Santos produces first shale gas in Australia

The Business Spectator reports that Santos are getting some positive market feedback after expanding into shale gas in inland Australia (supplementing their natural gas and coal seam gas production) - Santos pins hopes on first shale gas.

Oil and gas producer Santos says Australia's first commercial shale gas well is ready to go into production, helping to boost supply and keep prices stable in eastern Australia.

Santos said its Moomba-191 well in the Cooper Basin was now producing dry gas after the company reported an increase in underlying first half profit and maintained its full-year production guidance on Friday. ...

Chief executive David Knox said shale gas flows from the Moomba well were a significant milestone in the company's program to unlock the vast unconventional gas potential of the Cooper Basin that straddles the South Australian and Queensland border.

"The shale well result has been an outstanding result for us and potentially for eastern Australia for the very long-term future," Mr Knox told analysts on Friday. ...

"The share price is up because of the surprisingly good flow rate that they're getting at their Moomba 191 shale gas well," Mr Wood said. "You can start to talk about some very large numbers on the back of that, but it's very early days. Certainly this flow rate was better than we were expecting."

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Gas prices to double in 20 years as demand explodes, Santos predicts

Santos is tipping much higher natural gas prices for Australian consumers and a boom in unconventional gas - Gas prices to double in 20 years as demand explodes, Santos predicts.

The only way to meet a tripling in natural gas demand in eastern Australia is by allowing unconventional gas projects, such as coal seam gas, oil and gas producer Santos says.

Santos's eastern Australia vice-president James Baulderstone told a conference that he expected gas prices to more than double within two decades, driven by demand and linking it to oil prices. Soaring global demand for liquefied natural gas is expected to contribute to Australia's wealth and make it one of the world's biggest exporters of the commodity. ...

''The five LNG trains already sanctioned, with more planned, represent a quantum change in eastern Australian natural gas demand,'' Mr Baulderstone told the Opportunities and Challenges for Australian Gas conference yesterday. ''Provided natural gas development activity is allowed to proceed at the right pace, and the market is willing to pay the increased cost of extraction, there is sufficient gas in eastern Australia to meet this demand.'' But he added that it was not viable to develop much of the gas reserves to meet the new demand at current Australian gas prices of about $4 a gigajoule.

Australian gas prices were some of the cheapest in the developed world, Mr Baulderstone said. He predicted prices would move to $6 to $9 a gigajoule.

The Australian (now beginning to paywall itself into oblivion) reports that AGL are already seeing much higher prices - AGL secures east coast's most expensive gas deal.

AGL Energy has snared the east coast's most expensive domestic gas sales contract in what is thought to be a 50 per cent price jump forced by the expected demand from Queensland's coal-seam gas export plants. AGL is believed to have secured a price of about $6 a gigajoule for gas that will be used to supply miner Xstrata's Mount Isa operations for 10 years from 2013.

The SMh reports that fracking for coal seam gas now has a new cause for concern - earthquakes - Fracking shock reignites concern.

DEBATE over the safety of ''fracking'' in Australia has reignited after a gas project in Britain was named as the likely cause of 50 tremors this year.

A panel of seismic experts has found it ''highly probable'' that fracking conducted by Cuadrilla Resources - 41 per cent-owned by Australian drilling company AJ Lucas - was the cause of two significant tremors and 48 aftershocks near the British town of Blackpool in April and May. The findings come after the independent MP Tony Windsor told the federal government this week he would not support its mining tax unless more was done to investigate the safety of fracking in Australia.

Fracking, or hydraulic fracturing, is a controversial gas extraction technique that uses high pressure solutions to fracture rocks deep underground. The process is used in both coal seam gas and shale gas extraction and, if poorly executed, can contaminate groundwater and trigger seismic activity.

Fracking is most common in the United States but is fast spreading to other nations like Australia and Britain, where Cuadrilla hoped to develop a gas source near Blackpool. The company was forced to launch an investigation after tremors of magnitude 2.3 and 1.5 appeared to follow a series of fracks.

The report - commissioned by Cuadrilla - confirmed the fracking was ''most likely'' to have caused the tremors but said the region had ''rare'' geological factors that were one of ''many factors'' which ''coincided to induce these seismic events''.

AJ Lucas services the main coal and coal seam gas basins in Queensland and NSW, including in the Hunter Valley, Bowen Basin and Surat Basin.

The Cuadrilla revelations are not the first time fracking has been linked to tremors, with regulators in the US state of Arkansas expressing concern that two shale wells - now owned by BHP Billiton - were responsible for causing earthquakes.

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Santos expands CSG interest by buying Eastern Star Gas

The ABC reports on some more consolidation of he Australian coal seam gas industry - Santos expands by buying another CSG company.

Coal seam gas company Eastern Star Gas has been sold to resources firm Santos, the same company that's currently being blockaded by farmers on the NSW Liverpool Plains. Former Deputy Prime Minister and Eastern Star Gas chairman, John Anderson, was previously the Federal Member for Gwydir, which covers the Liverpool Plains region.

He says coal seam gas is essential to solving a looming energy crisis. "No one has contradicted me on this yet, but gas is actually going to be very important for agriculture, because it's the obvious extender of hydrocarbons, i.e. oil, as we run out of oil and as oil becomes incredibly expensive," he said. "We've got to find a sensible way to do this in the very interest of food security."

Mr Anderson says there needs to be a rational debate, and that mining and agriculture can co-exist. "I'm not confident as a farmer that there are no risks in some things that farmers do," he said.

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