Open access peer-reviewed chapter

# Economic Synergies from Tighter Agri-Business and Coal Seam Gas Integration

By Syeda U. Mehreen and Jim R. Underschultz

Submitted: August 15th 2017Reviewed: December 18th 2017Published: January 26th 2018

DOI: 10.5772/intechopen.73195

## Abstract

In addition to government royalties, Australia’s coal seam gas (CSG) development has been beneficial in terms of facilitating regional economic development and growth, expansion of remote populations and facilities, increased employment opportunities and improved regional infrastructure, mainly in regional Queensland. There is substantial revenue potential for the Australian economy from the export of the resource to international energy markets. Many current CSG operations in Australia are located in prime agricultural-cattle grazing regions. Failure to identify potential coexistence opportunities between agribusiness promoting industries (API’s) and the CSG industry could limit the agriculture value chain and consequently restrict Australia’s food security and agricultural export potential. The economic benefits of the CSG industry combined with the importance of a sustained agricultural industry lay the foundation for investigating coexistence opportunities between these industries. Emphasis has been placed on potential synergies exhibited by the CSG industry (namely from CSG by-products) and the local agricultural industry which is typically dominated by API’s.

### Keywords

• coal bed methane
• coal seam gas
• cattle value chain
• agricultural value chain
• energy-food nexus
• gas & agricultural coexistence

## 1. Introduction

### 3.4. Tannery: Leather processing industry

The waste brine generated from CSGAW treatment can be beneficially used in leather manufacturing processes. Saline rich feed water (e.g. brine) is required for curing the hides, particularly for antibacterial purposes, as well as for degreasing processes [85]. The tannery facility may be constructed at a proximal distance from the CSGAW distribution and abattoir sites, to optimise costs associated with the transportation of water and hides. The leather processing industry is a viable user of water, however flows (treated CSGAW and brine) will be directly related to the number of carcasses processed at the abattoir, which will in turn have consequences for the number of hides produced for leather manufacturing.

Providing CSGAW and CSG industry-sourced brine to the leather processing industry has massive potential to inject new economic opportunities for the local economy and creates avenues for international export if produced on a large scale. Purposefully co-locating tannery facilities with CSGAW distribution sites, has the added advantage of processing recycled tannery effluent waste through the same water treatment site. This suggested industry would promote the agricultural value chain and provide a potential coexistence opportunity for both the CSG industry and an API.

## 4. Agribusiness promoting industries: Coexistence potential with coal seam gas

As the ‘native’ industry in CSG operating areas is the agricultural industry and associated agribusinesses, it is important to facilitate the growth and progress of those industries. The concept of a supply chain is services from one entity flow to another entity, through a medium that allows the flow of services to take place. In this way, services of one industry can pass their benefit to another industry, thereby contributing to a supply chain type model. Similarly, services provided by the CSG industry (such as by-product CSGAW) to local agribusinesses, can help to facilitate the agricultural value chain by enhancing food productivity, injecting investment opportunities, promoting agri-based tourism and trade prospects. Mehreen & Underschultz [39] propose an agri-based industrial coexistence model which promotes local synergies between the CSG industry and local agribusinesses. The model given in Figure 5 schematically represents the potential synergies between entities involved in the cattle value chain and the CSG industry, specifically focussing on CSGAW (and brine in the case of leather processing). This co-location of agri-based industries around the CSG developments allows the growth of the agriculture value chain, increased employment opportunities, regional infrastructure growth, and enhanced utility infrastructure [33, 46, 86].

The CSG water treatment and distribution facility can deliver CSGAW that has been amended (to the respective regulatory standards) for irrigation to nearby agricultural farms. Feedlot operations are provided with fodder or other feed crop that has been harvested by the agricultural farms in the area. These agricultural farms may even provide livestock (e.g. cattle) grazing lands. Untreated or amended CSGAW (treated in accordance with respective regulatory guidelines) (Tables 6 and 7) can be provided to feedlot operations for livestock consumption. The feedlots near abattoir / meat processing facility in the area, can provide livestock for slaughter. Treated CSGAW provided to the abattoir, can be utilised during sterilisation, evisceration, slaughtering and other meat processing stages. An anaerobic digester (AD) can treat the feedlot and abattoir effluent streams (high organic load dominated by biologically hazardous material) to produce biogas (methane) and highly concentrated nutrient load (potential fertiliser). Prior to using the fertiliser on agricultural crops, this nutrient load from the AD must be diluted with treated CSGAW from the CSG water treatment facility. This fertiliser can be commercialised as a selling product or can be provided to agricultural farms and grazing areas to grow crops. The biogas produced from AD can be processed for abattoir’s energy use (equipment) or provided to the CSG operator as a supplementary methane source. The CSG Water treatment facility can provide the saline-rich CSGAW for leather processing in the tannery facility and also provide local water treatment capacity for otherwise unusable wastewater from meat processing and tannery operations. Note that other local services (telecommunication and transportation infrastructure, and services in regional towns) that have developed as a result of CSG development will have longer term sustainability if they are also servicing an expanding co-located agribusiness chain.

