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Shale gas set to become a global game changer


29 December 2011

The emergence of shale gas is set to have a profound impact on the oil & gas industry according to the Oil & Gas Reality Check, the latest report from professional services firm Deloitte which looks at ten of the top issues facing the sector in 2012.

Stephen Reid, Deloitte’s Australian Oil & Gas Leader, said that while 2011 had been a year of upheaval in which political and economic uncertainty had dominated, it was the growing abundance of natural gas, particularly shale gas, which was likely to have the most significant impact on the global gas industry.

“Shale gas has undoubtedly been a game changer for the United States’, transforming it into a largely self-sufficient gas market with potential to develop future export opportunities,” Mr Reid said.  “However, it is difficult to gauge what impact the emergence of the US as a gas exporter will have on the Australian market.”

“Regardless of the US activity, growth in the Australian LNG industry in the medium term will continue to be driven largely by a strong Chinese demand, which is likely to quadruple by 2020.  However, China has its own substantial gas reserves that remain largely unexploited due to competing land use issues and technological constraints.”

But despite its obvious potential, Mr Reid said that it would take time for China to fully realise its unconventional resources.

“China’s new five-year plan is committed to investing in developing its upstream industry but for it to monetise its unconventional gas will require a huge investment in technology and infrastructure,” he said.

“That leaves Australian producers with a window of opportunity in which to develop their unconventional gas reserves and continue to cement a dominant position in the Asian natural gas market.”

According to Mr Reid, the U.S. Energy Information Agency estimated Australia had 396 trillion cubic feet of technically recoverable shale gas resources across four basins – considerably more than either its conventional gas assets or estimated coal seam reserves.

“To date, coal seam gas has attracted both the bulk of investment and attention for unconventional activity. It has also attracted a high level of community concern that will need to be properly managed.

“However, promising results from Beach Energy’s first two shale gas wells drilled in the Cooper Basin could signal a new wave of investment from the international investors. The Cooper Basin is likely to prove particularly attractive given its maturity means the infrastructure necessary to monetise any shale reserves there is already well established.

“While the domestic shale gas industry is in its infancy, it is already attracting interest from foreign majors keen to get a foothold in an emerging market in the hope it will replicate the success of the US shale industry,” Mr Reid said.

“However, it’s still early days and the true potential of an Australian shale gas industry is yet to be proven – much will depend on whether coal seam gas continues to live up to expectations and whether production costs will enable economic development.”

Top Ten Issues:

  1. The future of oil production: Libya and Iraq are now part of the equation
  2. Join the game: The global development of shale gas assets
  3. The decoupling of oil and gas prices: Where and when?
  4. The new NOCs: The emergence of non-traditional consuming national oil companies
  5. Just because shale is in doesn’t mean conventional is out: New exporters come to market
  6. China is an upstream game, not just a consuming black hole
  7. WTI and Brent: Will the price gap close or stay at an abnormal divide?
  8. The new cool kid on the block: The American tight oil industry
  9. At a crossroads: Brazil’s challenge to distribute oil wealth while encouraging investment
  10. 10. The people equation: Canadian oil sands industry to face tough labour issues

NB: See our media releases and research at


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Stephen Reid
Deloitte Australia
Job Title:
Partner, National Mining Leader
Tel: +61 3 9671 7506
Eileen Kerrigan
Job Title:
Corporate Affairs & Communications
Tel: +61 3 9671 6910, Mobile: 0412 499 683




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