Unconventional oil & gas
The unconventional gas potential of South Australian basins include shale gas, tight gas, coal seam gas, in situ gasification and syngas.
Exploration for these new resources is at an early stage. In consideration of the enormous economic and other potential benefits of unconventional gas to the State, the Department of State Development has established a roundtable to explore the issues and progress development of these resources. This has led to the production of a Road Map for unconventional gas projects in South Australia and the establishment of five working groups to address the challenges and maximise local opportunities. SACOME has a representative on each of these working groups and will continue to represent large and small industry members to address the issues of our petroleum members, including:
- A regional hub for training to meet Australia's and South East Asia's skill requirements for deep onshore petroleum operations, co-located with regional corporate headquarters
- Efficient and fit-for-purpose supply hubs, roads, rail-links and airstrips to/in the Cooper-Eromanga basins
- Efficient and fit-for-purpose water use in the Cooper-Eromanga basins
- An industry-government partnership to maintain safe and sustainable transport and reduced red tape along SA-Qld 'wharf to well' corridors to the Cooper-Eromanga basins
- Innovation towards cost-effective and trustworthy GHG detection
What is unconventional gas?
Unconventional gas is ‘trapped’ natural gas that cannot be extracted by conventional means. Shale gas has the most significant potential in South Australia, particularly in the Cooper Basin. South Australia also has gas in tight sandstone and lesser amounts in deep coal, all at depths below 2000 metres.
Unconventional activity in SA
In 2012, the Cooper Basin produced Australia’s first shale gas at commercial flow rates at the Santos operated Moomba 191 well. Exploration work is continuing in the Cooper Basin by a number of Australian entities together with global oil & gas companies including Drillsearch, BG and Chevron. South Australia’s unconventional gas is deep and requires specialist technology to access. This is still being developed and refined; recent advances include the 3D seismic data, horizontal drilling and new fracturing technology.
South Australia has several unconventional plays being explored by over 20 joint ventures.
South Australia’s unconventionals have many advantages:
• South Australia’s world-leading regulatory environment
• Extensive infrastructure in place
• Proximity to export facilities and Asian markets
• Australia’s technical expertise and excellent research facilities
“With unconventional gas, the volumes are so great that once enough work has been done it’s possible to produce a tight curve in the ‘factory’ phase. Costs are predictable, returns are predictable.” – Reg Nelson, Beach Energy, 2013
“In the Cooper we have a really good layout of infrastructure …That gives us a unique ability to commercialise gas.” David Knox, Santos 2013
South Australia does not produce oil or gas from offshore facilities but exploration is intensifying in the Great Australian Bight.
Companies exploring in the Bight include BP, Statoil, Chevron, Bight Petroleum, Santos and Murphy Australia Oil. All petroleum exploration and development activities in Australian waters are subject to stringent environmental standards and reporting requirements.
BP has completed seismic testing in four exploration licence areas and is currently determining targets, with a view to commence drilling in late 2015. Norwegian oil & gas giant Statoil has invested heavily in this project.
Read about BP’s $1.4 billion petroleum exploration project
South Australia has no Liquified Natural Gas (LNG) projects but will be impacted by the facilities that are set to revolutionise the export of gas from Australian acreage, including the world-class Cooper Basin which is connected to the Gladstone LNG facility, set for completion and first exports in 2015, through existing pipeline networks.
Massive gas demand from Australia’s 10 LNG projects (which include seven of the world’s 12 largest) could see the nation’s gas exports triple to over 63 million by 2017. Seven Australian LNG projects have secured contracts with countries including Japan, Korea and India, with the first to become operational in 2014/2015.
Initial gas requirements for LNG contracts are likely to be met by existing conventional and coal seam gas supplies, but other unconventional sources will be necessary to offset domestic shortfall and increasingly meet international export demands.
Coal to liquids
Coal to liquids in South Australia is in the early stages with no production at present. The Arckaringa project North of Cooper Pedy is focused on developing a mining and production facility to convert coal to methanol, as an alternative fuel supply.