This paper aims to provide a brief overview of the Australian Coal Bed Methane (CBM) industry and more importantly the challenges to sustainable management of the industry's by-product, groundwater. In a country where water is scarce and having gone through one of the worst recorded droughts it is vital that this important industry be seen to be managing water in a responsible manner with the greatest environmental and social benefit. Benefits of the water from CBM wells can be enhanced through treatment to produce potable water for domestic or stock purposes, water for irrigation or aquaculture or lower quality or untreated water for industrial or mining purposes. Other options are re-injection of raw water or waste from the treatment processes or discharge to surface waterways. The critical change and difference between CBM projects and traditional oil and gas operations should be that where possible water is no longer disposed of via evaporation ponds with the dual legacy of waste of the water resource and an environmental contamination problem with the remaining salt and brine product.