Gas tipped to ease pain of Olympic Dam job losses by: MATT...

Gas tipped to ease pain of Olympic Dam job losses by: MATT CHAMBERS From: The Australian October 12, 2013 12:00AM

THE Cooper Basin's growing unconventional oil and gas production, including shale potential, could make up for employment and investment losses South Australia felt last year when BHP Billiton ditched its $30 billion Olympic Dam expansion, industry sources say.

While analysts are loath to predict potential investment in the burgeoning sector, drilling contractors are said to be looking at tripling staff numbers in coming years as operators become increasingly impressed by the potential of both shale gas and other so-called tight gas that requires hydraulic fracturing, or fracking, to release it.

Tino Guglielmo, chairman of the SA government's Resource Energy Sector Infrastructure Council, said there was huge potential for gas in the Cooper, the most prospective areas of which are in South Australia, but which extends into Queensland."The economic potential of the Cooper Basin is potentially larger than that of the Olympic Dam expansion," he said. Mr Guglielmo, who has more than a decade of experience in the Cooper Basin, is managing director of one of the companies operating there, Ambassador Oil and Gas, meaning he has an interest in talking up the basin.

But with BHP's shale ground in the US attracting $US6 billion ($6.3bn) a year of spending, it is not out of the question that if all goes well in the Cooper, eventual investment could supersede the $30bn analysts believed was being lined up for Olympic Dam before BHP shelved its plans.

The Australian reported yesterday that US investor interest in the Cooper was growing as positive test flows came from shale wells and as a looming tripling of national gas demand, led by Gladstone LNG plants, came closer.Beach Energy chief Reg Nelson, who studied the Cooper Basin for more than 30 years, says the gas and oil held in shales and other unconventional sources could make it the nation's main producer. "There's little doubt that the Cooper will continue to be a major supplier of natural gas to the eastern Australian market for decades to come," Mr Nelson told a Melbourne Mining Club lunch last week."I believe it could be a dominant supplier if we can unlock the gas potential of its deeper rocks."According to industry consultants Energy Quest, the Cooper Basin's first-half oil production this year was 5.2 million barrels of oil, just beating the five million barrels produced by the Gippsland Basin fields owned by ExxonMobil and BHP in Bass Strait, which were for years the nation's biggest oil producers.

Industry body the Resources and Engineering Skills Alliance is preparing a study of the potential jobs that will be available in SA's growing oil and gas sector.RESA chief executive Phil de Courcey said it was too early to say whether there was the potential to match the investment and 10,000 construction and permanent jobs that had been lost with the shelving of the Olympic Dam project. But he said growth was evident. "One drilling organisation we surveyed started operating about two years ago and has grown to 200 people," he said."They are expecting to have about 600 in three years' time."

SA Resources Minister Tom Koutsantonis said the Cooper Basin was going through a renaissance after a half century of producing oil and gas."We conservatively estimate that $3.5 billion will be spent in the next five to seven years in exploration alone within the Cooper and Eromanga basins in South Australia," he said."

The South Australian government doesn't regard the investment in Cooper Basin as replacing the expansion of the Olympic Dam mine. Ideally, we would like the Cooper Basin, Olympic Dam, as well as our strong pipeline of gold, copper, uranium, iron ore and mineral sands projects to all be developed."