The Energy White Paper gave gas top billing with several
initiatives to be progressed during the coming year all of which
should assist in the commercialisation of shale gas, in addition to
more conventional gas resources.
Australia is estimated to have approximately 396 trillion cubic
feet (Tcf) of shale gas resources, of which 288 Tcf is estimated to
be held in Western Australia's onshore basins (this amounts to
double WA's conventional offshore gas reserves) and 85 Tcf in
the Cooper Basin spaning Queensland and South Australia. One Tcf of
gas can provide enough energy to power a city of one million people
for 20 years.
Middletons partner, Fiona Melville said, "There is an
undeniable need to examine all sources of energy that are both
economic and environmentally viable in the years to come. Many
projections have our energy consumption needs rising significantly
in response to population growth which on current estimations is
expected to exceed 28 million by 2030."
Ms Melville highlighted the American experience, "Shale gas
production has been hugely successful in the US, with 20-26 Tcf of
shale gas produced annually for the past 10 years, causing the US
domestic price of gas to plummet from US$8.00/thousand cubic feet
(Mcf) in 2008 to US$3.75/Mcf in 2010. Shale gas now represents 25%
of total US gas production and is likely to transform the US from a
gas importer to a gas exporter."
When asked if Australia could replicate this success, Ms
Melville responded, "Given the abundance of this energy source
domestically, there is certainly scope for more investigation.
Until recently it was almost impossible to recover shale gas.
However, developments in fraccing and horizontal drilling
techniques have enabled shale gas to be recovered at a cost which
is competitive with other sources of natural gas in the US. Whether
the same economics will apply here remains to be seen as production
costs may well be significantly higher in Australia with some
commentators estimating that a shale well in Australia costs A$7
million, compared with only US$2-3 million per well in the US.
Ms Melville highlighted the unique incentive which exists in the
Australian context explaining, "The implementation of a carbon
price provides an incentive for the use of natural gas over other
sources of energy, given the lower carbon footprint of natural gas.
However, due to higher methane emissions historically associated
with shale gas extraction, the carbon footprint of shale gas has
been greater than that of conventional gas or oil. Improved
recovery techniques can significantly reduce this footprint. Carbon
emissions from shale gas are therefore estimated to be between a
third to a half that of coal."
The federal government's energy white paper is expected to
be released shortly giving gas top priority in the energy plan,
extolling the benefits of opening up energy markets to competition
and increasing privatisation of the energy supply industry
currently owned by state governments.
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These reforms are largely targeted at reducing the cost of the capacity component of the Wholesale Electricity Market.
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