Fugitive Sector Greenhouse Gas Emissions Projections 2007

FUGITIVE SECTOR
GREENHOUSE GAS EMISSIONS

PROJECTIONS
2007
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February 2008

Executive Summary
Fugitive sector emissions in 2005 represented 5.5 per cent of the Australian total, and at
32.3 Mt CO2-e were 10.9 per cent higher than 1990 emissions of 29.1 Mt CO2-e.
The level of “With Measures” emissions from the Fugitive sector is projected to:
Increase to 36.7 Mt CO2-e per year over the Kyoto period, up 26 per cent over 1990 levels;
Increase to 52.0 Mt CO2-e in 2020, up 79 per cent over 1990 levels.
‘Business as Usual’ (BAU) emissions are also projected to:
Increase to 45.2 Mt CO2-e per year over the Kyoto period, up 55 per cent over 1990 levels;
Increase to 61.8 Mt CO2-e in 2020, up 112 per cent over 1990 levels.
The impact of measures is estimated to be:
8.5 Mt CO2-e per year over the Kyoto period and 9.8 Mt CO2-e in 2020.
Compared with the previous projection, “With Measures” emissions are projected to be
1.7 Mt CO2-e lower per year over the Kyoto period. This result is derived from:
A downward revision to projected emissions from black coal production of
2.0 Mt CO2-e resulting from more widespread use of site-specific emission factors and
improvements to decommissioned mines methodology, offset by reclassification of
underground mines and alignment with the updated NGGI.
A increase in abatement in the Coal sector of 0.3 Mt CO2-e due to the inclusion of new
measures to reduce emissions from underground coal mines.
A increase in Oil and Gas sector emissions of 0.6 Mt CO2-e due to an increase in projected
gas distribution network loss rates, offset by an expected delay in some oil and gas
production.
Emissions in 1990 are now estimated to have been 0.9 Mt CO2-e lower than what was estimated
in the previous projection.
Table ES 1 Greenhouse Gas Emissions from the Fugitive Sector
Total Fugitive sector emissions (Mt CO2-e)

Scenario
Kyoto period
1990 2005 2020
average
BAU Best 29.1 37.6 45.2 61.8
Best 29.1 32.3 36.7 52.0
With
High 29.1 32.3 39.6 60.0
measures
Low 29.1 32.3 35.2 43.9
Figures in table are rounded.
EXECUTIVE i
SUMMARY

Figure ES 1 Projected Fugitive Emissions, 1990-2020
70
BAU
60
WM High
50 WM Best
WM Low
40
30
20
10
0
1990 1995 2000 2005 2010 2015 2020
Year
Source: DCC analysis 2008, Barlow Jonker 2006/Energy Strategies 2006
“With Measures” (WM) Results

The “With Measures” projection is for emissions of 36.7 Mt CO2-e per year over the Kyoto period (26 per
cent above the 1990 level) and 52.0 Mt CO2-e in 2020 (79 per cent above the 1990 level).
In the High scenario, “With Measures” emissions are projected to be 39.6 Mt CO2-e per year over the Kyoto
period (36 per cent above the 1990 level) and 60.0 Mt CO2-e in 2020 (106 per cent above the 1990 level).
In the Low scenario, “With Measures” emissions are projected to be 35.2 Mt CO2-e per year over the Kyoto
“Business as Usual” (BAU) Results

Business as Usual emissions (in the absence of measures) are estimated to increase to:
45.2 Mt CO2-e per year over the Kyoto period, up 55 per cent over 1990 levels;
61.8 Mt CO2-e in 2020, up 112 per cent over 1990 levels.
Growth in emissions from the Fugitive sector is associated with both the level of production and the
greenhouse intensity of the extraction process for each coal mine or gas field.
ii EXECUTIVE
SUMMARY

Coal production in 2010 is projected to be more than two and a half times its 1990 level, which will lead to
an increase in emissions despite the shift in mine population towards less emission-intensive open-cut
production. Similarly, production of natural gas is projected to more than triple over the same period, which
will tend to cancel significant reductions in emissions intensity that are expected to result from reduced
distribution losses and flaring in the industry.
Impact of Measures
The impact of greenhouse response measures is estimated to be 8.5 Mt CO2-e per year over the Kyoto period
and is estimated to increase slightly to 9.8 Mt CO2-e by 2020.
Abatement is achieved through the Greenhouse Challenge Plus programme, the Greenhouse Gas Abatement
Programme (GGAP) and the more recently initiated Australian Coal Mine Methane Reduction Programme
(ACMMRP). These programmes include a number of projects that reduce Fugitive emissions from coal
mining, oil refining and gas production. Abatement of Fugitive emissions from coal mining involves
capturing the waste coal mine methane (WCMM), for flaring, generating electricity on-site or piping for
offsite power-generation.
Measures are estimated to reduce Fugitive emissions in the Coal sector by 6.6 Mt CO2-e in per year over the
Kyoto period and also by 6.3 Mt CO2-e in 2020, while Fugitive emissions in the Oil and Gas sector are
reduced by 1.9 Mt CO2-e per year over the Kyoto period and by 3.5 Mt CO2-e in 2020.
Figure ES 2 Total Abatement from Measures in the Fugitive Sector
12
10
0
1990 1995 2000 2005 2010 2015 2020
Ye a r
T o ta l M e a s u re s C o a l M e a s u re s O il & G a s M e a s u re s
Source: DCC analysis 2008, Barlow Jonker 2006/Energy Strategies 2006 data.
EXECUTIVE iii
SUMMARY

Changes from the 2006 Projection
Compared with the 2006 projection, Fugitive sector emissions are projected to be 1.7 Mt CO2-e lower per
year over the Kyoto period in the “With Measures” scenario. This change includes a decrease in BAU
emissions of 1.8 Mt CO2-e and a decrease in abatement of 0.1 Mt CO2-e.
Coal:
Compared with the 2006 projection, emissions in the Coal sector are projected to be 2.4 Mt CO2-e lower per
emissions of 2.0 Mt CO2-e and an increase in abatement of 0.3 Mt CO2-e.
Decreased BAU emissions in the Coal sector has resulted from:
A reduction of 2.2 Mt CO2-e from more widespread use of specific emission factors for individual
coal mines. The most recent NGGI includes some additional site-specific emission factors for
several major underground mines. Using these specific emission factors in place of the default Class
A and Class B emission factors which were used in previous inventories and the 2006 projection can
make a significant difference to the projection.
o Some “gassy” Class A mines have become even more gassy as a result of using the more
precise specific emission factors, while other have become less “gassy”. Some less “gassy”
Class B mines have also become significantly more “gassy” as a result of the change.
An increase of 0.2 Mt CO2-e in post-mining emissions due to reclassification of some underground

mines that use site-specific emission factors.
o The NGGI includes mines that have recently been reclassified from Class B to Class A.
The site-specific emission factors for these particular mines have not changed, however
their mining emissions levels are now considered to be within the range of Class A
emissions. Class B mines are not considered to contribute to post-mining emissions,
whereas Class A mines do. Hence, reclassification of a mine from Class B to Class A
requires addition of a small post-mining emissions component to mining emissions.
The 2006 projection series has also been aligned with new actual data for 2005, which has resulted
in an emissions increase of 0.4 Mt CO2-e per year over the Kyoto period.
The most recent NGGI also includes an updated methodology for calculating the rate of emissions
from decommissioned mines, in particular it now incorporates the effect of mine flooding. A revised
projection has been undertaken using this new methodology, which has resulted in an emissions
reduction of 0.3 Mt CO2-e per year over the Kyoto period.
iv EXECUTIVE
SUMMARY

Estimated abatement per year over the Kyoto period for the Coal sector of 6.6 Mt CO2-e is 0.3 Mt CO2-e
higher than the 2006 estimate, due to introduction of the Australian Coal Mine Methane Reduction
Programme (ACMMRP), which will further help to reduce emissions from underground coal mines.
The “With Measures” case for 2020 Coal sector emissions is projected to be 4.3 Mt CO2-e (12.8%) below
the 2006 projection, again due to the issues outlined above.
Oil and Gas:
Compared with the 2006 projection, emissions in the Oil and Gas sector are now projected to be
0.6 Mt CO2-e higher per year over the Kyoto period.
Gas distribution network loss rates have been updated to reflect new ESAA (Energy Supply
Association of Australia Ltd) data, resulting in an increase of 0.9 Mt CO2-e per year over the Kyoto
period.
The Gorgon LNG project will now commence in 2013, as opposed to 2011 in the 2006 “With
Measures” projection. This means the Gorgon project is not expected to be operational within the
Kyoto period. The associated emissions reduction of 0.7 Mt CO2-e is offset by a consequent
reduction in geosequestration abatement of 0.5 Mt CO2-e per year over the Kyoto period, resulting in
a net reduction of 0.2 Mt CO2-e.
Uncertainties and Sensitivities

