March 23rd 2019


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Articles from this issue:

COVER STORY Federally, the pro-family voter is starved for choice

SPECIAL EDITORIAL Has Cardinal George Pell been wrongly convicted?

EDITORIAL For politicians: lessons from Europe's emerging pro-family parties

ENERGY Hundreds of years of oil and gas reserves; if we want to use them

THE CARDINAL AND THE MEDIA Four Corners: the third trial of Cardinal Pell

SOCIETY AND RELIGION The future belongs to those who possess the past

SCIENCE Are summer heatwaves caused by climate change?

CHILD SEXUAL ABUSE The roots of the breaking of a fundamental taboo

CARDINAL PELL CONVICTION Triumphalism over Pell verdict shows civilisation is just a veneer

INTERNATIONAL AFFAIRS President Donald Trump: an unlikely promise keeper Part 1

THE AUSTRALIAN CLIMATE Same old same old in our beloved sunburnt country

THE AUSTRALASIAN A three years' drought

ASIAN AFFAIRS Taiwan reaches out to its regional neighbours

INTERNATIONAL AFFAIRS Covington boys: left hoist on its bigots' petard

MUSIC Time's unfolding: One of music's raw materials

CINEMA Stan & Ollie: Past joys, past sorrows

BOOK REVIEW The three-part attack on the home

BOOK REVIEW What draining the DC swamp turns up

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ENERGY
Hundreds of years of oil and gas reserves; if we want to use them


by Chris McCormack

News Weekly, March 23, 2019

 

  • Exploiting our oil shale and gas shale reserves could enable Australia to be self-reliant in energy
  • “Fracking” refers to injecting sand, water and chemicals into rock to fracture the rock
  • Australia is already the world’s largest exporter of LNG

Could the vast oil shale and gas shale reserves discovered in Australia, rivalling those of the United States, mean that Australia could be self-reliant in fuel/energy needs?

Shale oil is produced by converting kerogen in the oil shale rock. Shale oil can be extracted in two ways: in situ, where the shale rock is left in place and heated to extract the oil; or surface mining of the shale rock, which is then heated and the oil extracted.

Shale gas is extracted by hydraulic fracturing (fracking), which involves sand, water and chemicals being pumped at high pressure through holes drilled into the rock, which fractures the rock, enabling the gas to flow out.

Far from being a new technology, fracking was first discovered in the 1860s and has been more widely used as a method of extraction since the 1960s, although evolutionary progress in methods of extraction have occurred since then.

An Australian Council of Learned Academies (ACOLA) report in 2013 found that Australia could have more than 1000 trillion cubic feet (tcf) in recoverable shale-gas reserves spanning the Northern Territory and all states except Tasmania. This is in addition to an estimated 819 tcf of other gas resources. To put that in perspective, Australia consumed a total of 1.1 tcf of gas in 2013.

A United States Department of Energy report in the same year estimated that Australia has 437 tcf of recoverable shale-gas reserves, compared with the 665 tcf in the U.S. In either estimate, there are enough shale deposits to power Australia for hundreds of years. That is, if we learn from the lessons of the Queensland gas-export deal.

Under this deal, Australia largest liquefied natural gas exporter in the world last November. This sent dom­estic gas prices skyrocketing as most of our gas was being exported. Sixty per cent of Australia’s natural gas production was exported in the 2015–16 financial year. The International Energy Agency predicted that this would eventually rise to 70 per cent. Without a gas reservation policy similar to the one put in place in Western Australia, or enacting restrictions on gas exports, we will squander the opportunity for energy security, self-reliance and an affordable domestic gas price.

In response to spiralling gas prices, the Federal Government introduced the Australian Domestic Gas Security Mechanism (ADGSM) in 2017, which can be triggered if the Government foresees a shortage in domestic supply. So far, it has not been triggered because export companies vowed to put more gas aside for the domestic market.

This promise has done nothing, however, to bring the price down. In December 2014, the Short Term Trading Market (STTM) price of wholesale gas was relatively low, ranging from around $1.40 per gigajoule (GJ) in Brisbane to $2.40 in Sydney and $3.40 in Adelaide. From January 2015, when the first shipment of export liquefied natural gas left Gladstone, the price rose sharply to around $9.50–$10.50 GJ in early to mid 2017. Its current price is between $8.39–$10.51 GJ for the three cities.

Global energy research firm Wood Mackenzie found that, unless more gas projects were developed in the next few years, prices could reach between $14.30 and $15.90 GJ by 2030 and potentially keep rising thereafter. If gas is to be a low-cost powerhouse for Australia, substantive action, not platitudes, will be necessary to secure an affordable dom­estic gas price.

Why are policymakers allowing our industry and business to collapse or relocate offshore because of unsustainably high energy costs when we have an abundance of low-cost energy resources? To add insult to injury, gas import terminals are planned to be built in the next few years. The Australian Competition and Consumer Commission has repeatedly predicted domestic gas shortfalls. It is the definition of insanity that in the largest gas-export nation in the world, four gas import terminals are planned in NSW and Victoria in response to the shortfall.

Currently, Tasmania and Victoria ban fracking completely, while the Northern Territory and Western Australian moratoriums on fracking were lifted last year. The NT Government removed the ban after stating that it was following scientific advice that the risks from fracking were acceptable if certain recommendations were followed.

Similarly, when lifting the WA ban, WA Premier Mark McGowan said: “This is a balanced, responsible, science-based policy that supports economic opportunities, new jobs, environmental protection and landowner right.”

Only 2 per cent of WA’s landmass will be able to “fracked” while 51 per cent of the NT will be accessible. In the other states, 98 per cent of South Australia is accessible for fracking, 97 per cent of NSW and 100 per cent of Queensland and the ACT.

The lifting of the WA and NT moratoriums on fracking has effectively opened up huge gas and oil reserves. Santos chief executive Kevin Gallagher said the Territory’s McArthur Basin “has the potential to do for the Northern Territory and Australia what the shale gas revolution has done for America”.

The U.S. shale-oil revolution has enabled the U.S. to overtake Russia and Saudi Arabia as the world’s largest petroleum producer; last December it become a net oil exporter for the first time in 75 years.

A Linc Energy report estimated that South Australia’s Arckaringa Basin alone contained shale oil reserves several times more than all of the existing oil extracted in Australia and could be worth in excess of $20 trillion. “If it comes in the way the reports are suggesting, it could well and truly bring Australia back to (oil) self-sufficiency,” Linc managing director Peter Bond said.

The aforementioned U.S. Department of Energy report estimated Australia’s shale-oil reserves at 17,500 million barrels, which is more than 12 times our existing reserves. The largest oil shale and gas shale reserves lie in the Canning basin in WA, the Georgina and Beetaloo basins in the NT and western Queensland, and the Cooper Basin in central Australia. Resources Minister Matt Canavan has said that the Beetaloo Basin is one area that could secure Australia’s fuel security.

Australia’s colossal oil and gas reserves have the potential to ensure our fuel/energy security indefinitely. But politicians must pass sensible policies free of ideology, and enable our resources to be tapped; and they must legislate reservation policies ensuring a low-cost, plentiful domestic supply.




























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