Australian Shale Gas Potential

The land down under is aiming to follow the U.S. in profits from shale gas.

Australian energy company Santos Ltd (ASX: STO) today turned on the taps at its Moomba-191 well in Australia’s Cooper Basin.

The well connects to the Roseneath, Epsilon, and Murteree shale deposits, and its connection to the grid marks a milestone for the Pacific nation.

Today’s activity added enough natural gas for 40,000 homes to the grid. And its just the start of what Australia hopes to achieve through this venture.

Jay Weatherill, the South American premier, was the one to turn the tap, emphasizing as he did so the importance of the action for the nation.

From the Australian:

“Unconventional gas has always been regarded as something that would happen in the future but today’s opening demonstrates that the future has arrived,” he said. “The US economy has been transformed by the exploitation of the massive shale gas reserves, which has also led to the re-emergence of their advanced manufacturing sector.

“Today’s achievement is a significant step towards unlocking the vast unconventional gas potential of the Cooper Basin.”

Shale gas extraction has been lauded in much of Australia. The nation also produces coal-seam gas, much to the dismay of environmentalists. It’s harder to crack through the rock to access coal seam gas, and the seams are often located close to aquifers.

But shale gas wells are located much deeper underground, making it less likely the chemicals will damage the aquifers.

A U.S. Energy Information Administration global study put Australia’s technically recoverable resources at 396 trillion cubic feet (tcf). This was supported by a similar find from Geoscience Australia, putting it well over the estimate of 235 tcf for coal seam gas.

The Moomba well’s quick attachment to the grid was facilitated by its strategic placement. James Baulderstone, CEO of Santos, told ABC News:

“The well was only 350 metres from the existing pipeline network and eight kilometres from Moomba’s gas processing plant, which enabled it to be brought on-line quickly, illustrating the importance of Santos’ existing infrastructure position in commercialising the region’s significant resource potential.”

Santos is also working on the construction of its Gladstone LNG project in Queensland, one of three Australian export projects that will have a final total capacity of 25 million mt per year. Santos portion will cost roughly $18.5 billion.

Santos has a 67% stake in the basin, and other stakeholders include Beach Energy (ASX: BPT) with 20% and Origin Energy (ASX: ORG) with 13%.

The Australian government expects to receive A$20 million (roughly 20.7 million) a year in royalties from the shale gas development in the Cooper Basin.

That’s all for now,

Brianna Panzica

@brianna_panzica on Twitter

Energy & Capital’s modern energy guru, Brianna digs deep into the industry with accurate and insightful updates into the biggest energy companies and events. She stays up to date with the latest market moves and industry finds, bringing readers a unique view of current energy trends.