Assessment of High and Low scenarios in the Coal sector is based on different production scenarios and
start-dates across the entire population of operating mines, as well as altering the ratio of estimated Class A
(“gassy”) and Class B (less “gassy”) mines among the future underground projects of unknown class. In the
Oil and Gas sector, high and low scenarios correspond with the variation of assumptions relating to the
timing and scale of specific major projects, and the assessment of the consequent impacts on emissions
projections.
period (21.1 per cent above the 1990 level) and 43.9 Mt CO2-e in 2020 (50.8 per cent above the 1990 level).
EXECUTIVE v
SUMMARY

Contents
Executive Summary i
“With Measures” (WM) Results ii
“Business as Usual” (BAU) Results ii
Impact of Measures iii
Changes from the 2006 Projection iv
Uncertainties and Sensitivities v
Contents 1
1 Introduction 3
1.1 Scope of the 2007 Projection 3
1.2 Key Drivers and Historical Trends 4
1.3 Projections Methodology 6
2 Black Coal Sector Results 11

2.1 Summary of Emission Results 11
2.2 BAU Emissions in the Coal Sector 12
2.3 Measures in the Coal Sector 15
2.4 High and Low Scenarios 16
2.5 Changes from the 2006 Projection 18
3 Oil and Gas Sector Results 19

3.1 Summary of Emission Results 20
3.2 Production and BAU Emissions, Oil and Gas Sector 21
3.3 “With Measures” Results in the Oil and Gas Sector 25
3.4 Uncertainty and Sensitivity Analysis 28
3.5 Changes from the 2006 Projection 29
4 Total Fugitive Sector Results 30

4.1 Overall Projection 30
4.2 Reconciliation with the 2006 Results 31
5 Abbreviations and Explanations 32
6 References 34
CHAPTER 1 1

Figures
Figure ES 1 Projected Fugitive Emissions, 1990-2020 ii
Figure ES 2 Total Abatement from Measures in the Fugitive Sector iii
Figure 1.1 Fugitive Sector Emissions, 2005 5
Figure 1.2 Fugitive Sector Emissions by Sub-sector, 1990 to 2005 7
Figure 2.1 Historical and Projected Fugitive Emissions from Black Coal Production 11
Figure 2.2 Projected Australian Black Coal Production, by class 13
Figure 2.3 Mine Population per Annum, by Class 14
Figure 2.4 Total Coal Sector Fugitive Abatement from Measures 16
Figure 2.5 Black Coal Production from Qld and NSW, High and Low Scenarios 17
Figure 2.6 Black Coal, Compared with 2006 Projection 19
Figure 3.1 Projected Oil and Gas Emissions, 1990-2020 20
Figure 3.2 Projected Natural Gas Production, 1990-2020 22
Figure 3.3 Major Contributors to NGGI Oil & Gas Fugitive Emissions 26
Figure 3.4 Minor Contributors to NGGI Oil & Gas Fugitive Emissions 26
Figure 3.5 Total Oil & Gas Fugitive Abatement from Measures 27
Figure 3.6 Overall Fugitive Measures, 1990-2020 30
Tables
Table ES 1 Greenhouse Gas Emissions from the Fugitive Sector i
Table 1.1 Fugitive Emission Trends, 1990 to 2005 6
Table 2.1 Coal Fugitive Emissions Projections to 2020 12
Table 2.2 Projected Abatement from Coal Sector Measures (Mt CO2-e) 16
Table 3.1 Fugitive Emissions from the Oil and Gas Sector 21
Table 3.2 Projected Natural Gas Production 21
Table 3.3 Projected Abatement, Oil and Gas Sector Measures (Mt CO2-e) 27
2 CHAPTER 1

1 Introduction
This paper presents projections of greenhouse gas emissions from the Australian Fugitive sector and forms
part of the 2007 updating of emissions projections.
The 2007 Fugitive sector emissions projection is a minor update of the 2006 projection. The update reflects
new information from the DCC and other sources relating to coal production and emissions, timing of oil and
gas projects, intensity of gas supply and measures i the of the ncluding the recently announced Australian
Coal Mine Methane Reduction Programme (ACMMRP).
Chapter 1 provides an introduction by explaining the coverage of the Fugitive sector, projection
methodologies used, historical trends and key drivers of Australian Fugitive emissions. Chapter 2 presents
detailed projections for the Coal sector, while Chapter 3 reports results from the Oil and Gas sector. Chapter
4 presents total greenhouse gas emissions projections for the Fugitive sector.
1.1 Scope of the 2007 Projection

The Fugitive energy sector is a sub-sector of the Energy sector, which also includes emissions from
Stationary Energy (SE) and Transport. For projections from Stationary Energy and Transport, see the 2007
Transport emission projections and 2007 Stationary Energy emission projections.
The Fugitive energy sector covers emissions of greenhouse gases that are associated with the production,
processing, transport, storage, transmission and distribution of fossil fuels such as black coal, oil and natural
gas. The Fugitive sector does not include emissions arising from the combustion of fuel for energy purposes,
which is accounted for in the Stationary Energy sector. Nor does the Fugitive energy sector include
emissions from the decomposition of organic waste in landfills, as these emissions are accounted for in the
Waste sector.
The greenhouse gases covered in the Fugitive projections are methane (CH4), carbon dioxide (CO2) and
nitrous oxide (N2O) (see IPCC guidelines). The individual and combined impact of the greenhouse gases are
expressed in terms of CO2-equivalence (CO2-e), where the impact of each gas is converted to CO2-e
according to its Global Warming Potential (GWP).The National Greenhouse Gas Inventory (NGGI) also
includes emissions from decommissioned (“abandoned”) underground mines, using an approach developed
in the 2006 IPCC Review of National Inventory Reporting Guidelines. Emissions from coal mine spoil
heaps, open cut overburden, washery tailings dams and spontaneous combustion of coal heaps are not
estimated in the NGGI. Although these may be significant sources of Fugitive emissions, they are not
estimated due to the lack of an internationally agreed inventory methodologies.
In understanding Fugitive emissions, it is important to distinguish between Coal Seam Methane (CSM) and
Waste Coal Mine Methane (WCMM). WCMM refers to methane released as a by-product of the mining of
CHAPTER 1 3

black coal, roughly proportionate to the mass of coal mined. CSM on the other hand describes methane gas
deliberately extracted from coal seams with the specific objective of using it as a fossil fuel.
WCMM emissions are covered under the Coal sector of Fugitive emissions, while the emissions associated
with CSM extraction and processing are covered under the Oil & Gas Sector. However this distinction is
becoming increasingly difficult, with coal mining-related fugitive methane being increasingly harnessed at
some sites for commercial purposes, including energy generation.
The distinction used in this paper is as follows: if methane is generated primarily as a by-product of coal-
mining then it is WCMM. The capture of such methane is a Fugitive abatement. If that methane is simply
flared, converting it to CO2 (and thus reducing its Global Warming Potential), that flaring is also a Fugitive
abatement.
On the other hand, if methane is extracted from a coal seam primarily for the purpose of being harnessed as a
fossil fuel in its own right, then it is CSM and its capture and combustion are not a Fugitive abatement.
However any activities designed to reduce methane leakage or venting during the CSM extraction process do
constitute Fugitive abatement, under the Fugitive Oil and Gas sector.
Moves to exploit coal mine methane as CSM are expected to increase, as this addresses greenhouse concerns
and may enhance the commercial profitability of a site, although current regulatory regimes are state-based
and differ between Queensland and New South Wales.
From 2006, the same methodology has also incorporated site-specific reporting of production-related
emissions from coal mining companies. This enables site-specific emission behaviour to be incorporated into
Fugitive emissions calculations.
1.2 Key Drivers and Historical Trends

Total Fugitive sector emissions, as reported in the 2005 National Greenhouse Gas Inventory (updated), were
32.3 Mt CO2-e, representing 5.6 per cent of Australia’s net greenhouse gas emissions of 583 Mt CO2-e. In
2005, emissions from the mining and handling of black coal accounted for 67 per cent of Fugitive sector
emissions, while oil and natural gas production, processing and distribution accounted for the remaining 33
per cent of emissions (see Figure 1.1).
The future level of Fugitive emissions will be determined in part by the total production of black coal, oil
and natural gas, but more importantly by the emissions intensity of that production. Emission intensity varies
greatly between particular coal, oil and natural gas deposits of different characteristics, so that the level of
emissions is more affected by whether or not particular deposits with high emission characteristics are
exploited. Underground mining of black coal from Class A (“gassy”) mines accounted for 43 per cent of
coal-related emissions in 2005 (29 per cent of total sector emissions) but only 12 per cent of all black coal
mined. The combination of Class A and Class B (less “gassy”) underground mines produce 37 per cent of all
Fugitive emissions. In the case of natural gas, production from a minority of gas fields that have high gas
reservoir concentrations of CO2 is the predominant source of Fugitive emissions.
4 CHAPTER 1

