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Australia’s shale gas riches

Australia ranks in the top ten countries for shale gas resources, according to a report by the US Energy Information Administration.

With an estimated 437 trillion cubic feet of shale gas, Australia comes in at seventh place, ahead of South Africa, Russia and Brazil, but behind the US, Canada and Mexico. China has the largest estimated shale gas resources with 1,115 trillion cubic feet.

The US Department of Energy estimates that global shale resources are vast enough to cover more than a decade of oil consumption. Russia has the largest resources of shale oil, with 75 billion barrels, with the US in second with an estimated 58 billion barrels of shale oil.

Despite other countries’ massive resources, only the US and Canada are actually producing oil and natural gas from shale formations in commercial quantities, according to the department. Australia could be one of the next countries with commercially viable shale oil and gas production.

The majority of Australia’s shale gas is held in four main basins. The Cooper Basin, which has been our main onshore gas producing basin since the 1960’s, could be the first to be developed, because it already has the infrastructure in place. Santos Limited (ASX:STO) and Beach Energy (ASX:BPT) are the two primary players in the Cooper Basin.

The Canning Super Basin in Western Australia is currently being explored by a number of companies including Buru Energy Limited (ASX:BRU) and New Standard Energy (ASX:NSE), who hold most of the leases.

Other prospective shale gas basins include the Perth Basin in Western Australia, the Maryborough Basin in Queensland, and the Beetaloo and Georgina Basins in the Northern Territory.

Foolish takeaway

With an estimated 17.5 billion barrels of shale oil and huge shale gas resources, Australia could see significant windfalls from the energy sector, which could take over  as the resources boom declines.

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Motley Fool writer/analyst Mike King owns shares in Santos.

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