US shale gas exports 'no threat'

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," said Diana Hoff, Santos' vice-president of technical and engineering.

Factors holding back US shipments include 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 huge new gas projects in Australia.

Santos is stepping up its development of shale and other so-called unconventional gas reserves, particularly in 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. Gas priced at between $6 and $9 per 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 85 trillion cubic feet of gas, roughly equivalent to 85 years of Australia's current usage.

"The early signs are good," Ms Hoff said, adding it would take about 15 wells to assess the potential.

While technical boundaries will be challenging, so may be 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.

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