The key question in estimating the total level of Fugitive emissions is not so much the overall demand for
black coal and natural gas, but the contribution from particularly emissions-intensive mines and gas fields.
Forecasting these contributions also involves issues such as the relative ease of capitalising open-cut coal
mining versus underground sites, and relative scales of output of these different modes of coal mining, or the
viability of exploiting different offshore gas fields with different concentrations of CO2.
Production levels are driven by both domestic and export demand, which are in turn influenced by factors
such as domestic and world economic growth, relative fuel prices and fuel substitutability in the various end-
use markets, as well as energy policy settings in each country. All of these factors have a high degree of
inherent uncertainty, although strong market signals can be discerned. The obvious signals from export
markets are the commodities boom, with extremely strong demand from China for thermal coal and coking
coal for steel production, and the current global oil “shock”, with high prices per barrel crude oil and demand
for alternative fuel supplies to augment oil supply.
Figure 1.1 Fugitive Sector Emissions, 2005
Gas D is tribution 9% Undergro und M ines

(Clas s A and B )
Flaring 8%
P os t-M in ing
O pen Cu t M ines
Underg round Mines
Venting 13% 37% Dec om m is s ioned M ine s
(C las s A and B )
O il
V enting
O il 2%
F laring
D ec om m is s ioned Min es
5% O pen C u t Mines 24%
G as Dis t ribution
P os t-Min ing 2%
Source: 2005 NGGI (updated)
From 1990 to 2005, total black coal production has increased by 104 per cent, from 188 Mt in 1990 to
383 Mt in 2005. However, the proportion of black coal production coming from underground mines has
declined, from 30 per cent in 1990 to 23 per cent in 2005, with a shift away from the earlier dominance of
Class A “gassy” mines in underground production. The contribution from open-cut mining has increased
correspondingly, from 70 per cent in 1990 to 77 per cent in 2005. This has translated into a net increase of
CHAPTER 1 5

coal-related emissions, from 16.1 Mt CO2-e in 1990 to 21.8 Mt CO2-e in 2005, substantially less than the
related increase in black coal production (see Table 1.1 and Figure 1.2).
Oil and gas emissions have fallen by 19 per cent, from 13.0 Mt CO2-e in 1990 to 10.5 Mt CO2-e in 2005,
despite production having increased by 29 per cent over the same period, from 2073 PJ in 1990 to 2673 PJ in
2005 (2005 NGGI (updated)). This reduction in emissions, relative to production levels, is mainly
attributable to significantly reduced leakage from gas distribution systems, including complete re-lining of
older parts of the Sydney gas system in the early 1990s and equivalent section by section upgrades in other
major systems, such as Melbourne and Adelaide.
Table 1.1 Fugitive Emission Trends, 1990 to 2005

Source 1990 2005 Change on 1990 emissions
Mt CO2-e % Total Mt CO2-e % Total Mt CO2-e % Total Sector

Sector Sector
FUGITIVE 29.1 100.0 32.3 100.0 3.2 10.9
Coal1 16.1 55.4 21.8 67.4 5.6 34.8
Oil2 0.5 1.6 0.7 2.3 0.3 53.9
Gas3 4.2 14.5 3.1 9.5 -1.2 -27.7
Venting4 3.7 12.7 4.2 13.0 0.5 13.7
Flaring 4.6 15.7 2.5 7.9 -2.0 -44.6
Source: 2005 NGGI (updated). Columns may not add due to rounding.
1.3 Projections Methodology

The 2007 Fugitive sector emissions projection is a minor update of the 2006 release. New NGGI data for
2005 released by DCC has been included and measures estimates have been revised by the DCC, to include
the new Australian Coal Mine Methane Reduction Programme (ACMMRP). Oil and gas emissions
information was obtained by scanning specialised media and data sources, resulting in updates to gas
distribution network loss rates and gas project timing. Coal sector emissions projections were recalibrated to
the latest NGGI emissions with underlying growth in production forecasts retained from the 2006 projection.
1 Includes decommissioned mines.

2 Includes emissions from oil exploration plus production, transport, refining, storage and distribution of products.
3 Includes emissions from gas production and processing, transmission and distribution.
4 In the Oil & Gas sector, venting of CO and flaring of unusable gas or oil refinery feed-gas are given separate categories to other
2
emission sources.
6 CHAPTER 1

The Fugitive emissions projection presented in this paper has been prepared by the Department of Climate
Change (DCC) and draws heavily on sectoral modelling undertaken by Barlow Jonker Pty Ltd and Energy
Strategies Pty Ltd in 2006. Given the NGGI’s recent movement towards site-specific reporting in the Coal
sector and the dependence of emissions in the Oil and Gas sector on a small set of major projects, the
emphasis of the Fugitives projection is weighed heavily in favour of bottom-up modelling of the type
undertaken by Barlow Jonker Pty Ltd and Energy Strategies Pty Ltd.
Figure 1.2 Fugitive Sector Emissions by Sub-sector, 1990 to 2005
38
25
13
0
19 90 1 993 199 6 199 9 20 02 2 005
O il Y e ar Ve nting
F la rin g G as
Bla ck C oal T o tal F ugitiv e Emis sions
Source: 2005 NGGI (updated)
Coal mining emissions
In 2006 the Australian Greenhouse Office commissioned Barlow Jonker Pty Ltd to present a current
perspective of black coal production in Australia, and project production estimates to 2020 and beyond, with
a view to DCC estimation of mining-related methane emissions. The consequent view of Australia’s current
global position and projected future activity as a coal-producing country is derived from the Barlow Jonker
2006 analysis, and is contingent on assumptions of global economic growth, Australian legislative
assumptions, the maintenance of competitiveness of Australian supply and coal as a fuel source, and absence
of a carbon price.
CHAPTER 1 7

Bottom-up modelling was performed by the DCC using site-specific mine production figures provided by
Barlow Jonker Pty Ltd and NGGI emission factors5, preferably site-specific. Default NGGI emission factors
were assigned to each mine in the absence of site-specific emission factors. The assignment depended on
whether the mine site being examined was underground “gassy” (Class A), underground less “gassy” (Class
B), an open cut mine in Queensland or an open cut mine in New South Wales. Coal from Class A mines also
has post-mining methane emissions associated with it, proportional to the mass of coal.
Future black coal production figures for existing and proposed mines were estimated by Barlow Jonker Pty
Ltd on a site-specific bottom-up basis, in reply to estimated top-down global demand, demand by market and
demand by country. In the case of thermal coal, export demand for Australian coal by other countries was
estimated on a power station-specific basis. The black coal production figures used in 2006 for Coal sector
projections have been retained as the basis for the 2007 projections.
A key issue in forecasting future emissions from coal mines is to estimate the gassiness of future
underground mines that are planned but have not as yet been completed or commissioned. In 2006, the AGO
commissioned Energy Strategies Pty Ltd and the CSIRO to gauge their probable future gassiness (Class A or
B) where possible, based on company feedback and scientific estimation. Where these estimates could be
obtained, this was combined with the Barlow Jonker production data to project these sites’ future emissions.
Where such estimates were impossible, the probable total future populations of Class A and B mines was
obtained by dividing the remaining “underground, unknown class” minesites between these classes
according to existing ratios.
As of 2006, the NGGI now also estimates emissions from decommissioned (“abandoned”) underground
mines, using an approach newly developed in the 2006 IPCC Review of National Inventory Reporting
Guidelines. The decline of emissions following mine closure is modelled using the application of an
emission decay curve (EDC), a negative exponential curve with its initial condition taken from the average
of mine emissions from the last years of the mine’s operation. Emissions from a decommissioned mine are
further attenuated by natural flooding from the water-table, with a fully-flooded mine yielding zero
emissions. A distinction is therefore made between “dry” and “wet” decommissioned mines.
Brown coal mines are assumed to have zero methane emissions, due to the nature of the coal being
excavated.
Oil and gas emissions
The 2007 Oil and gas emissions projection draws heavily on a bottom-up model of the Australian Oil and
Gas sector developed by Energy Strategies Pty Ltd in 2006. The significant changes made for the 2007 Oil
and Gas projection apply to gas distribution network loss rates and project start dates, to reflect the latest
5 For operating black coal mines, production-related methane emissions are estimated by the NGGI through linear formulae
associating methane emission with Run-of-Mine (ROM) black coal production. Saleable production from a mine is always less
than or equal to ROM production. All production figures throughout this report will be the ROM figures, not saleable production,
unless otherwise stipulated.
8 CHAPTER 1

