I strongly believe that the long battle to stop coal seam gas in NSW is one we cannot afford to lose, so the phrase “know thy enemy” caught my attention early on. Google says the dictum comes from the ancient Chinese general Sun Tzu saying “Know thy enemy and know yourself; in a hundred battles, you will never be defeated”.
This yarn is to share some of the research I’ve done on the history of gas and the two major players in the industry in NSW, AGL and Santos. In part it is a history of longstanding connections between the companies as well as with the NSW and federal governments.
To my surprise my readings on the founders of Santos and the background to their great influence in South Australia today left me with admiration and respect for them. More about that later.
Gas – it’s life and times
1840s – Gas was produced from coal in city gasworks
1900s – Conventional gas was found trapped in reservoirs, sometimes with oil, deep underground or below the sea.
2000s – Unconventional gas is extracted from coal seams and shale deposits. It requires many more wells, pipelines and other infrastructure compared to conventional gas and is therefore more harmful for the environment.
The world must phase out fossil fuels in a just and equitable way – moving to leave oil, coal and gas in the ground
June 15 2023 – The United Nations Secretary-General Antonio Guterres
These are my brief research notes on the major players in the gas industry in NSW.
AGL
The Australian Gas Light Company (AGL) was formed in 1837 to light the town of Sydney. Four years later Sydney’s streets were lit up with gas made from Newcastle coal at AGL’s gasworks in Pitt Street.[1]
AGL developed a gas purification plant in 1857 so gas could be used in private residences for lighting, heating and cooking. The company imported and sold gas stoves, and promoted cooking with gas classes. Initially consumers complained that the metres were weighted against them and that the price, compared to London, was too high.
AGL had great influence in Sydney. The Municipal Council of Sydney Electric Lighting Bill was introduced to the legislative assembly in 1891 but was discharged on a number of occasions due to prorogations of parliament, bringing to an end all business remaining before the House until the next session. Finally the bill was passed five years later. Sydney’s electric streetlights were switched on for the first time in 1904, making it the last city in Australia to be electrified.
World Wars prompt oil search subsidies
Petrol rationing was considered by the Australian government near the end of the First World War, but it was delayed and not implemented as rationing would have reduced the number of ships coming to the country, thereby reducing exports.[2] During the Second World War petrol rationing had to be introduced, as vehicle numbers had increased and demand had overtaken petrol storage capacity. Rationing continued until 1950, prompting a search for local crude oil.
In 1957 the Commonwealth Government commenced a scheme to give local and international companies subsidies for geophysical surveys and to drill for oil. All petroleum on or below the ground was deemed to be the property of the Crown. Control of petroleum exploration and development rights was vested in State Governments and mining companies had to first obtain a petroleum tenement, or licence, from them.
Santos
Santos, an acronym for South Australian Northern Territory Oil Search was floated as a public company in 1955 with directors including prominent Adelaide businessman, John Langdon Bonython AO and geologist and Antarctic explorer Sir Douglas Mawson. Santos held petroleum exploration licences over 860,000 square kilometres of South Australia and Queensland.[3]
Mawson had identified uranium in South Australia in 1906. Reginald Sprigg, a geologist and one of Mawson’s students, was secretly exploring for uranium for the South Australian Department of Mines. But Reg was fed up with the politics of his job and resigned from his position and registered a company Geosurveys, the first geological consulting company in Australia. American, French and British mining companies were conducting mineral and oil exploration in South Australia at this time.
Oil search by land and air
Helmut ‘Heli’ Wopfner was recruited by Geosurveys, which was contracted to work for Santos.[4] Heli’s first task was to map the area west and north of Oodnadatta then to explore the region around Cordilla Downs situated in the far northeast corner of South Australia near the Queensland border.
Heli drove over the land, inspecting the rocks and features. He then flew in a Lands Department charter flight conducting the first aerial photographic mapping of the area. Combining observations from the surface and the air, he created the first sketch map of the area showing structural features of the landscape.
Reg Sprigg and Geosurveys geologist, Austrian Rudi Brunnschweiler, were the only ones who accepted Heli’s findings. Heli and Brunnschweiler, both pilots in the German Luftwaffe during World War II, decided to continue their mapping survey by air flying in a little Sokol aircraft made of plywood and fabric. Every time they landed at a homestead, stones pierced the fabric and the holes had to be fixed with adhesive tape. They flew as low as possible, traversing across each structure and taking readings off the altimeter to construct a factual contour map. It took them 136 flying hours, switching pilot about every thirty minutes because of the intense concentration needed to fly low and steady. Plotting measurements from the altimeter, Heli drew up the first contour map of South Australia’s north-eastern corner. This gave Santos a guide to plan a drilling campaign.