The water requirements from each API in Figure 5 were calculated and compared with the modelled volumes of treated CSGAW for distribution from the CSG water treatment sites. This is summarised in Figure 6. Some assumptions that were taken into consideration when calculating water consumption rates are as follows:

• The water required for irrigation (4300 kL/day) is calculated for 40 ha of agricultural land [87]

• The average cattle numbers processed at the abattoir are at a rate of 1400 cattle per day [88]

• The water consumption for processing one cattle hide in tannery operations is 702 litres (L) [70]

• Water consumption per cattle head at feedlot operations has been taken as 130 L/ cattle head [88, 89]

• Typical water treatment installed capacity of 20,000 kL/day which is taken as being available from the CSG water treatment facility [90]

Upon calculation of the water consumption in the entities involved within the agri-based co-existence model, it was noted that the demand (8406 kL/day) is much lower than the average water supply capacity. As the local labour workforce has an agri-based skillset, there would not be a skill shortage for the API’s involved in this model. In fact this would help retain the local agri-based workforce with more job options. The main concern associated with the sustainability of this coexistence model may be the extent of water supply in the future as the CSGAW production volumes eventually fall. One option would be to use present piping and well injection infrastructure built for recharging aquifers, to collect and re-harvest the CSGAW for a sustainable supply of water into the future, when the CSGAW production has reached its end of life period.

From an economic and community perspective, there is great value in promoting coexistence of agri-based industries alongside the CSG industry. However, the progress of amalgamating agricultural industries with the CSG industry has been slow [9]. There is cumulative effect of coexisting CSG developments in close proximity to agricultural developments that are complicated by community attitudes, local industries, environmental assets, and regulations [91, 92].

In regional CSG development, there is often concern for the preservation of environmental assets, particularly land and water as they provide economic value, ecological diversity, recreational value, and aesthetic value. As CSG developments are often located on prime agricultural land, land use conflict and stakeholder trust is a concern for gas operators [93]. A lack of trust in the CSG operator is quite often the most significant social issue which underpins many of the other concerns affecting the progress of promoting coexistence between agri-based industries and CSG industry [91]. Land access agreements and their associated ‘confidentiality clauses’ can contribute to the distrust with CSG operators and regulatory bodies. Some government or CSG operator funded financial incentive is provided to landowners to promote greater cooperation [92]. Farmers with increased distrust in the CSG companies can have negative opinion of other farmers that have accepted monetary incentive. This can be viewed as having betrayed the ‘rural fabric’ that unites farmers and can create a local divide within the farming community. These social issues must also be addressed in order to better promote the coexistence value of the agribusinesses alongside the CSG industry. Strategic governance by federal and state governments to ensure trust with the local landowners must take effect to bridge the gap between agri-based industries and the CSG industry.

Analysing the effect of the CSG industry from a social perspective is quite often not as ‘tangible’ as analysing economic growth or environmental impact [92]. Perhaps this is attributed to the ability to better quantify economic and environmental impacts rather than social indicators which tend to be more of a qualitative nature. Therefore, conceptualising the potential impact on the social fabric underpinning the regional communities in the heart of CSG development regions can be difficult and may pose a barrier to better understand the effect of the CSG industry on the community from a social perspective. This further complicates analysis of the coexistence potential between the CSG industry and agri-based industries. It is therefore important to consider the cumulative impact of CSG development rather than the isolated impact.

When there are industries that are sharing infrastructure, there is an increased risk to the normal business case. For industries to coexist and gain mutual benefit, requires mutual trust. When the business risk is too high to share infrastructure between industries, it makes coexistence difficult. In this case, one company owns the infrastructure (e.g. CSG industry owned water treatment facilities) and another entity such as a new meat processing plant could benefit from utilising that business service. If access to water treatment is a critical component of the business case for the meat processing plant, but not in its control, this could pose an unacceptable risk to the establishment of the meat processing plant. For example agricultural wastes are characterised as having a high organic load, particularly in animal-based agri-based industries [61, 63]. Combining waste streams from such industries, and processing the produced wastewater through the CSG water treatment facility may increase the risk to the business model, and may pose as an unnecessary complication for the CSG operator. There must be corporative legislations that will be designed to remove the business risk; the support of the federal and state government is mandatory. Adequate planning must be implemented to remove such risks. The colocation reduces transportation costs dramatically due to the centralised location of the water treatment facility in relation to all the agri-based industries involved.

