Santos talks down threat of cheap US gas exports to Asia

US exports of shale gas to Asia are unlikely to undermine the market for Australian gas producers, a Santos executive said.

US exports of shale gas to Asia are unlikely to undermine the market for Australian gas producers, a Santos executive said.

"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."

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