Government subsidies
After government subsidies were announced Santos partnered with an American company Delhi–Taylor Oil Corp. They drilled their first petroleum exploration well, Innaminka 1, in 1959 in the Cooper Basin, an older sedimentary basin underlying the Great Artesian Basin.
By 1961 ‘total subsidies paid or undertaken was £3,687,692 for 31 drilling operations and 51 geophysical surveys.’[5] The first Australian commercial oil field was discovered at Moonie in Queensland’s Darling Downs and a pipeline from the oil field to the port of Brisbane was completed in 1964.[6]
Mining companies receiving government subsidies had to report on their operations to the Commonwealth Bureau of Mineral Resources.[7] Companies relied on contracted exploration parties to provide them with information. If an artesian water supply was found instead of oil, it was reported to the Bureau and recorded, and all findings were distributed to the various state authorities.
Santos discovers gas
Delhi-Santos drilled at a number of locations in the north east of South Australia before arriving at Gidgealpa Station on the banks of Cooper Creek.[8] A second well in the Cooper Basin was drilled, and on New Year’s Eve, 1963 condensate and natural gas were discovered. The condensate was not the oil they had hoped to find, but the drill team believed they were getting close.
Santos needed to find more reserves of gas to make building a pipeline to Adelaide economically viable for investors.[9] In 1966 they found a giant conventional gas field in the Cooper Basin, south of their last discovery. Santos established a company town, called Moomba, and the construction of a gas processing facility began in 1968. The following year the first petroleum production licences were issued to Delhi–Santos and a 790 kilometre gas pipeline to Adelaide was completed.
Opening of the Moomba to Adelaide pipeline
On the day of the opening of the new pipeline, the gas was too contaminated with dust and dirt from the pipeline’s construction to allow it to flow into the city system. When the Premier was seen to open the valve, a company employee, hidden under the stage, slowly opened the valve on a gas bottle and a flicker of flame rose up higher and higher into the sky to the crowd and media’s delight. When the cleaner and cheaper gas was eventually allowed to flow into the system, it broke Adelaide’s dependence on gas produced in smelly and dirty gasworks from coal imported from NSW. A 480 MW natural gas fired power station on Torrens Island, 18 kilometres from Adelaide was operational in 1967.[10]
Financing large projects
Up until the 1960s large scale projects in Australia had been financed by governments, and local and international private investors. During the 1960s, mining companies began to negotiate long-term contracts with their customers on the basis of their reserves. They were then able to obtain bank finance on the security of those contracts, for the large scale infrastructure needed to supply the product.
In March 1966 the government allocated $53,100,000 for oil searches in Bass Strait, the Pilliga State Forest in NSW and other areas.
When Roma’s conventional gas was finally proved to be a significant resource, a 440 kilometre gas pipeline was constructed to Brisbane in 1969. The same year Melbourne homes were connected to gas from Bass Strait.
AGL and Santos
Despite exploration, no commercial quantities of gas had been found in NSW. Air pollution in Sydney was highly visible in the 1970s, so the state government introduced policies to reduce car exhaust and industry emissions. As coal fuelled gasworks caused a lot of pollution, AGL looked for other sources of gas for its expanding number of customers in Sydney.
The Premier of Victoria, Sir Henry Bolte was unwilling to let ‘his’ state’s gas go to NSW even though the Bass Strait gas fields were in Commonwealth waters. [11] AGL signed a letter of agreement with the South Australian government and the state’s gas producers, Santos and Delhi Petroleum in 1971 to supply the reserves required.
The Moomba to Sydney gas pipeline was plagued by controversy, including the route over the Blue Mountains, the import of pipes from Japan and a legal challenge to the Pipeline Authority Act. Moomba, known as ‘ten inch or nothing country’, was flooded in 1974, pushing costs higher and delaying its completion to 1976.
Alan Bond’s attempt to takeover Santos
Significant oil deposits were discovered by Santos in the Cooper Basin in 1978. Santos, under the control of its founding Chairman John Bonython and a conservative board, became a target for corporate raiders. Alan Bond’s Bond Corporation bought Burmah Oils’ 37.5 percent shareholding in Santos and AGL bought Total’s 14.3 percent. Bond had grand plans for the company but the South Australian Government stepped in and limited individual shareholdings to fifteen percent. A year after purchase Bond sold 22.5 percent of his shareholding for a $20 million profit. Bond sold a further seven percent in 1980 to News Limited, TNT and Ansett ensuring a ballot for the board was held for the first time. John Bonython retired as chairman of Santos in 1981 and forty three year old Alex Carmichael became chairman as well as managing director.
