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What Is the Future of Shale Gas in Australia?

By Peter Cook

A review by ACOLA has weighed up the risks and rewards of shale gas extraction.

Unconventional gas, such as shale gas, coal seam gas and methane hydrates, has been in the news for many months as argument rages over its benefits and its impacts. The nation has to make a decision on this resource – and quickly.

For some, the potential economic benefits of new and potentially cheaper sources of gas are reason enough to develop shale gas. For others, the potential environmental impacts are reason enough to ban shale gas production.

The issue has been highlighted by a recent review by the Australian Council of Learned Academies (ACOLA), which has been examining the science, technology, economic, environmental and social impacts of shale gas in Australia.

To produce shale gas from fine-grained rocks with little or no natural permeability, it is necessary to hydraulically fracture (frack) the rock to allow gas to flow from the shale and into the production well. But there are concerns about the possibility of accidentally extending the fractures into an aquifer and contaminating important groundwater resources. Leaking wells also constitute a potential source of contamination.

A second risk is that fracking might result in induced seismicity – small earthquakes or microseismic events. There have been many fracking activities undertaken over the years around the world, but few examples of related earthquakes have emerged and none of them major. The best documented correlation with fracking was in 2011, with a series of small, non-damaging microseismic events of magnitude 2.3 on the Richter scale in the Blackpool area of England. As a result, fracking was suspended in the UK and new rules were applied to fracking to minimise the risk of induced seismicity. The UK ban on fracking has now been lifted.

Additionally, some early shale gas developments in the United States extended over large land areas and produced adverse aggregated and cumulative environmental impacts through surface disturbance, destruction and fragmentation, and loss of habitats.

In the US the development of shale gas and shale oil has had an enormous positive impact on the economy, on energy costs and on job creation. The US is set to become a net exporter of liquid natural gas and now produces more oil than it imports, while its greenhouse gas emissions have decreased.

Australia has many basins that are “promising” for shale gas and shale oil, and exploration is already underway in a number of them, with some shale gas already being produced in the Cooper Basin. If its promise is realised, shale gas in Australia could bring about significant economic benefits such as new jobs, new industries and new gas supplies.

Shale oil would benefit our balance of payments, as we are net importers of oil and its substitution for coal by gas could have a net greenhouse gas benefit. As many of the most promising shale basins are in northern Australia, infrastructure developments could benefit rural and regional industries.

Managing the Risks
If we embrace shale gas, the wells must be correctly engineered to protect major Australian aquifers. These can best be managed through the application of sensible (and enforced) regulations and industry best practice, particularly careful monitoring.

Drilling technologies and construction techniques have now greatly improved and much of this impact can be avoided.

As the ACOLA review said, appropriate landscape strategies must be adopted and best practices put in place to minimise surface and environmental impacts.

The risks associated with shale gas developments are small and can be managed, and the rewards have the potential to be important to the Australian economy. While the balance is strongly in favour of shale gas developments in Australia, this can only happen if the community is on-side. All concerns – about traffic, water, the environment, community cohesion, land use, pollution or health – need to be addressed openly and honestly.

Careful impact management, an informed and supportive community, increased knowledge of sedimentary basins and their resources, and transparent and effective regulations and companion codes of practice will be required to optimise the potential for Australia to benefit from shale gas.

Professor Peter Cook CBE FTSE is the former CEO of the CO2 CRC and Chair of the ACOLA report Engineering Energy: Unconventional Gas Production.