CSG water - war over liquid goldmine ...

Excerpt from Sunday Mail:

War over liquid goldmine

12 July 2008

A plentiful supply of water is the fodder of sweet dreams for farmers and graziers in Queensland's drought-stricken west.

So news that a neighbour has more than 4 million litres of the liquid gold to share each day seems like an answer to their prayers.

Energy giant Origin recently built a reverse-osmosis treatment plant at its gas field in western Queensland. It desalinates and treats the "waste" water generated from coal seam gas extraction.

The $20 million plant at Spring Gully, about 80km north of Roma, produces enough water to supply a city of 50,000 people and Origin expects the output to more than double in coming years.

It's a lot of water and Origin doesn't know what to do with it. At the moment it's being pumped into a creek.

But in these parched times it's a valuable resource and the energy company recognises this. In a move that's believed to be an Australian first, Origin has called for expressions of interest for the water.

It could drought-proof much of the region's agricultural enterprises and, given that it's a byproduct of the company's activity, some have suggested it be given away.

But Origin has sent a clear message to farmers and graziers in the district: pay up or miss out.

As the gas giant's Australian and New Zealand exploration and production division general manager, Paul Zealand, puts it: "Clearly, we're now in the water business. In today's market, water has a value. I've got water for sale.

"We've taken a leap of faith and built a reverse-osmosis unit for $20 million. We need to be able to offset those costs.

"At the end of the day, we have to make a return for our shareholders. We want to be good neighbours but it can't always be give, give, give."

Mr Zealand said he expected local agriculturalists to compete with submissions from local councils, feedlot operators and coal mine companies for the water supply.

But local farmers say it's easy to pick the poor cousin in the group of bidders, and how much the water is worth is anyone's guess.

Peter Thompson's grain property, Echo Hills, borders Spring Gully and for decades gas companies operating at the site have drilled wells on his land. Although his grazing and cultivation property is freehold land, legislation gives mining companies the rights to the resources underground and access rights to his property to remove them.

Mr Thompson said he, like neighbouring landowners, would like to secure a water supply as a form of compensation.

"We've got 220ha we could irrigate pretty much straight away, without building too much infrastructure," he said.

"It would basically drought-proof us in the sense that we could be guaranteed to produce (crops) each year. This means we could secure bigger contracts with feedlots and companies like Sanitarium."

While he knows farmers and graziers can't compete dollar-for-dollar with big business bidding for the water, Mr Thompson is hopeful.

"Right from Day One I've seen this water coming out with the gas. Even though it was salty, I thought we'd be able to use it one day."

The potential of the water supply from Origin isn't lost on the local council. Origin could supply the region's drinking water, allowing the council to turn off bores pumping from depleted underground aquifers, said Roma Region Mayor Robert Loughnan.

But he said the council "probably wouldn't" make a submission for the water because of the cost of building the required pipelines.

"I'd like to see some of the cockies (graziers) out there benefit from this. You can't put a price on how it could help them."

Expressions of interest will close on Friday.

See - War over Liquid Goldmine.