What are the net benefits of allocating land resource to coal mining or cattle production?
Identify the profit streams of using land for coal production, including all environmental and land rehabilitation costs
Compare to the profit streams of maintaining for cattle production
Net present value (NPV) of streams identifies which is best option
Broad estimates of annual revenues & profits by coal price
Comparing benefits and costs of coal production At lowest expected price, and discounted over 16 years at 10%, coal will generate $552M in profits and royalties Maximum profit from cattle production in future on same resource is $3M
How does the same analysis apply to Coal Seam Gas in Surat Basin?
Involves joint use of land
small proportion reserved for well heads and pipelines
Wells can operate for up to 20 years
Density varies, but minimum spacing of 750 metres (approximately 1 well per 200 ha)