Advertisement

Shale gas players in race to beat China

Australia's fledgling shale gas industry has a window of opportunity to develop the nation's massive reserves before China establishes itself as an upstream player, according to analysis by Deloitte.

WA is at the forefront of developing shale gas assets in the Canning and Perth basins, with multinationals Mitsubishi, ConocoPhillips and Bharat Petroleum backing local efforts to exploit them.

Deloitte national oil and gas leader Stephen Reid said promising results from Beach Energy's first two shale gas wells in South Australia's Cooper Basin could attract a new wave of interest from international investors.

"While the domestic shale gas industry is in its infancy, it is already attracting interest from foreign majors keen to get a foothold in an emerging market in the hope it will replicate the success of the US shale industry," Mr Reid said.

Shale gas had transformed the US into a mostly self-sufficient gas market with the potential to become an exporter.

"Regardless of the US activity, growth in the Australian LNG industry in the medium term will continue to be driven by strong Chinese demand, which is likely to quadruple by 2020," he said.

Mr Reid said China's estimated shale gas reserves of 1275 trillion cubic feet remained unexploited because of competing land use issues and technological constraints.

"China... is committed to investing in developing its upstream industry but for it to monetise its unconventional gas will require a huge investment in technology and infrastructure," he said.

"That leaves Australian producers with a window of opportunity in which to develop their unconventional gas reserves and continue to cement a dominant position in the Asian natural gas market."

Like coal seam gas, drilling for shale gas relies on the controversial practice of hydraulic fracturing, known as fraccing.

Mr Reid said the potential of the shale gas industry would depend on whether coal seam gas lived up to expectations and production costs allowed for development.