by: Barry FitzGerald From:The Australian August 18, 201212:00AM
Santos's shale gas project in the Cooper Basin of South Australia could lead to a big boost in our energy reserves Source: The Advertiser
IT'S early days with the Santos-led joint venture's testing of the shale gas potential of the Cooper Basin in Central Australia.
But the fact that the blandly named Moomba-191 well has achieved Australia's first commercial flow rate of 2.6 million cubic feet-a-day from shale is potentially game-changing stuff.
The shorthand of it all is that Australia's security of energy supply has just gone up a serious notch. The gas potential of the Cooper Basin's shale has been long been put at more than 200 trillion cubic feet. That's monster sized gas in anyone's language, remembering that the North West Shelf gas project kicked off on the strength of about 20tcf, Gorgon has about 40tcf and good old Bass Strait has about 7tcf to go.
But up until the drilling of Moomba-191, the shale potential of the Cooper Basin was just that -- potential. The basin has been producing "conventional" gas from reservoirs above and below the shale tapped in Moomba-191 for more than 40 years. But nothing from the shale.
The ability to extract previously ignored gas trapped in shale at commercial rates is revolutionising the US energy scene. And the hope has been that it can be repeated here to some extent, delivering greater energy security, greater export earning potential, and for all of those energy-intensive energy industries worried by rising input costs -- lower cost energy.
But before shale gas here has anywhere near the impact it has had in the US, there are a couple of things to note about the result from Moomba-191. Santos chief executive David Knox described the result as a milestone, while the group's vice-president for Eastern Australian operations James Baulderstone said the flow was an "unambiguously excellent result".
All very true. But helping to make Moomba-191 "commercial" is its location -- 350m from a flowline that connects the gas to the Moomba gas processing plant some 8km across the sand dunes. And it is known that if Moomba-191 were to flow gas from the shale zone, Santos will make sure it does it in style, by subjecting the shale zone in the well to quite possibly the biggest fracture stimulation ever seen in this country.
None of that detracts from the excitement of the initial result for the partners -- Santos (66.6 per cent), Beach (20.21 per cent) and Origin (13.19 per cent).
It is just a reminder that there is a long way to go before the broader commerciality of shale gas in the Cooper is proven.
And even then, it is a question of how much money will be invested into building shale gas production.
Shale gas is more expensive than gas from conventional reservoirs and gas produced from coal-beds. At current eastern state gas prices of about $4.50 a gigajoule, Cooper Basin shale gas would be a tough business, except where the wells are close to existing infrastructure, as is the case with Moomba-191.
So higher gas prices will be needed --upwards of $8 a gigajoule for the domestic market and more still for the export market.
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