Paul Howes, coal seam gas and Dutch disease

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Paul Howes, in a demagogic and incoherent article in the January 1 Sydney Sunday Telegraph begins with a description of what some economists call Dutch disease: the collapse of manufacturing export industries under the weight of a currency inflated by a runaway resources boom.

It’s called the Dutch disease because something similar to the current Australian resources boom occurred in The Netherlands between the late 1950s and the late 1970s. The discovery of North Sea oil and gas inflated the Dutch currency, making large parts of the country’s manufacturing industries uncompetitive internationally, contributing to their collapse.

This is the phenomenon Australian politicians and economists refer to when they talk about Australia having a two-speed economy, or as Wayne Swan tends to say, a patchwork economy.

Howes, national secretary of the Australian Workers Union, starts his article discussing the two-speed economy, pointing out how the minerals boom in some states is distorting the whole national economy, says this is bad, and then switches course and says the boom must be made to work for everyone, and the only way to do that is to let it rip everywhere — and hang the consequences for manufacturing.

From discussing the decline of manufacturing, Howes backflips to bewailing the fact that NSW is missing out on the boom, and then says the only hope of retrieving the situation is coal-seam gas, because the state “doesn’t have huge reserves of iron ore, uranium and coal” (actually, it has a great deal of coal, and it’s fortunate not to have uranium in view of that industry’s disastrous environmental record in the Northern Territory). Dutch disease, or the two-speed economy, is suddenly not a bad thing, but should be extended everywhere.

Howes then accuses opponents of coal-seam gas of spreading illogical fear and denounces farmers who oppose their land being taken over by mining companies, and he particularly castigates the Greens for supporting the farmers.

There are, in fact, extremely well-founded and well-documented fears about coal-seam gas. In his book Dirty Money (Random House Australia, 2011), journalist Matthew Benns cites the example of the Lloyd family, who run a large beef property near Chinchilla, in Queensland.

This family accepted a gas miner’s assurances that its operations would be unobtrusive and would not interfere with the property’s operation, but quickly found their land invaded by 17.3km of gravel access road and 15km of pipeline besides 165 gas wells on the property or close by. On top of that, a steady stream of vehicles uses the roads for inspection and maintenance of the wells and pipe network.

As well, some of the wells leaked, bubbling methane through pools of mud, defying repeated attempts to repair them.

Then it was found that the water bore, on which the property depends, dropped 10 metres very soon after the gas mining started, and had only 5m of water left. Two-thirds of the water had gone, and it was possible none would be left in 2-3 years.

The process of fracturing (fracking) rock and coal to release methane requires huge amounts of water.

The area of Queensland where this occurred is called the Surat Basin, which is part of the Great Artesian Basin. Some of the water in the Great Artesian Basin has probably been underground for two million years, and much of it at least for thousands of years.

Some of the artesian water could come from New Guinea, and much certainly comes from rainfall hundred of kilmetres away, on the eastern coastal ranges of Queensland and parts of NSW. Farmers and graziers must observe strict rules when using artesian water to ensure that their practices are sustainable, but the gas mining companies are exempt from those rules.

A 2010 report for the federal Department of Sustainability, Environment, Water, Population and Communities warned that the miners’ water use could be 22 times more than the companies estimated, and it could be 1000 years before parts of the Surat Basin recovered from the extraction of water required for coal-seam gas mining.

That leaves aside the matter of chemicals used to fracture rock and coal seams to release the methane. Once these chemicals are in the underground waters of the Great Artesian Basin they will be there for thousands of years, and these chemicals will be injected into the ground through 40,000 wells in Queensland alone.

Up to 23 chemicals are used in fracking, including THPS (tetrakis hydroxymethyl phosphonium sulphate), which has been linked to health concerns in North America, where it has been widely used.

BTEX (benzene, toluene, ethylbenzene and xylene) is a combination of chemicals sometimes used in fracking. It has been banned in Queensland because of its toxicity, but BTEX contamination has been detected near Mackay, perhaps because it was used before the ban or perhaps because the fracking process has released a similar combination of chemicals from the coal seams. These chemicals do exist in coal seams, and their release into groundwater is possible.

It is far from irrational to be concerned about these chemicals being injected into the ground, and into groundwater. These are dangerous chemicals.

Moreover, in the world’s driest continent, the most valuable resources by a long way are water and arable land. They must not be sacrificed for the short-term profits of mining companies, which as everyone knows will move on as soon as the easy money has been ripped out of the ground, leaving a mess for someone else to clean up, as they almost invariably do.

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4 Responses to “Paul Howes, coal seam gas and Dutch disease”

  1. Fran Yule Says:

    Excellent article!

  2. Peter Firminger Says:

    Well said!

  3. Skeletor Says:

    LOL @ your scaremongering.

    Firstly, your math is completely egregious. How does half of 10m (5m) become 2/3? That’s 1/2.

    Secondly, you mention Tetrakis(hydroxymethyl)phosphonium sulfate(THPS). Which non-existent health problems do you speak of when “In 1995, the EPA of the United States ratified it with zero toxicity and awarded it with US Green Chemical prize.”?

    You are irrational.

    • Ed Lewis Says:

      No scaremongering. It’s all true.

      You’re mistaken about the mathematics: 10m is two thirds of 15m.

      Secondly, on THPS, it wouldn’t be the first time health authorities have been mistaken about a chemical (remember thalidomide?). It is linked to health concerns in the US.

      I suggest you do a bit of investigation, starting with the Four Corners report here.

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