information. Most emissions are either associated with leakage from gas distribution systems or the
extraction of oil and gas (termed upstream oil and gas activities). For each extraction type or source,
emissions vary across a wide range depending on the characteristics of the raw natural gas or crude oil in the
reservoirs from which production is occurring. Hence there is no simple relationship between quantities of
oil or natural gas produced and the associated Fugitive emissions.
The projections methodology uses, as the main source of emissions data for these activities, an annual survey
conducted by the Australian Petroleum Production and Exploration Association (APPEA) amongst its oil
and gas-producing members. The APPEA data are supplemented by data from a variety of other sources for
those emission sources unrelated to oil and gas production, including gas transmission, gas distribution and
oil refinery flaring.
For projection purposes, individual oil and gas fields or basins are identified, particularly those with
characteristics that may result in high levels of emissions, and relationships between emissions and
production at this level are developed. Total demand for natural gas is informed by the Stationary Energy
projections and allocated among the various fields, on the basis of known project commitments and informed
professional judgement for the more remote time periods.
The bottom-up modelling approach has important advantages for determining Fugitive emissions from the
Oil and Gas sector, which are “lumpy” in the sense of being sourced from a relatively small number of large
emitters. These individual projects have a significant impact on the overall sectoral emissions. Hence it is
important to assess individual projects in detail; it is also practical because of their relatively small number.
Bottom-up modelling also makes it possible to assess the sensitivity of sectoral emissions to such factors as:
The inclusion/exclusion of individual projects; and
Site-specific emission factors such as the gassiness of individual coal mines or natural gas fields.
Projected emission curves estimated by Energy Strategies in 2006 for gas projects were adjusted to reflect
new information about timing and gas distribution network losses.
Greenhouse response measures
Historically there have been three separate national greenhouse measures resulting in actions to reduce
Fugitive emissions. These are the Greenhouse Challenge Programme (GCP), the Greenhouse Friendly
Programme (GFP) and the Greenhouse Gas Abatement Programme (GGAP). The Greenhouse Challenge and
Greenhouse Friendly programmes are grouped together under the Greenhouse Challenge Plus programme
(GC+). The 2007 fugitive emissions projection also includes abatement from the Australian Coal Mine
Methane Reduction Programme (ACMMRP) announced this year. Abatement is estimated on a project
basis, drawing on data reported to the DCC. Emissions are projected both with and without the effect of such
projects; the former constitutes a “With Measures” projection, while the latter constitutes a “Business as
Usual” (BAU) projection.
CHAPTER 1 9

Some State government policies and programmes may reduce Fugitive emissions. For example, the
Queensland Cleaner Energy Strategy encourages extra power generation from gas, some of which is
provided by coal seam methane.
Uncertainty and sensitivity analysis
Separate “Best”, “High” and “Low” projections were prepared for emissions from coal mining and from oil
and gas, using plausible ranges of assumptions about key parameters.
There is significant uncertainty surrounding baseline emission factors for coal mining and the CO2
concentration of oil and gas fields. Comprehensive information on these factors is not always publicly
available. Generally, the baseline emission factors used are derived from studies covering a limited number
of coal mines and oil/gas fields and the results extrapolated to other mines and fields with comparable
geographical locations and mining/processing operations.
Units
The principal quantity presented in this report is greenhouse gas emissions per annum, expressed in terms of
megatonne carbon dioxide equivalent (Mt CO2-e).
10 CHAPTER 1

2 Black Coal Sector Results
2.1 Summary of Emission Results

Emissions from coal mining depend partly on overall production, but more importantly on the projected level
of output from the emissions-intensive Class A “gassy” mines. Growth in emissions is also moderated by
the impact of the Greenhouse Challenge programme, the Greenhouse Gas Abatement Programme (GGAP),
and the Australian Coal Mine Methane Reduction Programme (ACMMRP). A summary of the 2007
projections for the Coal sector is presented in Figure 2.1 and Table 2.1.
Figure 2.1 Historical and Projected Fugitive Emissions from Black Coal Production
45
40 BAU
WM High
35
WM Best
30
WM Low
25
20
15
10
5
0
1990 1995 2000 2005 2010 2015 2020
Year
Fugitive emissions in 2005 from the Coal sector were 21.8 Mt CO2-e, which was approximately 35 per cent
above the 1990 emissions of 16.1 Mt CO2-e.
The best estimate “With Measures” projection is for 24.8 Mt CO2-e emissions per year over the Kyoto period
(54 per cent above the 1990 level) and 29.6 Mt CO2-e in 2020 (84 per cent above the 1990 level). In the
absence of measures, the BAU projection is for 31.4 Mt CO2-e emissions per year over the Kyoto period (95
per cent above the 1990 level) and 36.0 Mt CO2-e in 2020 (123 per cent above the 1990 level).
CHAPTER 3 11

It should be noted that recalculation of the 1990 base year in the most recent NGGI resulted in a reduction in
emissions from 17.1 Mt CO2-e to 16.1 Mt CO2-e due to the inclusion of site-specific emission factors and
methodology for decommissioned mine flooding. This has the effect of inflating emissions growth when
compared with last year's projection.
For example, the “With Measures” projection is for 24.8 Mt CO2-e emissions per year over the Kyoto period,
which is 54 per cent above the most recent NGGI 1990 emissions level of 16.1 Mt CO2-e. If we compare
the “With Measures” projection of 24.8 Mt CO2-e emissions per year over the Kyoto period instead to the
previous NGGI 1990 emissions level of 17.1 Mt CO2-e, the increase is 45 per cent.
Table 2.1 Coal Fugitive Emissions Projections to 2020

Coal sector emissions (Mt CO2-e)
Scenario
1990 2005 Kyoto 2020
average
BAU Best 16.1 24.5 31.4 36.0
Best 16.1 21.8 24.8 29.6
With
High 16.1 21.8 26.4 36.5
measures
Low 16.1 21.8 24.3 25.5
2.2 BAU Emissions in the Coal Sector

BAU emissions in the Coal sector are primarily driven by the total level of Australian production of black
coal and the share of that production which comes from emission intensive underground mines.
Australia dominates global supply of metallurgical coal, with a market share approaching 60%. In the case
of global supply of thermal coal, Australia’s share is slightly in excess of 20%. In 2005, Australian
production of black coal totalled 383 Mt, of which approximately 80 per cent was exported and 20 per cent
was consumed domestically. Over 95 per cent of Australian coal production in 2005 arose in NSW and Qld,
with mines in SA, Tasmania and WA contributing in the order of 3% of national production.
From 1990 to 2005, the percentage of total coal production coming from emission intensive Class A mines
has dropped from 18 per cent to 10 per cent, while the percentage coming from Class B (less “gassy”)
underground mines has remained stable at 13 per cent. The remainder was taken up by an increase in less
emissive open-cut mining, which increased its share over the period from 70 per cent in 1990 to 77 per cent
in 2005.
12 CHAPTER 3

This shift in production shares away from emission intensive Class A underground mines to less emission
intensive open cut operations over the historical period, is a major reason why BAU emissions from
Australian coal production has increased only 35 per cent, while total production has more than doubled over
the period, from 188 Mt in 1990 to 383 Mt in 2005. Actions taken to capture and utilise methane from
underground operations have also played a significant role is slowing emissions growth over the historical
period. These reductions are included in the “With Measures” scenario.
Figure 2.2 Projected Australian Black Coal Production, by class
600
500
400
300
200
100
0
1990 1995 2000 2005 2010 2015 2020
Years
Estimated Class A Estimated Class B Open-Cut Total Production
Source: Barlow Jonker 2006, DCC Analysis 2008.
Since 1990, this change in the composition of mines by class (illustrated in Figure 2.3) has been due to a
number of factors:
Older underground operations have closed due to equipment age, manning levels and resource
depletion;
New open-cut operations, being less capital-intensive than their underground counterparts, have
increasingly come on-stream, while older open-cut projects have been delved deeper as equipment
size has increased;
In 1995/96 new longwall operations were commissioned;
In Queensland, new open-cut operations will be developed in the Surat Basin, while in the Bowen
Basin open-cut operations are becoming deeper. Meanwhile in New South Wales, open-cut mineable
resources are declining in the Hunter Valley.
CHAPTER 3 13

Figure 2.3 Mine Population per Annum, by Class
140
120
100
80
60
40
20
0
1990 1995 2000 2005 2010 2015 2020
Year
Class A Mines Class B Mines

