Australian Shale Gas: The Show, or All Show?
Need a natural resource? Then Australia has it.
New fuel supply, notably unconventional in nature, is transforming world energy markets. Shale gas in particular has attracted much attention: for the scale of its potential, and for possible negative consequences associated with extraction processes.
There has been much press for several years about unconventional gas in Australia from coal seams, but only in the last twelve months or so has shale gas received press – and a rush of investment interest.
Australian listed companies active in Australia Shale Gas/Oil (source: Morgan Stanley):
Australian Listed Ticker Mkt Cap. (A$mn – 06/2011) Key Region
Adelaide Energy ADE.AX 51 Cooper
AWE AWE.AX 759 Perth
Baraka BKP.AX 46 Georgina
Beach Energy BPT.AX 1,103 Cooper
Buru Energy BRU.AX 139 Canning
Drillsearch DLS.AX 118 Cooper
Emerald EMR.AX 35 Canning
Empire Oil EGO.AX 107 Perth/Canning
Exoma EXE.AX 65 Galilee
Icon Energy ICN.AX 87 Cooper
New Standard NSE.AX 42 Canning
NorWest NEW.AX 42 Perth
Oil Basins OBL.AX 9 Canning
Origin Energy ORG.AX 17,233 Cooper/Perth
Santos STO.AX 12,547 Cooper
Senex SXY.AX 265 Cooper
Strike Energy STX.AX 56 Cooper
Transerv TSV.AX 29 Perth
- BHP Billiton (Mkt Cap: $204 Billion)
- Westralian Gas & Power (Mkt Cap: $6.1m)
- MEC Resources (Mkt Cap: $22.6m)
- BPH Energy (Mkt Cap: $7.3m)
There’s a veritable shale gas rush going on at the moment, with majors and many (sometimes very) juniors getting involved.
It’s a high risk environment.
Reservoir dynamics for the purposes of economic extraction for some of these reservoirs are largely unknown. Distance and cost to market can be prohibitive. Drilling is conventionally deep and technical (as opposed to shallow mineral rigs typically employed for coal seam gas extraction). These areas don’t have the concentration of contractors and equipment to facilitate exploration and production across the zones.
Will this be a flash-in-the-pan fad for all but the majors for the foreseeable future?