Shale gas

In 2014, Santos drilled Tanumbirini-1 in the Greater Beetaloo Basin of the McArthur Basin. 

The well was drilled to almost 4 kilometers and demonstrated that significant quantities of shale gas were present in the Velkerri shales. This was one of the most excising discoveries made in Australia in recent times. 

A significant appraisal program will be required to ensure that this gas can be safely and economically extracted. 

If proven to be commercial, the development of Tanumbirini has the potential to provide significant economic benefits to the Northern Territory, while making natural gas available to the east coast gas market, relieving gas shortages. 

Shale gas is natural gas. It is found in fine-grained shales in the remains of organic material. 

Shale gas is odourless, colourless and mostly methane, exactly the same as natural gas used in homes and businesses.

Shale gas was first extracted in the United States in 1821, but it is only in the last decade that advances in technology have made production viable on a large scale. About 15.8 trillion cubic feet of dry natural has was produced from shalew resources in the US in 2016, that's about 60% of total US dry natural gas production in 2016*. 

The United States Energy Information Administration has estimated that Australia could have 429 trillion cubic feet of recoverable shale gas, the equivalent of over 200 years of production at current rates.

*U.S. Energy Information Administration (EIA)

Benefits of shale gas

The benefits of shale gas are much the same as for natural gas in general. Natural gas is widely used in electricity generation. Because it can be quickly started and stopped, natural gas can be used for both baseload and peaking power, and to fill gaps in renewable power generation when wind or sunshine are not available.

Natural gas is also used for cooking, heating houses and buildings and heating water. 

In addition, natural gas fuels many industrial operations, including glass and steel foundries and aluminium and nickel smelters. It is also compressed for use as a transport fuel.

Natural gas is also a key ingredient in fertilisers and a wide range of industrial products, including plastics and polymers, textiles, paints and dyes.

Where is shale gas found?

Shale gas was formed over tens of millions of years from the compressed remains of organic material such as plants. Over time, increases in heat and pressure trapped this organic material in dense shale formations and it decomposed to form natural gas.

Shale formations are typically 2,500 to 4,000 metres below the earth’s surface and separated from other underground layers.

In 2011, shale gas exploration began in earnest in the NT, where unconventional resources are now estimated to be a several hundred trillion cubic feet of gas in place. More exploration and appraisal is required to dully determine the economic viability of this resource. However, the areas with the most promising shale gas potential, defined by recent well results, are limited to the McArthur Basin and in particular the Greater Beetaloo basin. 

For more information, click here to read a fact sheet about shale gas that was used to engage community members and industry in the NT during July 2017. 

Shale gas world reserves


How do we produce shale gas?

To produce shale gas, we drill wells deep underground into the shale. These wells are surrounded by steel and concrete to ensure they are separate from other underground layers, such as water aquifers.

Because the shales are hard and dense, we need to fracture them to create pathways for the gas to escape, using a process called hydraulic fracturing. This involves pumping a mixture of water, sand and small quantities of chemicals into the shale at pressure. The water and chemicals are then pumped out and the sand remains in the shale, holding open the fractures to allow more gas to be released.

The gas is then pumped through a network of pipes to stations where it is compressed, purified and sent on to customers.

Santos developed Australia’s first commercial shale gas well in South Australia in 2012.
Australia has up to 396 trillion cubic feet in shale gas resources - equivalent to about 185 years of total Australian gas production.