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DISCOVER MORE about the press release:

“Operation of Water Treatment Facilities” for QGC’s Coal Seam Gas project, Australia

www.veolia-newsroom.com

April 2012 ) Veolia Environnement, Veolia Water Communications Department


Background Natural gas exists in various forms in the earth’s crust and is one of the cleanest, safest, and most useful of all energy sources. Major forms of natural gas include shale gas, tight gas and coal seam gas. Shale gas and tight gas are typically found at significant depths, usually beyond 2,000 metres, and shale gas is generally embedded in clay-sedimentary rock. Coal seam gas is generally found in shallower depths of 300-1,000 metres embedded in the coal seam layer of the earth’s crust. Different extraction techniques are required to release the gases depending on their geological location. Coal Seam Gas is considered to be one of the least carbon-emitting natural gases. Consisting of more than 95% pure methane, it was made over 200 million years ago when coal was being formed. After extraction and with the right technology, it can be converted to Liquefied Natural Gas, LNG, which can be transported over long distances safely and cost effectively by ship, making it possible to sell it worldwide. With global demand for cleaner energy sources rapidly rising, the LNG market is about to boom. Australia hosts one of the world’s major Coal Seam Gas reserves, with Queensland having some of the largest reserves. Having benefited from its gas reserves to satisfy its local energy demands for many years, it is now predicted that the ability to convert Coal Seam Gas to LNG, coupled with increasing global demand, will enable Australia to become the world’s largest LNG exporter by 2020. The state of Queensland will be the main contributor.

www.veolia-newsroom.com

April 2012 ) Veolia Environnement, Veolia Water Communications Department

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QGC QGC is a 100% subsidiary of the BG Group, a leading Oil and Gas company headquartered in the United Kingdom with operations in more than 25 countries. QGC is a leader in Australian natural gas exploration. It is one of a small number of companies that has access rights to Queensland’s Coal Seam Gas reserves and supplies Queensland with 20% of its natural gas demand. Now the company is getting ready to meet the increasing international demand for natural gas by developing one of the world’s first projects to turn coal seam gas into LNG, making it possible for QGC to export its natural gas overseas. This extensive project involves developing coal seam gas fields in the remote area of Surat Basin in Southern Queensland, around 350km west of Brisbane, and connecting them to a gas liquefaction plant being constructed on Curtis Island near the port of Gladstone on Queenland’s coast. Here the gas will be converted to LNG and exported worldwide by ship. The project covers an area of over 20,000km2 and includes the construction of over 6,000 wells over the life of the project, as well as the construction of a 540km underground natural gas pipeline network.

www.veolia-newsroom.com

April 2012 ) Veolia Environnement, Veolia Water Communications Department

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Q&A 1. How is Coal Seam Gas extracted? 2. How is responsible water management performed during Coal Seam Gas extraction? 3. What is the nature of Veolia Water’s engagement with QGC? 4. What are the details of the O&M contract? 5. What is the expected turnover of the O&M contract for Veolia Water? 6. Where are the water treatment facilities located? 7.

What happens to the water after treatment?

8. Why has QGC chosen Veolia to operate its water treatment facilities? 9. How many staff will be required to operate the plants? Will there be resourcing challenges due to the remote location of the plants? 10. How did Veolia Water stand out from the competition? 11. Which of our contracts influenced QGC’s decision? 12. What special challenges will the water treated under this contract present? 13. What other oil & gas contracts does Veolia Environnement hold in Australia? 14. What potential does the non-conventional fuel market hold for us in Australia and in the rest of your zone? 15. What technologies will be used at the QGC site? 16. There are 55 Veolia employees on site. Is that a lot for an industrial contract?

www.veolia-newsroom.com

April 2012 ) Veolia Environnement, Veolia Water Communications Department

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Q&A 1. How is Coal Seam Gas extracted? Coal Seam Gas is held in the coal seam layer of the earth’s crust by water pressure. It can be extracted by removing the water that holds it in place. This is done by drilling wells through the coal seam. The wells release the water, enabling the natural gas to flow out from the coal. Sometimes this mixture of water and gas will flow to the surface unaided. Often high-pressure pumps are used to increase the flow-rate. This process, called hydraulic fracturing, also known as “fraccing” involves injecting a mixture of water and sand into the well.

The gas and water that comes out of the wells are separated on the surface at the well-head. The gas is then piped to compression plants for injection into gas transmission pipelines and distribution to residential and industrial customers including power stations, as well as to the new LNG production facility at Gladstone.

www.veolia-newsroom.com

April 2012 ) Veolia Environnement, Veolia Water Communications Department

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Q&A 2. How is responsible water management performed during Coal Seam Gas extraction? Responsible water management is a critical part of Coal Seam Gas extraction in order to be able to maintain continuous operations and protect the environment in accordance with strict environmental regulations. The water that remains after the gas is separated at the well-head is known as Coal Seam Gas water. It is a by-product of Coal Seam Gas extraction, and is highly concentrated in salt. Due to its high salinity, it cannot be released back into the environment or used for other purposes until the salt is removed. It is therefore essential to remove the water from all the well-heads effectively and safely, and to treat it extensively to remove the salt. To do this, the water is collected from the multiple well-heads and transferred through a network of water pipes to central storage ponds, where it is safely stored before being pumped to water treatment facilities that are specifically able to deal with high salt content removal. After extensive water treatment, the water can then be safely released into the surrounding environment to replenish the water table, or to use for other beneficial purposes such as irrigation, industrial use or to replenish raw water supplies for drinking water production. In this way, Coal Seam Gas extraction can be performed in a fully environmentally-sound manner with regard to water management, and even replenish local water resources. 3. What is the nature of Veolia Water’s engagement with QGC? Following a tender process Veolia Water has been engaged by QGC to operate its water treatment facilities at the Coal Seam Gas project under a 20 year Operations and Maintenance contract, plus a 5 year option. Other short-listed bidders in the tender process were GE, Trility/Acciona, and Suez Environnement. The water facilities, constructed or under construction, comprise 3 water treatment plants for a total capacity of 200,000m3/day. These plants will be fylly operational by june 2014.