In 1984 thirty nine year old Norman Adler joined Santos as managing director, the same year the company’s $1.5 billion processing facilities at Port Bonython in South Australia produced LPG (liquid petroleum gas) for export to Japan.
Coal Seam Gas
Santos drilled a test well for coal seam gas in 1996 through the impermeable base layer of the Great Artesian Basin to the Bowen Basin at their Scotia Gas Field, 145 kilometres north east of Roma.[12] Commercial production began in 2002, providing gas to a Queensland Government owned gas fired power station on a fifteen year contract. In 2006 Santos bought the lease for the Fairview field north of Roma then in 2007 bought the lease over the Gunnedah Basin in NSW.
In 2008 Santos announced it would partner with Petronas to build an LNG (liquid natural gas) plant at Gladstone Harbour (GLNG) for exporting gas.
AGL claims to have been “Safely supplying our share of NSW’s gas needs since 2001” from their Camden Gas Project near Sydney but production will cease this year.[13]
Footnote: Both Sir Douglas Mawson and Reg Sprigs became conservationists in their latter years. Reg and Griselda Sprigg built Arkaroola Wildlife Sanctuary, one of Australia’s first Eco-Tourism resorts.
The next Gas Yarn will be about a CSG whistleblower.
Gas Yarns 1 – Roma oil and gas discovery 1900
Sydney Coal Seam Gas Rally
When: Thursday, 14 September ⋅11:30am – 1:00pm
Where: Customs House, 31 Alfred St, near Circular Quay, Sydney
What: March from Customs House to Parliament House
The Gomeroi, NSW Farmers, NSW Country Women’s Association (CWA), Unions NSW and Lock the Gate are organising this rally to show politicians the diverse range of people against coal seam gas and to stop it expanding further in NSW.
Santos’ coal seam gas (CSG) plans for north-west NSW include the Pilliga Narrabri Gas Project, the Hunter Gas Pipeline and the Pilliga Lateral Pipeline. These developments will have a detrimental impact on groundwater, including the Great Artesian Basin, the Pilliga Forest and the prime agricultural land of Liverpool Plains.
Facebook Event
Watch the video
Please ask your friends to join you and share the event on social media. I hope to see you there.
References
[1] https://www.agl.com.au/about-agl/who-we-are/our-company
https://www.agl.com.au/discover/energy/lighting-up-the-streets-of-sydney
https://ewh.ieee.org/r10/nsw/subpages/history/electricity_in_australia.pdf
[2] Lorna Froude, Journal of the Australian War Memorial, Petrol rationing in Australia during the Second World War https://www.awm.gov.au/journal/j36/petrol.asp
[3] Santos https://www.santos.com/about-us/our-story/ The first Directors were Mr John Bonython AO, Major General G. W. Symes, Mr R. F. Bristowe, Sir Henry Simpson Newland and Sir Douglas Mawson.
https://www.energymining.sa.gov.au/industry/energy-resources/further-information/historical-highlights
[4] The Advertiser https://www.adelaidenow.com.au/business/sa-business-journal/austrian-geologist-heli-wopfner-played-a-key-role-in-helping-santos-find-oil-and-gas-in-outback-south-australia/news-story/15d842865ed468f88d201676f730f079
[5] Oil Subsidies for Eight New Projects, The Canberra Times, 6 April 1961
[6] Union Oil Development Ltd was the Australian Subsidiary of Union Oil of California, in association with Kern County Land Co. of California and Australian Oil and Gas Corp, Department of National Development Bureau of Mineral Resources Geology and Geophysics, Notes on Petroleum Exploration in Australia to September 1964 by J. M. Henry https://d28rz98at9flks.cloudfront.net/11413/Rec1964_157.pdf and https://www.pipeliner.com.au/end-of-an-era-the-moonie-to-brisbane-pipeline-shuts-down/
[7] Oil Search Parties Extend Knowledge of Artesian Water Supplies, Western Herald, Bourke, NSW, 22 November 1963
[8] Santos, 60 Year Anniversary, A supplement to Oil and Gas Investor Australia, 2014. https://www.santos.com/wp-content/uploads/2020/02/solid-steps-towards-a-sustainable-future.pdf http://dm.ogiaustralia.com/i/418062-santos-2014, Santos, Who We Are, History, https://www.santos.com/who-we-are/history/
[9] https://www.santos.com/about-us/our-story/
[10] AGL Torrens https://www.agl.com.au/about-agl/how-we-source-energy/thermal-energy/agl-torrens
[11] https://www.pipeliner.com.au/the-moomba-to-sydney-pipeline-1971-to-1976/
[12] MiningLink, Scotia Gas Field, https://www.mininglink.com.au/mine-details/scotia-gas-field
[13] https://www.agl.com.au/about-agl/how-we-source-energy/camden-gas-project