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Australia on course for a shale bonanza?

June 5, 2013 at 1:20 PM   |   Comments

SYDNEY, June 5 (UPI) -- Australia may have more than a sextillion cubic feet of shale gas resources, a new study indicates, more than double the size of current estimates.

But the researchers say additional environmental assessment and robust regulatory procedures are needed before the country can benefit from the potential shale gas bonanza.

The Australian Council of Learned Academies, the federal government's top research council, in its "Engineering Energy: Unconventional Gas Production" report released Wednesday, said obstacles to Australian shale development include lack of available pipelines, meaning shale gas would cost about $6 to $9 per gigajoule to produce, compared with less than $4 in the United States.

Report co-author Professor Peter Cook cautioned rigorous background work on Australia's shale gas is needed to avoid the controversy that has plagued the country's coal seam gas sector.

"You need a regulatory regime that is transparent," he told Guardian Australia. "You need to know what the impact is going to be, rather than rely on a high degree of speculation. That has caused angst around coal seam gas."

Community opposition in New South Wales has led the government to ban coal-seam gas exploration or production in many parts of the state.

The report said energy companies are planning to invest an estimated $500 million in shale exploration in the next few years. Santos is already producing shale gas in the Cooper Basin in central Australia and is planning more wells there and in the Northern Territory, The Age reports.

Groundwater, Cook said, "clearly needs to be safeguarded" to prevent contamination from hydraulic fracturing, or fracking. Fragmentation of landscapes with roads and drilling is also of concern.

"We won't see a shale gas boom here as we have in North America. It will be more modest growth, but what might really push it along is the oil associated with the gas," he said.

"Oil is what is driving the industry in North America. Gas is almost a byproduct. Things will move very quickly if they find oil amongst the shale gas here, because Australia doesn't have much oil. But we just don't know what's down there yet."

Meanwhile, Australia's high dollar, green tape, and escalating labor and construction costs have hindered investment in resource projects.

Speaking in Adelaide last month, Australian Resources Minister Gary Gray said development of shale "will drive once again prosperity through a manufacturing sector and it will drive prosperity through downward pressure on domestic gas prices."

Topics: Peter Cook
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