Resources potential

The North Bowen and Galilee are best known for their high quality coal. However, there has been widespread exploration for other resources in the basins. Industry has developed some of these resources, and there may be significant value in investing in further operations (figure 1).

Gas fields are abundant within the basins. A small number of active players have explored the basins extensively. Industry has uncovered significant quantities of gas trapped within coal seams and deeper sandstone. If all the gas estimated to reside in the North Bowen and Galilee was sold today, it would be worth over $100 billion. Current production is limited and explorers are seeking to prove resource economics in their license areas.

Metallurgical and thermal coal have widespread reserves and resources. There is significant coal production in the basins today, including over 60% of Australia’s total metallurgical coal production. Additional investments are in various stages of project development.

Gold sees modest production within the basins, accounting for only 5% of Australia’s total gold production. A planned expansion to a project at Ravenswood will significantly scale-up production. There are several undeveloped gold deposits in the North Bowen and Galilee region. Almost all are at early stages of feasibility assessment.

Critical minerals, such as vanadium, are present in significant quantities, but are not being produced. Reserves and resources are modest compared to the other commodities in the North Bowen and Galilee. Comparatively, there are more extensive critical mineral deposits and projects being developed elsewhere across Australia.

Hydrogen projects in the areas surrounding the basins are in the early development stage. There is significant momentum towards developing these projects, from both industry and the government. However, industrial pathways for clean hydrogen are still emerging.

The North Bowen and Galilee are rich in gas, with an estimated 17,661 petajoules of gas in place. This is enough to supply the entire east coast gas market for around 10 years.

However, current gas production in the region remains low, at approximately 9 petajoules per annum. The Moranbah Gas Project in the North Bowen is the only producing operation. Arrow Energy operates this project to supply Townsville via the North Queensland Gas Pipeline.

In the North Bowen Basin, industry activity to date has focused on identifying gas resources. Exploration activity undertaken by companies like Arrow and Blue Energy have identified significant gas resources. The next step is to translate these resources into estimates of recoverable reserves. Industry activity is more advanced than in the Galilee Basin, where activities are focussed on exploration and knowledge regarding the potential resources is less developed.

While significant gas potential has been identified, there are barriers and uncertainties surrounding the commercial extraction of the gas. Exploration has been relatively widespread throughout the basins, but further appraisal activity is required to better understand the commercial prospects in the region.

The basins have complex geology, trapping the gas underground. Exploration and production areas also overlap and co-exist with mineral projects and land used for agriculture and other purposes. Pipeline infrastructure is insufficient to support development at scale and does not currently connect the basins to major gas demand centres.

These obstacles have presented challenges to commercial scale gas production. As a result gas companies have prioritised investment in other basins already connected to markets. For example, the Surat Basin in southern Queensland.

Addressing the challenges associated with the geology of the North Bowen and Galilee basins

Most activity in the North Bowen and Galilee is focussed on coal seam gas (Figure 2). This is gas trapped within natural fractures of the coal matrix (also known as coal ‘cleats’).

Coal seam gas reservoirs typically consist of expansive coal formations, approximately 300 to 1,200 m deep. Coal seam gas production is widespread across Queensland. The ‘tight coals’ of the North Bowen and Galilee are highly saturated with gas but have low permeability, trapping the gas. To improve access and commerciality, industry must use complex drilling techniques. One option is to drill much longer horizontal wells through the coal seam to free additional gas. Alternatively, fracture stimulation may help to achieve economic gas flows.

In addition to coal seam gas, the Galilee also features traditional gas reservoirs deeper within the basin. Faults in the rock or impermeable shale overlie permeable sandstone, trapping conventional gas in place.

These sandstone reservoirs are deeper and under higher pressure than coal seams. The depth of these reservoirs makes an initial well more expensive to drill, but without the ongoing operational costs associated with fracture stimulation.

Independent experts and industry stakeholders confirm that gas from both basins should be broadly cost competitive in today’s market. However, geological challenges are not the only features of the basins that have pushed industry investment elsewhere.