Reimagining Australia's shale gas revolution: lessons at home and abroad

Abstract

In Australia the shale gas debate has been polarised between those extolling its virtues with unchecked enthusiasm on one side and deep wariness on the other. How can we re-imagine Australia’s energy future and what is the proper place for shale gas? With 396 trillion cubic feet of potential shale gas reserves (CSIRO, 2012), Australia stands on a precipice of a golden age of gas, but only if those reserves can be developed profitably and with a higher level of community support and understanding. The development of a shale gas industry is likely to transform the nation’s domestic gas and export LNG markets, increase energy security, and bolster the Australian economy. Community concern and infrastructure constraints, however, stand as barriers to the realisation of the industry. The US is one of the few countries to have developed shale gas to a commercial scale. Facilitative government policies, extensive infrastructure networks, open-access policies, a favourable regulatory framework, a highly competitive industry, and a strong R&D focus have allowed the shale gas industry to flourish. Meanwhile, the nascent Australian unconventional gas industry grapples with community support, regulatory duplication and delays, conflicts about competing resources, productivity decline, and rising capital and labour costs. The development of major CSG to LNG export projects in Queensland will promote competition for gas between domestic and international customers. The eastern Australia domestic gas market will no longer be insulated from the world gas market and the domestic gas price is likely to rise to meet international prices. A shale gas industry in Australia could provide part of the solution to future domestic gas shortages and price hikes. To develop an Australian shale gas industry, however, proponents will require a social licence to operate and access to infrastructure. Government and industry need to act now to implement a coordinated strategy that will enable proponents to secure and maintain their social licence and obtain adequate access to infrastructure. While the existing Australian unconventional gas industry and overseas shale gas experiences are defined by a specific set of circumstances and differ from the Australian shale gas experience in a number of important respects, lessons from shale gas projects abroad is paramount to shaping a mature debate and ensuring this potential opportunity is realised.