, lucerne, grain crops
  - provide water for industrial use.
  In Queensland, Santos will provide assistance packages to farmers to use the treated water resulting from gas extraction operations.
12. What final uses are proposed for the produced water?
  
  Water management options are covered on pages two and three of the Incidental Water Management Factsheet.
13. How big are your holding ponds?
  
  Holding ponds hold up to 250 mega litres. They are typically lined with high density polyethylene, and designed and constructed for use by the landholder after the project is completed, or removed and rehabilitated if the landholder prefers.
14. What will Santos do with the salt that is extracted from incidental water? Does it contain heavy metals and radioactive material?
  
  Pilot testing in the Gunnedah Basin is intended to develop an understanding of the expected volume of water that is in the coal seam and the quality of this water. It is impossible to estimate the expected volume of salt.
  Incidental water contains minimal concentrations of heavy metals. There is no reason to believe that any significant radioactive material would be intersected by the drilling program.
  Testing for radioactivity and the presence of key radioactive series isotopes is not undertaken for landholder bores, however, all pilot coal seam gas wells, when drilled, will be tested for α and β activity. Santos has not detected any radioactivity in coal seam water to date in our Queensland fields.
15. How will Santos dispose of the brine left over from the reverse osmosis process?
  
  For the pilot program, the brine from treatment of the incidental water will be carted via road or train to a treatment facility which is licenced to take the brine.
  Further investigation into brine management, such as providing the salt for soda ash production, will be undertaken if Santos continues operations in the Gunnedah Basin.
16. What are the options for water handling?
  Water handling options depend on the water quality and quantity. They include:
  - reverse osmosis and reuse of treated water. (e.g. for
    irrigation or agriculture)
  - industrial purposes
  - re-injection into subsurface formations.
  It may be necessary to temporarily hold CSG water in lined holding ponds. Santos does not intend to use evaporation ponds.
17. If the water is reinjected, where will it be stored prior to reinjecting?
  
  CSG water which cannot be used by the community may be reinjected into a subsurface formation of the same or greater salinity. The water is either reinjected immediately or temporarily stored in a holding pond. The process of reinjection is controlled by the yet-to-be-released NSW DPI Aquifer Interference Guidelines which protects against potential environmental impacts.
18. Will Santos commit to an independent water study?
  
  Santos is participating in the Namoi Catchment Water Study and has agreed to contribute exploration information on the condition that it is not identifiable in the final report. Santos and Eastern Star Gas have committed $500,000 to the study.
  During the exploration project, Santos has engaged experts to provide advice on the regions’ aquifers and other water issues. These studies will become more detailed as exploration progresses and if the project proceeds to production.
19. Are you going to build another 25 hectare dam like the one on George's Island?
  
  No dam has been built on George’s Island.
20. Given the interconnective nature of the Murray-Darling Basin and the Great Artesian Basin, how can this amount of extraction not result in the depletion of the water table and eventual draining of both these basins?
  
  It would not be possible to mechanically drain the Murray-Darling, Gunnedah and Great Artesian Basins.
21. How is Santos' extraction of water measured or monitored under the cap on water use in the Murray Darling Basin?
  
  The Water Resource Plan relating to groundwater in the Murray Darling Basin is still under development. Santos is working with the NSW Office of Water to understand the potential implications of the plan for our proposed activities.
  Santos is accessing water from coal seams below the alluvial aquifer systems that are used by farmers and measured under the proposed cap. For this reason, we do not expect the water we are extracting to be measured or monitored under the cap on water use in the Murray Darling Basin.
22. There are Santos reports of a farm in Queensland that is using mined water. Could you provide evidence to support this, including stock run, crops grown and harvested?
  
  Santos is running a pilot scheme with a Queensland landholder. In October 2010, they will be given treated water to grow forage crops and lucerne or leucena. Approximately 650 megalitres of treated water will be provided to the landholder over three years for 130 hectares of centre pivot irrigation and 100 hectares of drip irrigation. All crops are designed to improve live weight gain of cattle on the farm.
  At Santos' Fairview operations in Queensland, we are growing 500 hectares of Chinchilla white gums and expect the trees to be at 40 metres by 2034. Santos is also growing leucena plantations at its Fairview field using treated water for irrigation.
  All treated water comes from our new water treatment plants and a desalination plant that will treat about 24 megalitres of coal seam gas water a day. State-of-the-art water and soil monitoring facilities have been installed at locations throughout the plantation, and on local rivers and adjoining properties. Santos is committed to the sustainable management of the plantation within strict guidelines that have been agreed with the regulators.

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