Open-Cut Mines Underground, Unknown Class
Total Known Underground Mines Total Mines
Source: DCC analysis 2008, Barlow Jonker 2006 production data and CSIRO estimation of class of future sites 2006.
A key aspect of projecting emissions over the Kyoto period is to estimate emissions from future
underground mines that are as yet formally unclassified by gas content. Analysis conducted for the AGO in
2006 by Energy Strategies Pty Ltd and the CSIRO assigned classifications to most known projects expected
to 2020. The remaining population of underground mine sites of unknown class was then classified based on
the current ratio of Class A and B mines in Queensland and New South Wales.
Figure 2.2 illustrates the projected response to the international commodities boom, with Australian black
coal production forecast to grow strongly to 2010 before moderating in the period between 2010 and 2020.
Total Australian black coal production is forecast to grow at an average annual rate of 5.4 per cent
over the period 2005 to 2010, to reach a level 165 per cent higher than the 1990 production level.
For the period 2010 to 2020, growth in Australian coal production is projected to slow to 0.7 per cent
per annum, reaching 183 per cent of 1990 production levels by 2020. This moderation in forecast
14 CHAPTER 3

production growth in the latter half of the projections period reflects the forecast return to a more
balanced international coal market post 2012, as global supply catches up with strong recent strong
demand from Asia. Prices are projected to stabilise in the period following 2012, although remain
above 2004 levels.
All classes of mines show strong increases in production to 2010 in response to the commodities boom,
however in absolute terms, open-cut mines provide the overwhelming bulk of additional production due to
their dominant share.
Black coal output is forecast to grow 30 per cent between 2005 and 2010, with over 70 per cent of
this growth forecast to come from open cut mines.
The relative contributions of Class A and Class B mines are also demonstrated in Figure 2.2, which displays
the relative decline in contribution from Class A mines since 1990.
2.3 Measures in the Coal Sector

Overall measures are estimated to reduce Fugitive emissions in the Coal sector by 6.6 Mt CO2-e per year
over the Kyoto period and by 6.3 Mt CO2-e in 2020.
The Greenhouse Challenge Plus Programme, Greenhouse Gas Abatement Programme (GGAP) and the
Australian Coal Mine Methane Reduction Programme (ACMMRP) include a number of projects that reduce
Fugitive emissions from coal mining. Abatement of Fugitive emissions from coal mining involves capturing
the waste coal mine methane (WCMM), for flaring, generating electricity on-site or piping for offsite power-
generation.
Flaring of WCMM mostly converts it to CO2. This significantly reduces the global warming potential of
the released gas.
Utilising the WCMM to generate electricity likewise mostly converts it to CO2. WCMM used in this way
also reduces emissions further by replacing other forms of electricity, although these benefits are
included under the Stationary Energy projection.
Queensland and New South Wales have differing regulatory regimes concerning the use of WCMM for
power generation, hence the commercial parameters for WCMM capture differ between states. Furthermore,
WCMM capture is only practicable for underground mines of sufficient gassiness. Figure 2.6 and Table 2.2
shows projected abatement attributable to the various programmes.
CHAPTER 3 15

Figure 2.4 Total Coal Sector Fugitive Abatement from Measures
0
2000 2005 2010 2015 2020
Year
Table 2.2 Projected Abatement from Coal Sector Measures (Mt CO2-e)
Programme 2005 Kyoto period average 2020
GGAP projects 0.1 2.2 2.2

ACMMRP projects 0.0 0.3 0.4
Greenhouse Challenge Plus 2.7 4.1 3.8
Total 2.8 6.6 6.3
Columns may not add due to rounding.
2.4 High and Low Scenarios

In 2006, the AGO commissioned Barlow Jonker to estimate High and Low scenarios for the Coal sector by
gauging variability in production and currently-known plans for each black coal mine site in Australia. The
uncertainty bounds in emissions derived from these scenarios have been retained for the 2007 update of
projections and will be updated along with a full update of Fugitive sector projections in 2008.
Variability is determined by market demand, the mine capacity (projected based on the site’s known capacity
and/or any proposed site projects or enhancements) and cluster capacity, i.e. the overall capacity of the
“cluster” of relevant mines, including the mine site under consideration, around a railway line to a port.
16 CHAPTER 3

Shortfalls in production from a particular mine may be compensated by other mines in its cluster, in response
to demand from a customer at the port, hence cluster capacity often counteracts deficits in an individual
mine’s capacity.
For the purposes of emissions calculations, relevant black coal production is almost entirely confined to
Queensland and New South Wales. Figure 2.5 shows that black coal production from these states is
approaching full capacity, and is expected to remain so until 2020. In addition, possible high scenario
increases in effective production are also limited by port capacity on the Eastern seaboard. The rate at which
coal can be shipped through Australian ports currently imposes a significant constraint on export production
of coal from mine clusters, although this is expected to be relaxed in the longer term as port expansions are
completed.
Figure 2.5 Black Coal Production from Qld and NSW, High and Low Scenarios
550
High Production
530 "Best" Scenario
Low Production
510
490
470
450
430
410
390
370
350
2005 2010 2015 2020
Year
Source: AGO analysis 2007, Barlow Jonker 2006.
For the Low production scenario, plausible delays in projects’ start-up or expansion schedules were inserted
where appropriate, taking into account port capacity expansion plans and rail capacity, with the results for
Queensland and New South Wales also evident in Figure 2.5.
High and Low emission scenarios were calculated by the DCC by combining these production scenarios with
the other major source of emissions uncertainty, namely the methane content of future underground mines of
unknown class, which grows increasingly significant towards 2020. While the “Best” WM projection
assigned classifications based on the current ratio of Class A and B mines in Queensland and New South
CHAPTER 3 17

Wales, the High emission scenario assigns all future mines to Class A, and the corresponding Low scenario
assigns them to Class B. The resulting spread of emissions across scenarios is shown in Figure 2.1.
2.5 Changes from the 2006 Projection

Compared with the 2006 projection, emissions in the Coal sector are projected to be 2.4 Mt CO2-e lower per
emissions of 2.0 Mt CO2-e and an increase in abatement of 0.3 Mt CO2-e .
Decreased BAU emissions in the Coal sector has resulted from:
A reduction of 2.2 Mt CO2-e from a more widespread use of specific emission factors for individual
coal mines. The most recent NGGI includes some additional site-specific emission factors for
several major underground mines. Using these specific emission factors in place of the default Class
A and Class B emission factors which were used in previous inventories and the 2006 projection can
make a significant difference to the projection.
o Some “gassy” Class A mines have become even more gassy as a result of using the more
precise specific emission factors, while other have become less “gassy”. Some less “gassy”
Class B mines have also become significantly more “gassy” as a result of the change.
An increase of 0.2 Mt CO2-e in post-mining emissions due to reclassification of some underground

mines.
o The NGGI includes mines that have recently been reclassified from Class B to Class A. The
site-specific emission factors for these particular mines have not changed, however their
mining emissions levels are now considered to be within the range of Class A emissions.
Class B mines are not considered to contribute to post-mining emissions, whereas Class A
mines do. Hence, reclassification of a mine from Class B to Class A requires addition of a
small post-mining emissions component to mining emissions.
The 2006 projection series has also been aligned with new actual data for 2005, which has resulted
in an emissions increase of 0.4 Mt CO2-e per year over the Kyoto period.
The most recent NGGI also includes an updated methodology for calculating the rate of emissions
from decommissioned mines, in particular it now incorporates the effect of mine flooding. A revised
projection has been undertaken using this new methodology, which has resulted in an emissions
reduction of 0.3 Mt CO2-e per year over the Kyoto period.
Estimated abatement per year over the Kyoto period for the Coal sector of 6.6 Mt CO2-e is 0.3 Mt CO2-e
higher than the 2006 estimate, due to introduction of the Australian Coal Mine Methane Reduction
Programme (ACMMRP), which will further help to reduce emissions from underground coal mines.
18 CHAPTER 3

The “With Measures” case for 2020 Coal sector emissions is projected to be 4.3 Mt CO2-e (12.8%)
below the 2006 projection, again due to the issues outlined above.
Table 2.3 Comparison of Coal Fugitive Emissions Projections 2006-2007

Year
1990 2005 Kyoto period 2020

average
2006 “best” WM (Mt CO2-e) 17.1 25.3 27.1 34.0
% of 1990 baseline 100 148 159 199
2006 BAU (Mt CO2-e) 17.1 28.0 33.4 39.9
% of 1990 baseline 100 164 207 211
2007 “best” WM (Mt CO2-e) 16.1 21.8 24.8 29.6
% of 1990 baseline 100 135 154 184
2007 BAU (Mt CO2-e) 16.1 24.5 31.4 36.0
% of 1990 baseline 100 152 195 223
Figure 2.6 Black Coal, Compared with 2006 Projection
45
40
35
30
25
20
15
10
0
1990 1995 2000 2005 2010 2015 2020
Year
2006 reported WM 2007 WM 2007 NGGI
Source: DCC 2008, Barlow Jonker 2006/Energy Strategies 2006 data.
CHAPTER 3 19

