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Booming, but for how long?

World Coal,


Much has been written on the prospects for Australia’s coalbed methane industry (CBM, called coal seam gas in Australia) and many billions of dollars has already been invested. But at least one recent article, from business news site MarketWatch, argues, it may not all be plain sailing as the world’s two largest economies – the US and China – start to exploit the enormous reserves of shale gas both are sitting on.

“A few years ago we all thought the US would be a net importer of gas — how wrong could we have been,” said Simon Powell, head of Asian oil and gas at CLSA in Hong Kong, speaking to MarketWatch. “The US could become a meaningful exporter in the next five years. The question is how big? North America is a meaningful threat to Australia’s aspirations,” he said.

The other threat is China, which as both CBM and shale reserves. “We’ve all been shocked at how much shale the US fields have spat out [but] China might be sitting on a shale reserve that makes the US shale reserve look small,” Powell said. “If the Chinese find out they have a lot of shale, you could see the Chinese say [to Australia]: Thanks a lot, we found the mother of all shale reserves, we don’t need you anymore.”

The Australian CBM industry also faces domestic challenges including a national skills shortage that is pushing up costs and delaying projects throughout the country’s natural resource sector. There has been an increase in environmental and popular opposition to CBM drilling.

“LNG plants are very complex, high-end pieces of kit. Are there enough electricians to build all these things? Is there really enough gas [in the Queensland fields] for all the trains that are on the drawing board, and will the farmers let them dig it up?” Powell asked.

So, all is not certain. But don’t count out Australian yet. China still has a long way to go in developing its unconventional resources, and it’s not completely clear whether the US government will actually allow exports of LNG. The US Department of Energy is yet to make a decision on the matter, which is becoming increasingly political. Lawmakers from both the House of Representatives and Senate have raised concerns that LNG exports could raise domestic gas prices and hurt manufacturing industries that rely on natural gas. 

Read the article online at: https://www.worldcoal.com/cbm/28022012/australia-lng-industry-faces-competition-from-us-and-chinese-shale-gas/


 

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