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Australia – DMITRE Unconventional Gas Roadmap – Key Observations.

5 January, 2013


Legal News & Analysis – Asia Pacific – Australia – Energy & Project Finance


On 12 December 2012 the South Australian Department for Manufacturing, Innovation, Trade, Resources and Energy (DMITRE) released its Roadmap for Unconventional Gas Projects in South Australia.

The Roadmap was an initiative born out of a roundtable discussion at the APPEA conference in May 2010. It was developed in consultation with the Roundtable for Unconventional Gas Projects in South Australia, which comprises a group of 212 stakeholders, including the usual suspects of petroleum majors, unconventional gas explorers and LNG producers, as well as representatives from related industries and interested groups (e.g. SA Farmers Federation and the Wilderness Society), academia, the media and government.

The release of the Roadmap dovetails neatly with the commercialisation of the first unconventional gas well in South Australia – Santos-operated Moomba 191 – earlier this year.

A shale gas revolution in South Australia?

Exploration for unconventional gas in South Australia (including shale gas, tight gas and hydrocarbons from coal, via coal seam gas, in situ gasification and surface syngas processes on mined coal) is at an early stage.

The Roadmap demonstrates the South Australian Government’s cautious optimism for the opportunities for tight and shale gas development in the Cooper Basin on the heels of the United States’ growing tight and shale gas industry and the US Government’s Energy Information Agency’s estimate that the shale gas play in the Cooper Basin could yield 85 trillion cubic feet (roughly 93,500 PJ) of sales gas.

At the time the Roadmap was written, there were 24 joint ventures exploring nine unconventional gas plays in South Australia; at least one of which, the Roadmap optimistically predicts, will be profitable within the next five years.

Roadmap of opportunities and recommendations

Minister for Mineral Resources and Energy Tom Koutsantonis noted that “the road map is intended to inform investor strategies as well as build confidence in the Government’s policies, programs and regulations of the unconventional resource sector”. (Government of South Australia, Department for Manufacturing, Innovation, Trade, Resources and Energy, ‘Road map toward maximising SA’s gas potential’ available here.)

In line with this purpose, the Roadmap provides a useful overview of the unconventional gas industry in South Australia for the benefit of both investors and the public. It includes details of:

  • the opportunities and risks associated with unconventional gas projects;
  • the State’s unconventional gas plays (i.e. the areas in which unconventional gas accumulations exist and/or may exist);
  • the advanced unconventional gas projects in South Australia;
  • the components of an unconventional gas supply-chain;
  • domestic and international market opportunities for South Australian gas; and
  • the requirements for licensing approval, environmental approval, regulated activity approval and land access approval under the primary governing act, the Petroleum and Geothermal Energy Act 2000 (SA), and other relevant environmental and Native Title legislation.

The Roadmap advocates efficient and competitive unconventional gas supply chains, which leverage on economies of scale, thereby reaping benefits for upstream gas producers, contractors to those producers, and finally gas users.

The roundtable working groups propose 125 recommendations covering the life cycle of unconventional gas projects, which set the course for the environmentally sustainable and safe development of South Australia’s ‘vast unconventional gas resources’.

The recommendations are numbered by overall rank (based on materiality then ‘do’ability’). The top recommendation advocates the fine-tuning of regulations to ensure that exploration, retention and production licences have terms, area and conditions that take account of the life-cycle for finding, appraising, developing and producing unconventional petroleum. The Roadmap took care to note that the listing of the recommendations does not imply universal support for all recommendations and rankings from every roundtable member.  

The major themes of the recommendations include:

  • increasing investor and public trust: 41 out of the 125 recommendations focus on this theme, including recommendations for greater disclosure and consultation, as well as calls for effective licence terms and transparency in regulations and administration;
  • environmental protection: the roundtable’s recommendations focus on water use, and the clarification of the environmental assessment standards, timing and processes; and
  • infrastructure and supply chain to support unconventional gas projects: Interestingly, the Roadmap includes specific and detailed recommendations for the required infrastructure (e.g. paved roads between Moomba and Queensland, additional pipelines and processing facilities).  

What’s next?

In light of concerns vocalised by communities in New South Wales and Queensland in respect of unconventional gas projects in those States, the South Australian Government has taken the sensible approach of engaging stakeholders while the unconventional gas industry in that State is in its infancy. 

Beach Energy Managing Director Reg Nelson, a member of the roundtable, commented that the South Australian Government’s leadership of the process is “why we’ve had the confidence to hire an extra 50 workers and spend a record $410 million on exploration in the Cooper Basin, ensuring we’re involved in more than 100 wells in the next 12 months”. (Government of South Australia, Department for Manufacturing, Innovation, Trade, Resources and Energy, ‘South Australia charts road map to fully tap our vast gas potential’ available here).

It remains to be seen how and when the roundtable will take specific actions based on the Roadmap, but encouragingly, a timeline has been set out for measuring progress based on the Roadmap.

The roundtable working groups will reconvene in early 2013 to progress implementation of the recommendations. The DMITRE is encouraging stakeholders not already involved in the roundtable working groups to participate by contacting the Department via the roundtable’s secretariat at [email protected]. A report on progress (or otherwise) will be published in the second quarter of 2014 and the Roadmap will remain a ‘living document’, to be updated at least once every year, with its first update to be concluded in 2014.

The Roadmap predicts that considerable progress will be made on a number of recommendations in 2013 and successive years. 


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