3 Oil and Gas Sector Results
3.1 Summary of Emission Results

Emissions from the Oil and Gas sector depend on production levels of domestic natural gas and export LNG,
the greenhouse gas concentrations in the gas fields involved and technical assumptions regarding the
processing and distribution of products. Growth in emissions is moderated by the impact of abatement
measures through the Greenhouse Challenge Plus programme including the geosequestration of emission
products in future Gorgon LNG production.
A summary of the 2007 projections for the Oil and Gas sector is presented in Figure 3.1 and Table 3.1.
Figure 3.1 Projected Oil and Gas Emissions, 1990-2020
30
BAU
25
WM High
WM Best
20
WM Low
15
10
0
1990 1995 2000 2005 2010 2015 2020
Year
Source: DCC 2008, Energy Strategies 2006.
Fugitive emissions in 2005 from the Oil and Gas sector were 10.5 Mt CO2-e, which was approximately 19
per cent below the 1990 emissions of 13.0 Mt CO2-e.
The best estimate “With Measures” projection is for 12.0 Mt CO2-e emissions per year over the Kyoto period
(8 per cent below the 1990 level) and 22.4 Mt CO2-e in 2020 (72 per cent above the 1990 level). In the
absence of measures, the BAU projection is for 13.8 Mt CO2-e emissions per year over the Kyoto period and
25.8 Mt CO2-e in 2020 (99 per cent above the 1990 level).
20 CHAPTER 3

Table 3.1 Fugitive Emissions from the Oil and Gas Sector
Oil and Gas sector emissions (Mt CO2-e)
Scenario
average
BAU Best 13.0 13.0 13.8 24.8
Best 13.0 10.5 12.0 22.4
With
High 13.0 10.5 13.2 23.5
measures
Low 13.0 10.5 10.9 22.4
Emissions from natural gas projects are site-specific, depending on the CO2 content of the particular gas field
and the technologies in place to reduce emissions during gas processing. Consequently gas-related emissions
fluctuate, depending on field characteristics and the proportion of activity from each field, rather than on
total production.
Projections for oil-related Fugitive emissions are not directly calculated from a production curve, but are
instead projected from existing emissions data, and include flaring from crude oil refining and storage.
3.2 Production and BAU Emissions, Oil and Gas Sector

Oil and Gas Fugitive emissions include emissions from activities relating to the exploration, extraction,
refining, storage, transport and distribution of oil and natural gas. Gas production includes the production
and distribution of natural gas for the domestic market (DM) and the production of export LNG.
Overall natural gas production is projected to increase by 214% over the period 1990 to 2010, that is, to
grow from 797 PJ in 1990 to about 2504 PJ in 2010 in the best estimate scenario. Subsequently growth is
projected to continue from 2010 to 2020, reaching 6024 PJ in 2020 (see Figure 3.2 and Table 3.2). The steep
increases in production in this post-Kyoto period assume Pluto gas project will ramp up after it comes online
in 2011 and the Gorgon and Browse gas projects will come online in 2013.
Table 3.2 Projected Natural Gas Production

average
Gas produced for domestic markets 672 1097 1302 1692
(PJ)
LNG production for international 125 656 1350 4332
markets (PJ)
Natural Gas Production Figures (PJ) 797 1753 2652 6024
% of 1990 baseline 100 220 333 756
Source: DCC 2008, Energy Strategies Pty Ltd 2006.
CHAPTER 3 21

Figure 3.2 Projected Natural Gas Production, 1990-2020
7000
6000
5000
4000 Total Natural

Gas Production
3000 Domestic Gas
Consumption
2000 LNG for Export
1000
0
1990 1995 2000 2005 2010 2015 2020
Year
Natural gas production by sector
Domestic market
Natural gas production for the domestic market (DM) has grown steadily at an approximate rate of 3.3% pa
from 672 PJ in 1990 to 1097 PJ in 2005, and is projected to continue at a similar rate in the best estimate
scenario over the period 2002 to 2020.
For the period to 2020, domestic demand in southern and eastern Australia is assumed to be supplied from
gas fields in the region, including coal seam methane. Other key assumptions are:
Although fields in the Cooper-Eromanga Basin will continue to produce up to 2020, production will fall
over 2006-2008, finally stabilising at about half the pre-2002 production levels;
Known smaller fields with high CO2 content, i.e. Yolla (BassGas), Thylacine/Geographe (Otway Gas)
and Kipper, located respectively in the Bass, Otway and Gippsland Basins, are assumed to produce at
their agreed contract levels in all scenarios;
All other supply, irrespective of the level of demand, is assumed to come from existing and new gas
fields which have levels of CO2 in raw gas low enough not to require stripping and venting to achieve
pipeline quality specifications.
Domestic demand in Western and Northern Australia is assumed to be supplied by local regional production
which also supplies the much larger export LNG market (see below). This is assumed to be supplied from
22 CHAPTER 3

fields where the CO2 content is sufficiently low so as not to require stripping prior to pipeline supply. These
fields include the North West Shelf, various existing smaller onshore and near-offshore fields in WA, Bayu-
Undan and Blacktip.
LNG
By comparison with the domestic market, export LNG production has grown rapidly, from a low base of
about 125 PJ in 1990 to 656 PJ in 2005. It is projected to grow even more rapidly with North West Shelf and
Bayu-Undan developments and surge in production post-2010, with Gorgon, Pluto, Browse and Greater
Sunrise developments contributing to a 2020 estimate of 6024 PJ.
Although emissions in the Joint Petroleum Development Area (JPDA) are to be deemed divided between
East Timor and Australia, it is as yet unclear what proportion of gas processing will occur on the Greater
Sunrise platform(s) and what proportion will occur onshore in Australia. Consequently it is assumed for the
purposes of projections that all emissions related to the Greater Sunrise project will occur onshore and be
ascribed entirely to Australia.
Uncertainty regarding LNG production volumes and the timing of new projects arises because of uncertainty
in the international market for LNG, and uncertainty about the global investment plans and priorities of the
international petroleum majors which are majority shareholders in all of the potential new LNG projects.
For the best estimate scenario of future production, assumptions include:
2004 NWS Trains 1-3, 8.0 Mt LNG (pre-existing)

2005-06 NWS Train 4 phase in, 4.2 Mt LNG
2008-09 NWS Train 5 phase in, 4.2 Mt LNG

2006-08 Bayu-Undan phase-in, 3.2 Mt LNG
2011 Pluto phase-in, 3.0 Mt LNG
2013 Gorgon Train 1, 5.0 Mt LNG

2014-15 Gorgon Train 2, 5.0 Mt LNG
2013 Browse phase-in, 8.0 Mt LNG
2016-17 Greater Sunrise phase in, 5.3 Mt LNG
The major contributors to Fugitive emissions in the Oil and Gas sector are natural gas-related venting of CO2
and venting or flaring of methane, followed by natural gas distribution (see Figure 3.3). As that diagram
shows, the transmission component of natural gas transmission and distribution is by far the lesser
contributor to the emissions from that category, while the Fugitive emissions from oil are not shown, as they
are approximately an order of magnitude less than the main contributors from natural gas (see Figure 3.4).
CO2 venting
Venting of CO2 is the largest source of Fugitive emissions in the Oil and Gas sector with emissions
determined by:
CHAPTER 3 23

The level of production from fields with high CO2 content;
Whether the gas is for the domestic market (DM) or export LNG requiring a lower CO2 content;
Whether or not the removed CO2 is vented or captured and reinjected or otherwise geosequestered.
Methane venting
Some emissions of vented methane occur in association with CO2 venting. Other relatively minor methane
emissions also occur in gas processing. In both cases, technology improvements are expected to continue the
trend in reducing methane emissions in relation to production.
Emissions from this source have declined significantly since 2000, with the largest emission reductions
coming from two specific abatement measures described in Section 3.3 below.
Flaring
Small quantities of hydrocarbons are flared at oil and gas production and processing facilities as a part of
safe process control. Larger quantities are currently flared at a limited number of offshore oil fields in WA
as the most economically viable option. The projections assume that these fields have a relatively short
production life and that the WA Government is unlikely to licence similar flaring entitlements for future
fields of this type. Consequently, significant further reductions in emissions from this source are projected
within the next few years. In addition, the anticipated reduction in Australian crude oil production between
now and 2020 will result in further flaring reductions.
Gas distribution losses
The NGGI and projections methodology assumes that natural gas leakage, resulting in fugitive emissions of
methane, together with small amounts of CO2, is a constant fraction, set at 50% of unaccounted for gas
(UAG).
Oil refinery flaring
Despite limited recent data, oil refinery flaring has shown a downward historic trend reflecting process
improvements in Australia’s oil refineries. Current projections assume that this source of emissions will
continue to trend downwards initially and then stay roughly constant.
Other (minor) emission sources
While this category of emissions covers a number of different sources, the two most important are flaring in
association with oil and gas exploration and leakage from gas transmission pipeline systems.
24 CHAPTER 3

