The shale gas revolution might be upon us. Interest in shale gas has grown sharply due to the success of American producers, with the fuel now providing the U.S. with a third of its natural gas needs. Shale gas has put America in a position where it will soon be self-sufficient in gas and potentially a net exporter.
In October this year a milestone was achieved in terms of our path towards joining the ranks of global shale gas producers. Santos announced Australia’s first commercial production of gas from a shale well, and is talking big about the potential of trillions of cubic feet of gas trapped in deep shale formations in Australia’s Cooper Basin, which straddles Queensland and South Australia.
It’s got the pollies excited too. The South Australian Premier, Jay Weatherill, said at the on-site opening ceremony of the shale well that:
Natural gas from unconventional sources has been regarded as something that would happen in the future but today’s opening demonstrates that the future is happening today. This is the first step in the next wave of Cooper Basin development that will lead to natural gas from unconventional sources being increasingly used in households across SA and Eastern Australia more generally.
But it’s not without controversy. Gas is stimulated to flow from the low permeability shale rocks by injecting fluid consisting of water, sand and chemicals under high pressure into the shale reservoir to open up natural fractures and to create new ones in a process known as hydraulic fracturing, or ‘fracking’. If the debate here on the development on shale gas follows that in the US and Europe, then it’s likely that industry will be pro-shale gas, environmental groups will be concerned about the impacts of fracking and cautious of claims of a reduced environmental impact relative to coal seam gas (that occurs at much shallower depth close to surface aquifers and in areas used for farming), and politicians will focus on regulation.
The Australian Government Energy White Paper released this month presents a sensible appraisal of the important role of gas generally in Australia’s energy future, and signals government is aware that shale gas is an important resource that needs to better understand in the Australian context.
We’re unlikely, however, to see the shale gas revolution underway in the US—currently being hyped as ‘fueling an American industrial revival‘. As the White Paper notes, our prospective shale and ‘tight ‘gas resources (natural gas trapped in low permeability and low porosity reservoir sandstones and limestones), are likely to be ‘lower in liquids than those in the United States (due to differing geology) and, with the exception of the Cooper Basin, will require costly new infrastructure to develop’.
While not noted in the White Paper, China would be a major competitor to Australia here: it’s got the world’s largest undeveloped shale gas resources (PDF), and has recently announced that it will subsidise production of shale gas. This will provide more gas from a greater diversity of supply and may lead to lower gas prices.
But the Energy White Paper says there is good potential for further discoveries of shale gas. It points out that Geoscience Australia estimated last year (PDF, p15) that there may be 258 900 petajoules (PJ) of additional coal-seam gas, 435 600 PJ of shale gas and 22 000 PJ of tight gas, (although the extent to which those resources are economically recoverable is untested). To put that into context, Australia’s conventional gas resources total 184,000 PJ—which shows just how significant unconventional gas is for Australia if it can be technically and economically recovered. The development of onshore shale gas may also, the White Paper points out, unlock unconventional liquid hydrocarbons.
Shale gas offers Australia a potentially important addition to our energy security. State governments have developed or are developing regulatory codes that deal with the environmental issues associated with its extraction. But the major challenge that shale gas faces here is likely to be political, as a result of public suspicion. We need more analytical work on the environmental and regulatory challenges and to learn what we can from the US boom. And as the Energy White Paper notes, it will be important that governments and industry ensure that lessons learned from the development of the coal seam gas are applied to future shale gas and tight gas developments.
Some of that work is underway: the Australian Office of the Chief Scientist has set up an expert working group through the Australian Council of Learned Academies on unconventional gas, which has a shale gas focus. The group’s report will be presented next year to the Prime Minister’s Science, Engineering and Innovation Council in order to inform government.
Anthony Bergin is deputy director of the Australian Strategic Policy Institute. Image courtesy of Flickr user hitthatswitch.