Santos talks down threat of cheap US gas exports to Asia
"We don't think it's a significant risk," Santos's vice-president of technical and engineering, Diana Hoff, said.
Factors holding back US shipments are the lack of infrastructure and whether the US government will allow shipments of scale, Ms Hoff said.
Major Asian gas importers, such as Japan, have reportedly been talking up the prospects of buying US gas in a bid to cut prices just as energy companies ramp up new gas projects in Australia.
Santos is stepping up its own development of shale and other so-called unconventional gas reserves, particularly in the Cooper Basin straddling South Australia and Queensland.
Santos drilled its first commercial shale gas well last September and is planning its first three vertical and horizontal well sets in coming quarters. Gas priced at $6 to $9 a gigajoule "will be economic for the shale gas", Ms Hoff said.
The Cooper Basin is Australia's most prospective and commercially viable region for shale gas. The US Energy Information Administration estimates the basin has about 2.4 trillion cubic metres of gas, roughly equivalent to 85 years of Australia's current usage.
"The early signs are good," Ms Hoff said, adding it will take some 15 wells to assess the potential.
While there are technical challenges, there are also environmental ones. In June, a survey of unconventional gas production published by the Australian Council of Learned Academies highlighted the potential for contamination of freshwater aquifers.
John Williams, one of the report's authors and a former chief of CSIRO's land and water division, said the geological structures of the Cooper Basin differed from those where shale gas has been typically extracted from in the US. Horizontal drilling, for instance, may encounter different stresses and could extend existing fault lines and connect aquifers not linked at present.
Dr Williams said increased seismic activity may be another issue, as well as further fragmentation of fragile ecosystems at the surface.
But Ms Hoff said Santos had great knowledge of the region's geology, having drilled and explored there for more than half a century.
"Your environmental practices don't necessarily change based on which rock you're targeting," she said. "You always have the same principles to protect aquifers and to minimise footprint."
Frequently Asked Questions about this Article…
According to Santos’ vice‑president of technical and engineering Diana Hoff, US shale gas exports to Asia are unlikely to be a significant risk to Australian gas producers. Santos cites limiting factors such as a lack of export infrastructure in the US and uncertainty over whether the US government will permit shipments at scale.
Santos is stepping up development of shale and other unconventional gas reserves, focusing on the Cooper Basin. The company drilled its first commercial shale gas well last September and is planning its first three vertical and horizontal well sets in coming quarters.
Santos has said shale gas priced between $6 and $9 per gigajoule would be economic for its shale gas developments in the Cooper Basin.
The US Energy Information Administration estimates the Cooper Basin contains about 2.4 trillion cubic metres of gas — roughly equivalent to 85 years of Australia’s current usage. That scale makes the Cooper Basin Australia’s most prospective and commercially viable region for shale gas, which is relevant for investors watching domestic gas supply and company growth prospects.
Santos says the early signs are good but that it will take around 15 wells to properly assess the Cooper Basin’s shale gas potential.
A survey by the Australian Council of Learned Academies flagged risks such as potential contamination of freshwater aquifers. Former CSIRO land and water chief John Williams warned the Cooper Basin’s geology differs from many US shale plays, so horizontal drilling could encounter different stresses, possibly extending existing fault lines, connecting aquifers, increasing seismic activity and fragmenting fragile surface ecosystems.
Santos says it has deep knowledge of the Cooper Basin’s geology, having drilled and explored there for more than half a century. Diana Hoff noted that environmental practices don’t necessarily change by rock type and that the company follows the same principles to protect aquifers and minimise its surface footprint.
The article notes major Asian importers such as Japan have been discussing buying US gas to try to cut prices while Australian energy companies ramp up projects. However, Santos views large‑scale US shipments as constrained by infrastructure and government approval, so it does not see a significant immediate threat to Australian projects.
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