Emissions from oil and gas exploration depend on a number of uncertain factors such as the overall level of
petroleum exploration, the number of successful wells, the flow rates from those wells and the duration of
production testing undertaken. NGGI estimates of emission from this source have risen markedly in the last
few years. It is assumed that this reflects an unusual conjunction of events, and that emissions will fall to
somewhat lower levels over the projection period.
Emissions associated with low levels of leakage and controlled releases of natural gas from the transmission
pipeline system are projected to grow steadily. These emissions are modelled in relation to the projected
domestic demand for natural gas which is assumed to correlate with the length of the transmission network
system – the more direct determinant.
3.3 “With Measures” Results in the Oil and Gas Sector

As a result of measures the best estimate “With Measures” projection is for 12.0 Mt CO2-e emissions per
year over the Kyoto period (8 per cent below the 1990 level) and 22.4 Mt CO2-e in 2020 (72 per cent above
the 1990 level).
Of the contributors to Fugitive emissions discussed under BAU activities, the ones most appropriate for
abatement measures are natural gas-related venting and flaring, and reduced leaks in distribution.
A number of measures implemented under the Greenhouse Challenge Plus programme have reduced
emissions of vented methane:
Under the Greenhouse Challenge Program at Woodside’s North West Shelf plant, some of the methane
mixed with CO2 is separated by flashing from the solvent mixture in plant furnaces.
Under the Greenhouse Friendly Program, previously vented emissions from gas production at the
Yellowbank natural gas facility (Queensland) are flared. The abatement contributes to the credits used by
BP to offset emissions associated with the use of “BP Ultimate” fuel.
CHAPTER 3 25

Figure 3.3 Major Contributors to NGGI Oil & Gas Fugitive Emissions
14,000
Venting
12,000
10,000 Flaring
8,000
Gas Distribution
6,000
Gas
4,000 Transmission &
Distribution
Total Oil &
2,000 Natural Gas
0
1990 1995 2000 2005
Year
Figure 3.4 Minor Contributors to NGGI Oil & Gas Fugitive Emissions
600
Oil Exploration
500
Oil Production
400
Oil Transport
300
Oil Refining &
Storage
200
Gas Production &
Processing
100
Gas Transmission
0
1990 1995 2000 2005
Year
Other measures undertaken by Greenhouse Challenge participant companies have involved reinjecting
methane that would otherwise have been flared at offshore oil production facilities, and reducing the
26 CHAPTER 3

quantities of hydrocarbons flared at gas processing plants and oil refineries, by diverting them to supply
useful energy.
Table 3.3 shows projected abatement attributable to the various programs. The best “With Measures”
estimate scenario includes the Gorgon LNG project proceeding with geosequestration of stripped CO2 and
assumes its gas is sourced in equal proportions from the Gorgon fields and Jansz gas field further offshore.
Overall measures are estimated to reduce Fugitive emissions in the Oil and Gas sector by 1.9 Mt CO2-e per
year over the Kyoto period, increasing to 3.5 Mt CO2-e in 2020 with Gorgon coming online, although the
rest of the Challenge contribution drops due to some projects ending (see Figure 3.5).
Figure 3.5 Total Oil & Gas Fugitive Abatement from Measures
3.5
2.5
1.5
0.5
0
1990 1995 2000 2005 2010 2015 2020
Year
Gorgon Geosequestration Total Oil & Gas Measures
Non-Gorgon Challenge Plus Projects
Table 3.3 Projected Abatement, Oil and Gas Sector Measures (Mt CO2-e)
Programme 2005 Kyoto period 2020

average
Total Abatement 2.5 1.9 3.5
CHAPTER 3 27

3.4 Uncertainty and Sensitivity Analysis
In the Oil and Gas sector, evaluation of uncertainty, and the sensitivity of the projection in varying from Best
“With Measures” values, corresponds to the variation of assumptions relating to the timing and scale of
specific major projects, and assessment of the consequent impacts on emissions projections.
period (2 per cent below the 1990 level) and 23.5 Mt CO2-e in 2020 (81 per cent above the 1990 level).
This corresponds with:
No geosequestration in the Gorgon LNG project;
The start date for Greater Sunrise being brought forward from 2016 to 2013, with all consequent
emissions attributed to Australia;
The Cooper Eromanga venting rate being increased from its current intensity of 12.8 kt/PJ to
18.9 kt/PJ by 2009, while its production is taken to be that of the MMA High demand scenario,
consistent with the Stationary Energy projection.
period (16 per cent below the 1990 level) and 18.4 Mt CO2-e in 2020 (42 per cent above the 1990 level).
This corresponds with:
Commencement of the Pluto project being pushed back from 2010 to 2013;
Commencement of the Browse project being pushed back from 2013 to 2015;
Cooper-Eromanga venting rate falling from its current intensity of 12.8 kt/PJ to 8.7 kt/PJ by 2009,
while its production is taken to be that of the MMA Low demand scenario, consistent with
Stationary Energy projection.
In the case of both High and Low scenarios, the effects of changing the timing, scale or emissions of the
specified projects was calculated by the Australian Greenhouse Office using the framework established by
Energy Strategies in 2006. The resulting time-series of data were then re-scaled in the same way as the
“Best” scenario, to deliver a consistent spread of data.
28 CHAPTER 3

3.5 Changes from the 2006 Projection
Table 3.4 Comparison of Oil & Gas Fugitive Emissions Projections 2006-2007
Year

average
2006 “best” WM (Mt CO2-e) 13.0 10.0 11.3 21.4
% of 1990 baseline 100 77 87 165
2006 BAU (Mt CO2-e) 13.0 12.5 13.7 24.8
% of 1990 baseline 100 96 105 192
2007 “best” WM (Mt CO2-e) 13.0 10.5 12.0 22.4
% of 1990 baseline 100 81 92 172
2007 BAU (Mt CO2-e) 13.0 13.0 13.8 25.8
% of 1990 baseline 100 100 107 199
Compared with the 2006 projection, emissions in the Oil and Gas sector are now projected to be
0.6 Mt CO2-e higher per year over the Kyoto period.
Gas distribution network loss rates have been updated to reflect new ESAA (Energy Supply
Association of Australia Ltd) data, resulting in an increase of 0.9 Mt CO2-e per year over the Kyoto
period.
The Gorgon LNG project will now commence in 2013, as opposed to 2011 in the 2006 “With
Measures” projection. This means the Gorgon project is not expected to be operational within the
Kyoto period. The associated emissions reduction of 0.7 Mt CO2-e is offset by a consequent
reduction in geosequestration abatement of 0.5 Mt CO2-e per year over the Kyoto period, resulting in
a net reduction of 0.2 Mt CO2-e.
CHAPTER 3 29

4 Total Fugitive Sector Results
4.1 Overall Projection

The “With Measures” projection is for emissions of 36.7 Mt CO2-e per year over the Kyoto period and
52.0 Mt CO2-e in 2020.
The “Business as Usual” projection is for emissions of 45.2 Mt CO2-e per year over the Kyoto period and
61.8 Mt CO2-e in 2020.
The impact of greenhouse response measures is estimated to be 8.5 Mt CO2-e per year over the Kyoto period
and is estimated to increase to 9.8 Mt CO2-e by 2020.
Abatement is primarily achieved through the Greenhouse Challenge Plus programme and the Greenhouse
Gas Abatement Programme (GGAP). These programmes include a number of projects that reduce Fugitive
emissions from coal mining, oil refining and gas production. Abatement of Fugitive emissions from coal
mining involves capturing the methane waste coal mine methane (WCMM), for flaring, generating
electricity on-site or piping for offsite power-generation, while abatement from oil and natural gas is
achieved by reducing natural gas-related venting and flaring, and reducing leaks in distribution. From 2013,
Gorgon’s geosequestration project is expected to come online in the “Best” scenario.
Figure 3.6 Overall Fugitive Measures, 1990-2020
12
10
0
1990 1995 2000 2005 2010 2015 2 02 0
Year
T o ta l M e a s u re s
C o a l M e a s u re s
O il & G a s M e a s u re s
G o rg o n G e o s e q u e s tra tio n
N o n -G o rg o n G re e n h o u s e C h a lle n g e P lu s
30 CHAPTER 4

