SA Mines and Energy Journal : November-December 2011
OCTOBER/NOVEMBER 2011 SA MINES & ENERGY JOURNAL 12 FEATURE With the emergence of a strong export gas market, new technology giving access to previously inaccessible gas and a world turning its back on coal in search of cleaner energy, unconventional gas has the resources world abuzz. Gas, which is about half as carbon intensive as coal when used to generate power, has found favour in a world keen to reduce greenhouse gas emissions. The definition of unconventional gas is broad, but generally refers to gas that has not accumulated in structural or stratigraphic traps. Unconventional gas resources are usually considered to be contained within large volumes of rock, distributed over large areas. They include coal seam gas, low permeability reservoir or tight gas, gas saturated coals susceptible to fracture stimulation or gas that has remained in- situ within rich organic shale formations where it first originated -- so called "shale gas. " Coal seam gas has attracted controversy in Queensland, where the coal seams can be less than 1000 metres underground, much closer to the surface than is typical for shale gas. Where extraction of coal seam gas has been developed under arable farming land and close to population centres, opponents have voiced concern over possible threats to water quality in the Great Artesian Basin, impacting on water quality for humans and livestock. In South Australia, the potential for coal seam gas is limited due to the lack of high quality coal deposits. The best potential for unconventional oil or gas in this State is within the shale rocks or associated "tight" sandstones that lie kilometres deep in the known petroleum basins of the State. These include the well-known Cooper Basin in the semi-desert country of the State's Far North. Although the region supports a cattle industry, its population density is small and well away from the main population centres. The Cooper Basin has been the mainstay for much of the gas supply for South Australia as well as the other major capitals in eastern Australia for over forty years. The SA Cooper Basin Joint Venture, consisting of Santos Limited, Beach Energy Limited and Origin Energy Limited, continues to produce and supply gas from the Moomba gas processing facility. However, the technological advances that have unlocked huge unconventional gas and oil resources in North America are now being applied in the area, where the gas in place could even be larger than all the coal seam gas resources of Queensland and New South Wales combined. The main players looking to develop the shale gas opportunity there are Beach Energy, Santos, and Adelaide Energy. In our State, the big issues facing the unconventional gas industry are the technical difficulty of drilling wells in the rock formations in the Cooper Basin and proving that gas will flow at commercial rates from shale. Mr Barry Goldstein, the Director of Petroleum and Geothermal at Primary Industries and Resources South Australia, says our State has nine unconventional gas plays, involving more than 24 companies. SA's unconventional gas plays include underground coal gasification (USG), gasification of mined coal and gas in low permeability reservoirs. But the main focus is on shale gas. Global market dynamics and technological advances have combined to improve its economic feasibility. The LNG (liquefied natural gas) export market has also emerged, added a new dimension to the equation. Interest in LNG has been fuelled by demand from the world's fastest- growing economies of China and India, as well as Japan. At the same time, technology has advanced to deliver a process known as fracture stimulation, which allows access to areas of gas previously trapped deep under impervious rock. When used to develop and produce shale gas, the fracture- stimulating (or fraccing) of rock, forces water, mixed with material, usually sand, to prop open the induced fractures, into shale formations deep underground, breaking up the rock and releasing gas to the surface through production wells. Technology now not only allows massive hydraulic fracturing of rock, it has also freed up gas flows by allowing horizontal drilling, which results in the gas flowing much more strongly. Beach Energy's Managing Director Reg Nelson says previously, gas could only be accessed via vertical drilling, significantly restricting gas flow. "Horizontal wells can deliver up to 10 times what a vertical well can, " he says. In the US, shale gas has taken off over the past 8-10 years, revolutionising the energy landscape there in the process. It now accounts for more than 20 per cent of the nation's gas production. Because the Moomba gasfields have always been a key contributor to Australia's gas needs, the nation has had no reason to further explore its gas reserves. continued overleaf Unconventional Gas - Set to Revolutionise the Cooper Unconventional gas has transformed the energy equation in the US and is a rapidly emerging industry in South Australia. By Kate Nash In our State, the big issues facing the unconventional gas industry are the technical di culty of drilling wells in the rock formations in the Cooper Basin and proving that gas will ow at commercial rates from shale.