4. What are the details of the O&M contract? The O&M contract that has been signed consists of three phases: Phase 1 - Transition The Transition Phase will commence on a date determined and advised by QGC. The duration of the Transition Phase is expected to be around four months. During the Transition Phase the main activities will include: — Mobilisation of resources, — Establishment of systems, — Training of operations staff. Phase 2 - Lead-In The Lead-in Phase commences upon handover of operations to Veolia Water. During the Lead-in Phase Veolia Water will be responsible for the O&M of the Water Treatment Facilities. The Lead-in Phase is expected to last 2-4 years. Phase 3 - Operations The Long Term Operations Phase commences upon completion of the Lead-in Phase and terminates at the end of the Services Term. The duration of the Operations Phase will be between 16-18 years (depending on how long the Lead-in Phase lasts) with a further 5-year option.

www.veolia-newsroom.com

April 2012 ) Veolia Environnement, Veolia Water Communications Department

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Q&A 5. What is the expected turnover of the O&M contract for Veolia Water? The expected turnover of the O&M contract for Veolia Water is scheduled to be at least 650 million euros. The project could also lead to other opportunities with the same client and other gas operators in Southern Queensland to build and operate a plant to treat the brine generated by the water plants (Veolia is one of the only players, through HPD, able to propose a process for this purpose). 6. Where are the water treatment facilities located? Veolia Water is not only a quality operator, making sure that local authorities can guarantee the Basin. The Northern Water Treatment Plant is approximately 150km to the north-west near Wandoan (population of 400). Kenya Central Water Treatment Plant is located between the small towns of Chinchilla (population of 3,700) and Condamine (population of 400). The Windibri Plant is located close to the Kenya Plant. 7. What happens to the water after treatment? Treated water from the Kenya Central Water Treatment Plant will be delivered to Sunwater the local bulk water authority for beneficial re-use in the community. Treated water from Windibri Water Treatment Plant will be treated to a specific specification and will be delivered to the Condamine Power Station. The destination of treated water from the Northern Water Treatment Plant which will be operational in June 2014 is yet to be determined. 8. Why has QGC chosen Veolia to operate its water treatment facilities? Veolia Water is a world leader in professional and effective water management, with proven in-depth expertise, know-how and technology to treat water and operate related facilities in a variety of different conditions, industries and geographical locations. Appointing Veolia Water to operate and maintain the water facilities for the coal seam gas extraction project will ensure that QGC can benefit from: — continuous and safe high-quality water treatment in challenging conditions, — guarantee of the environmental protection of the surrounding area, — operational staff available for immediate transfer and knowledgeable on operating complex water facilities according to different requirements, including in remote locations, — access to Veolia’s worldwide network of treatment experts including extensive expertise and operations experience related to brine treatment. With its water facilities managed by water industry professionals, QGC can therefore focus its attention on the core aspects of coal seam gas extraction and LNG production. 9. How many staff will be required to operate the plants? Will there be resourcing challenges due to the remote location of the plants? Once the water facilities are in full operations around 55-60 staff will be required to operate the facilities. The majority of staff will be from Veolia Water’s existing operations in Australia, including  in  Queensland. They are ready to be mobilised immediately and are already accustomed to working on sophisticated water management projects.

www.veolia-newsroom.com

April 2012 ) Veolia Environnement, Veolia Water Communications Department

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Q&A 10. How did Veolia Water stand out from the competition? — Local presence in Queensland and solid reputation of the Queensland manager, Ben Bowen, — Solid reputation built on local Queensland contracts, — Veolia’s overall expertise and potential for further cooperation on projects such as comprehensive treatment using unique processes (HPD expertise).

11. Which of our contracts influenced QGC’s decision? — First , our Western Corridor and Gold Coast contracts, — But also Sydney desalination and Rosehill. 12. What special challenges will the water treated under this contract present? Two major differences with water treated in membrane-based municipal treatment plants: — Briny water of varying qualities, depending on the gas well, — High volumes at the outset, tapering off over time (following the usual water production cycle in coal seam gas wells).

13. What other oil & gas contracts does Veolia Environnement hold in Australia? None as of this moment, apart from equipment supply (Veolia Water Solutions and Technologies) for other coal seam gas producers. 14. What potential does the non-conventional fuel market hold for us in Australia and in the rest of your zone? Australia is well on its way to becoming a leader in non-conventional gas production (coal stream and shale gases). China will also be a major shale gas producer before long. 15. What technologies will be used at the QGC site? Ultrafiltration, ion exchange, RO, brine concentrators, electrical substations. 16. There are 55 Veolia employees on site. Is that a lot for an industrial contract? The QGC contract is a very big industrial contract, with sales equivalent to those of a municipal contract in a sizeable city in France. 55 people is within the normal range for this kind of contract (there are 43 people with LG PetroChemical Daesan in Korea, for example, and 76 with Tianjin Soda in China).

www.veolia-newsroom.com

April 2012 ) Veolia Environnement, Veolia Water Communications Department

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InfographiC Illustration

www.veolia-newsroom.com

April 2012 ) Veolia Environnement, Veolia Water Communications Department

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MAP Location

www.veolia-newsroom.com

April 2012 ) Veolia Environnement, Veolia Water Communications Department

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