Overall measures are estimated to reduce Fugitive emissions in the Coal sector by 6.6 Mt CO2-e per year
over the Kyoto period and also by 6.3 Mt CO2-e in 2020, while Fugitive emissions in the Oil and Gas sector
are reduced by 1.9 Mt CO2-e per year over the Kyoto period and by 3.5 Mt CO2-e in 2020.
4.2 Reconciliation with the 2006 Results

Table 3.5 below summarises the current projections over the Kyoto period and 2020 and compares them with
the previous projections from 2006. With reference to Tables 2.3 and 3.4, it can be seen that overall Fugitive
emissions currently projected for the Kyoto period are lower for Coal and lower for Oil and Gas sectors, and
higher for both for 2020.
Table 3.5 Comparison of Total Fugitive Emissions Projections 2006-2007

Year
Quantity 1990 2005 Kyoto period 2020
average
2006 “best” WM (Mt CO2-e) 30.0 35.2 38.5 55.4
% of 1990 baseline 103 121 132 190
2006 BAU (Mt CO2-e) 30.0 40.4 47.1 64.8
% of 1990 baseline 103 139 162 190
2007 “best” WM (Mt CO2-e) 29.1 32.3 36.7 52.0
% of 1990 baseline 100 111 126 179
2007 BAU (Mt CO2-e) 29.1 37.6 45.2 61.8
% of 1990 baseline 100 129 155 212
Compared with the previous projection, “With Measures” emissions are projected to be
1.7 Mt CO2-e lower per year over the Kyoto period. This result is derived from:
A downward revision to projected emissions from black coal production of

2.0 Mt CO2-e resulting from more widespread use of site-specific emission factors and
improvements to decommissioned mines methodology, offset by reclassification of underground
mines and alignment with the updated NGGI.
Introduction of the Australian Coal Mine Methane Reduction Programme (ACMMRP) to reduce the
projected level of emissions by 0.3 Mt CO2-e per year over the Kyoto period.
A increase in Oil and Gas sector emissions of 0.6 Mt CO2-e due to an increase in projected gas
distribution network loss rates, offset by an expected delay in some Oil and gas production.
CHAPTER 4 31

5 Abbreviations and Explanations
Abbreviations
ABARE Australian Bureau of Agriculture and Resource Economics
AGO Australian Greenhouse Office
APPEA Australian Petroleum Production and Exploration Association
BAU Business as Usual
CoPS Centre of Policy Studies
CSM Coal Seam Methane
CSIRO Commonwealth Scientific and Industrial Research Organisation
DCC Australian Government Department of Climate Change
EDC Emission Decay Curve
FY Financial Year
GGAP Greenhouse Gas Abatement Program
GWP Global Warming Potential
IPCC Intergovernmental Panel on Climate Change
MMA McLennan Magasanik Associates Pty Ltd
NGGI National Greenhouse Gas Inventory
PJ Petajoules
ROM Run-of-Mine
WCMM Waste Coal Mine Methane
WM With Measures
SE Stationary Energy
CO2 Carbon Dioxide

32 ABBREVIATIONS AND
EXPLANATIONS

CH4 Methane
N2O Nitrous Oxide
Explanations
Abatement Refers to emissions reductions made beyond that which would have been achieved
in the business as usual scenario. Also referred to as beyond BAU abatement.
Business as usual Refers to a projection that incorporates changes in activity levels and greenhouse
gas emission factors, but with the exclusion of any effects that are directly
attributable to greenhouse policy measures. Also referred to as without measures
or Baseline.
Measures Refers to past, current or committed Australian, State/Territory or local

government policy actions that have an impact on greenhouse gas emissions,
causing them to deviate from the BAU path after the base year of 1990. Also
referred to as measure impacts.
Kyoto period Refers to the first quantified emission limitation and reduction commitment period
of the Kyoto Protocol, from 2008-2012.
With measures Refers to the “reality” or “best-estimate” of future emission levels. This is also
equivalent to the net emissions from reducing the BAU by the greenhouse gas
abatement that is directly attributed to the greenhouse policy measures.
That is: With Measures = BAU – “measures” abatement.
Best estimate A “best estimate” scenario adopts all most likely assumptions and modelling
parameters.
High emissions A “high emissions” scenario adopts plausible high emission assumptions.
Low emissions A “low emissions” scenario adopts plausible low emission assumptions.
ABBREVIATIONS AND 33
EXPLANATIONS
6 References
Australian Greenhouse Office, Australian Methodology for the Estimation of Greenhouse Gas Emissions and
Sinks 2003: Energy (Fugitive Fuel Emissions), Commonwealth Government, 2005.
Department of Climate Change, National Greenhouse Gas Inventory 2005 (revised), Commonwealth
Government, 2008.
Barlow Jonker Pty Ltd, Australian Coal Forecast & Resource Estimation, unpublished report prepared for
the Australian Government Department of Environment and Heritage, May 2006.
Barlow Jonker Pty Ltd, Explanation of High and Low Case Production Scenarios, unpublished report
prepared for the Australian Government Department of Environment and Heritage, September 2006.
Barlow Jonker Pty Ltd, Explanation of Supplementary Data, unpublished report prepared for the Australian
Government Department of Environment and Heritage, September 2006.
Barlow Jonker Pty Ltd, Flaring & Power Generation of Methane in Coal Mine Pre- and Post-Drainage and
Mine Ventilation Air Flows, unpublished report prepared for the Australian Government Department of
Environment and Heritage, September 2006.
Barlow Jonker Pty Ltd, Overview of Extraction and Utilisation of Methane from Coal Mines in Australia,
unpublished report prepared for the Australian Government Department of Environment and Heritage,
September 2006.
Commonwealth Scientific and Industrial Research Organisation (Williams D.J., Carras J.N, Saghafi A.,
Lange A. and Thomson C.J.; Francey R.J., Steele L.P., Langenfelds R.L. and Fraser P.J), Measurement of
the Fluxes and Isotopic Composition of Methane Emissions – Project 1460, Commonwealth Government,
August 1992.
Energy Strategies Pty Ltd, Emissions Abatement Projects at Existing Underground Coal Mines, unpublished
report prepared for the Australian Government Department of Environment and Heritage, September 2006.
Energy Strategies Pty Ltd, Projection of Greenhouse Gas Emissions from Venting at Major New Gas
Projects, 2005-20, unpublished report prepared for the Australian Government Department of Environment
and Heritage, August 2005.
Energy Strategies Pty Ltd, Projection of Greenhouse Gas Emissions from Venting at Major New Gas
Projects, 2006-20, unpublished report prepared for the Australian Government Department of Environment
and Heritage, August 2006.
Other sources include provision of data and spreadsheets from the CSIRO, Energy Strategies Pty Ltd and
Barlow Jonker Pty Ltd.
34 REFERENCES


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FUGITIVE SECTOR

GREENHOUSE GAS EMISSIONS

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© Commonwealth of Australia 2008

ISBN: 978 1 921297 80 9

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Table ES 1 Greenhouse Gas Emissions from the Fugitive Sector

Total Fugitive sector emissions (Mt CO2-e)

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Source: DCC analysis 2008, Barlow Jonker 2006/Energy Strategies 2006

“With Measures” (WM) Results

“Business as Usual” (BAU) Results

61.8 Mt CO2-e in 2020, up 112 per cent over 1990 levels.

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Figure ES 2 Total Abatement from Measures in the Fugitive Sector

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Decreased BAU emissions in the Coal sector has resulted from:

An increase of 0.2 Mt CO2-e in post-mining emissions due to reclassification of some underground

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Oil and Gas:

Uncertainties and Sensitivities

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2 Black Coal Sector Results 11

3 Oil and Gas Sector Results 19

4 Total Fugitive Sector Results 30

5 Abbreviations and Explanations 32

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1.1 Scope of the 2007 Projection

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1.2 Key Drivers and Historical Trends

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Figure 1.1 Fugitive Sector Emissions, 2005

Gas D is tribution 9% Undergro und M ines

Source: 2005 NGGI (updated)

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Table 1.1 Fugitive Emission Trends, 1990 to 2005

Mt CO2-e % Total Mt CO2-e % Total Mt CO2-e % Total Sector

1.3 Projections Methodology

1 Includes decommissioned mines.

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Figure 1.2 Fugitive Sector Emissions by Sub-sector, 1990 to 2005

Source: 2005 NGGI (updated)

Coal mining emissions

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Oil and gas emissions

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The inclusion/exclusion of individual projects; and

Greenhouse response measures

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Uncertainty and sensitivity analysis

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2.1 Summary of Emission Results

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Table 2.1 Coal Fugitive Emissions Projections to 2020

2.2 BAU Emissions in the Coal Sector

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Figure 2.2 Projected Australian Black Coal Production, by class

Source: Barlow Jonker 2006, DCC Analysis 2008.