Analysts' money on shale gasBY: ROSEANNE BARRETT From: The...

Analysts' money on shale gas
BY: ROSEANNE BARRETT From: The Australian November 08, 2011 12:00AM

MINING companies are exploring Australia's resource states for controversial shale gas as analysts tip the nascent industry will create the next energy boom.

Resources companies have poured about $500 million this year into developing South Australia's Cooper Basin and Western Australia's Perth Basin for shale gas, while early prospecting is occurring in central Queensland's Galilee Basin.

Amid controversy in the US and Britain over the hydraulic fracturing or "fracking" required to extract the shale gas from at least 2km below the surface, Morgan Stanley has said the industry has enormous potential.

Analyst Stuart Baker said shale gas could be "the next success story for Australia oil and gas". "The size of the prize is potentially very large, but unlocking the resource is likely to be an evolutionary process and, as with any exploration, there are likely to be setbacks," he said in a June research paper.

"Commercial production from shale hasn't been seriously attempted in Australia yet, but that is about to change."

About 25 companies have begun to investigate shale gas in Australia.

Beach Energy has drilled two exploration wells and will invest about $200m over the next two years to develop another 11 wells in the Cooper Basin, with a view to commercial production in 2014.

Its chief executive and managing director, Reg Nelson, said the "potential for large-scale gas production is very high".

He said 2 trillion cubic feet of gas was potentially recoverable -- equivalent to a third of the Cooper Basin's total historic gas production or more than 330 million barrels of oil equivalent.

Exoma Energy is exploring the Galilee-Eromanga Basin, one of two approved shale gas exploration licences in Queensland.

Chief executive Rob Crook said the company was "at the early stage of exploration" to understand not only the gas, but also the environmental interactions.

In Western Australia, six companies are approved for fracking of unconventional gas.

Last week, an independent report cited shale-gas fracking and unusual geology at a British drill site as the probable causes of a minor earthquake, a report jumped on by independent MP Tony Windsor, who is demanding more research into the effects of fracking as a condition for his support of the mining tax.

South Australian government energy resources executive director Barry Goldstein yesterday said shale gas would have a "net benefit" and appropriate environmental protections were in place.