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Australia's one man show

Queensland remains the country's capital of unconventional gas, with bans in force in some other states

It's down there and it's staying there. Much of Australia's abundant reserves of unconventional gas remain locked in the rock because of opposition from environmental groups. This has pretty much shut down exploration in most states other than Queensland, the unofficial capital of coal-seam gas, and South Australia.

At the end of 2017, a permanent ban on the exploration and development of all onshore unconventional gas was imposed in Victoria. Indeed, another moratorium, this one on the exploration and development of conventional onshore gas, has been extended until mid-2020.

In New South Wales, no additional wells have been drilled in the past three years because of a blanket ban on developing unconventional gas. The last wells were drilled by Santos for the Narrabri project in the northwest of the state in 2014.

In the Northern Territory, a series of scientific studies confirms the potential for the state to become what the Australian Petroleum Production & Exploration Association (Appea) describes as "a new major Australian gas province". But another moratorium, dating from late 2016, has stalled all activity. As Appea adds, this is despite fields such as Velkerri Formation in the Beetaloo sub-basin having "huge potential resources of shale gas and liquids".

Concerns over hydraulic fracturing explain the moratoriums, even though it's been going on for years. In South Australia's Cooper Basin, for instance, there have been more than 800 fracturing "stimulations" in the last 50 years, albeit only one for unconventional gas operations. And in Queensland about 20% of the wells drilled for coal-seam gas were hydraulically fractured, without incident.

Yet, in spite of the moratoriums, Australia is still well on the way to rivalling Qatar as the world's largest exporter of liquefied natural gas, mainly through tapping its treasure trove of coal-seam gas (or coal-bed methane). As the International Energy Agency forecasts, the country's gas production from all sources should more than double to 195bn cubic metres a year by 2040, up from 99bn cm in 2016. That's equivalent to an annual growth rate of 3.4%, fastest of all the OECD nations. The IEA estimates that Australia's gas exports will more than triple to 137bn cm/y by 2040, mainly from LNG.

But unless there's a change of thinking in the moratorium-hit states, the gas will have to come from Queensland, South Australia and Western Australia. With unconventional gas resources in the last two states largely undeveloped—in the past two years there has been only one unconventional gas well drilled in Western Australia—it will be Queensland that does the heavy lifting almost on its own. There are three major unconventional gas facilities in operation there, and most of the increase in Australia's gas usage relies on the state's resources of coal-seam gas.

When will the moratoriums be lifted? There are several inquiries into the overall impact of hydraulic fracturing going on, the next report due being the Northern Territory's in March 2018. Its findings will likely influence political decisions in other states.

This article is part of an in-depth series on Global shale. Next article is: Shrinking Canadian expectations

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