Brisbane, July 4, 2008 (ABN Newswire) - Queensland Gas Company (ASX:QGC)(PINK:QGSCF) Managing Director Richard Cottee has welcomed the Queensland Government's announcement of a $5 million grant for a feasibility study into the use of water produced from coal seam gas (CSG) extraction.

"This is a far-sighted and timely allocation of funds to benefit all Queenslanders who use water," Mr Cottee said today. Premier Anna Bligh announced the grant following the Council of Australian Governments (COAG) meeting in Sydney yesterday.

Ms Bligh said Queensland's $510 million share of Federal funding would go toward the purchase of water entitlements and improving water efficiency in the Queensland section of the Murray-Darling Basin.

Some $5 million was set aside for a detailed feasibility study to examine the use of coal seam gas water.
Mr Cottee commended Ms Bligh and Minister for Natural Resources and Water Craig Wallace on the announcement that their Government would undertake industry and community consultation in southern Queensland, where the Murray Darling headwaters originate.

Vast quantities of water are extracted daily from Surat Basin coal seams as part of the CSG production process. Currently, this water is deemed a waste by-product and, as such, pumped into purpose-built evaporation ponds.

"The water is plentiful and there will be a lot more of it as the coal seam gas industry grows," Mr Cottee said. "We are simply saying 'look at this water.' It is fantastic opportunity for Queensland."

QGC currently has the capacity to produce about 17 megalitres of water a day and is negotiating an agreement with the Dalby Regional Council to supply half a billion litres a year to the town of Miles.

With gas exploration and production stepping up to supply the Queensland Curtis LNG Project - today awarded State Government Significant Project status - the quantity of water produced will also rise substantially.

"Water extracted as a by-product of CSG production comes from the coal seams themselves, not underground aquifers," Mr Cottee said.

"We have already produced potable water in our own reverse osmosis trials. Let's use this plentiful resource - not let it slip through our fingers."

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