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Queensland: Floods Threaten Coal Mines, Coal Seam Gas, Prices

February 3, 2012

This time last year, metallurgical coal prices spiked to $350 on the back of floods affecting a range of Australian coal mines.  Today, floods are peaking in some of the same regions, with some coal mines again possibly at risk.  Mines are still saddled with flood waters which have yet to be pumped from last year – 300 gigalitres.

The most recent rainfall data shows the flood distribution:

24 hour rainfall Queensland 3 Feb 2012 (source: BOM)

Further rainfall is forecast.

While conventionally coal production is a concern, the very large expansion of investment in, and operation of, coal seam gas infrastructure is now widespread in Queensland and possibly affected by the current floods. There is now some 28 PJ of 2P reserves in the State, concentrated largely in the Bowen and Surat basins.

Roma is now subject to higher than forecast floods and has been declared a ‘disaster district’, and coal seam gas assets in the Surat basis are surely now subject to signficant flood risk.

Distribution of coal seam gas assets can be seen on the image below.

Coal Seam Gas Distribution Queensland. Source: Queensland Government

Last year, a number of private and publicly-listed energy companies announced flood impacts.  We have yet to see any company announcements, but expect to see some on opening of markets on Monday given the extent of the flooding in coal and gas-rich areas of Queensland.

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