If agri-based industries are dependent on water, such a setup proposed in the agribusiness coexistence model in this paper, would mean that those industries will be heavily reliant on the CSG industry for providing water for their beneficial use. Due to the long period entailing the business case, it may be difficult to attract investment. This is perhaps another reason that has hindered the amalgamation of the CSG industry colocation with the agricultural industry sooner than later. Therefore, it will be important to find innovative business models that can alleviate these business risks and allow investment in a co-existence model where different industries can share infrastructure.

## 5. Conclusion

Upon investigation, it was found that the agricultural industry can benefit from the by-products and services of the CSG industry, mainly because of its shared location with many CSG developments and for the fact that the current workforce in these rural areas are related to the skillset required by new API’s; therefore, no significant skills upgrade would be needed. This study has analysed the potential of CSGAW supply for the suggested API’s: irrigation (crop harvesting), livestock watering, meat processing and leather manufacturing. It is regarded that some form of water treatment is required prior to beneficial use by the API’s. Utilising CSG by-product synergies (particularly CSGAW) with API’s helps maintain the sustenance of local agri-based industries and strengthens the agricultural value chain in the agriculturally dominated rural landscape which is native to many areas surrounding CSG developments in Queensland. The agri-based industrial coexistence model presented, allows for the API’s to utilise the CSG industry’s by-products for beneficial use and positively contribute to the sustainability and expansion of the agricultural value chain. It provides the potential as a ‘drought buffer’ for landowners, helps to maintain the local skills set and provides long-term jobs. Providing CSGAW for irrigating crops (for both human and livestock consumption) can be regarded as an initiator for expanding the meat processing and leather manufacturing industries; thereby enhancing land productivity and further strengthening the agricultural value chain. Furthermore, the colocation of API’s in close proximity to the CSG water treatment facility would also ensure maximal use of a centralised utility & telecommunications infrastructure network. Re-harvesting CSGAW using the present infrastructure built for managed aquifer recharge, has been suggested as an option to ensure the reutilization of CSG-derived water for the API’s, following the period of post-CSG production. Increased employment and export trade opportunities, sustainable crop harvesting, facilitating the operation of the local agricultural-based value chain, and generation of other industries (agri-tourism, biofuel generation, local meat and leather processing) are prospective opportunities associated with the agri-based coexistence model. The agri-based coexistence model integrates the agricultural value chain. In effect, it localises all the involved agri-sourced industries, thereby increasing connectivity of supply chain processing over short distances, greatly reducing transportation costs that would otherwise be associated with transferring ‘raw’ products to additional locations for further downstream processing. Conventionally, the agricultural industry and the production of agri-based products are sourced from rural regions and regional towns, which are connected by highways. This creates a dispersed value chain. By implementing a more localised network of entities involved in the agricultural value chain (through the agribusiness coexistence model), the demand cycle for agri-based products can be better controlled due to the centralised nature of the system. On a local scale, the agribusiness coexistence model allows local consumers to purchase fresh ‘home-grown’ produce (better availability due to irrigation water supply), which further supports local farmers to maintain the ‘locally-grown’ initiative. Such policy adoption associated with the agribusiness coexistence model can also have a global impact, with the export of high-quality meats, and other agri-based food products to international consumers, injecting investment for Australia’s economic prospects and further strengthening the agricultural value chain. The suggested agri-based coexistence model has shown the potential of concurrently developing CSG operations with agriculture-based industries, whereby the energy-food nexus can be maintained. Moreover, careful coordination and continuous engagement with the local industry is required for successful ‘API-CSG’ coexistence to occur.

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© 2018 The Author(s). Licensee IntechOpen. This chapter is distributed under the terms of the Creative Commons Attribution 3.0 License, which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited.

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Syeda U. Mehreen and Jim R. Underschultz (January 26th 2018). Economic Synergies from Tighter Agri-Business and Coal Seam Gas Integration, Agricultural Value Chain, Gokhan Egilmez, IntechOpen, DOI: 10.5772/intechopen.73195. Available from:

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