Australia: The next Saudi Arabia?

Is Australia poised to become the world's largest exporter of oil and gas?

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Australia survived the global financial crisis, which began in 2008, very nicely, thanks to our massive resources exports.

That now appears to be tapering off as our biggest export customer, China, moves from an industrialising nation to a consumer-focused economy, and demand for natural resource material slows.

But we could be on the verge of another boom. This time it's oil and gas, as global demand for energy, especially in emerging Asia, rises. According to the US government's Energy Information Administration, Australia is rich in hydrocarbons (think oil and gas), was the world's second largest exporter of coal in 2011 and the third largest liquefied natural gas (LNG) exporter in 2012. Australia exports more than 70% of its total energy production according to government sources.

Six months ago, Linc Energy (ASX:LNC) released two reports, estimating the amount of shale oil in the as yet untapped Arckaringa Basin ranging from 3.5 billion to an astounding 233 billion barrels. To put that into context, Saudi Arabia's reserves from its giant oil fields are estimated at 263 billion barrels. If the higher estimate is correct, it means the Arckaringa Basin is six times larger than the Bakken, 17 times the size of the Marcellus formation and 80 times bigger that the Eagle Ford US shale deposits.

And that's just one basin. Australia has several basins that could hold massive reserves of shale oil and gas, including the Cooper Basin, Canning Superbasin (containing several sub-basins), Carnarvon, Browse and Bonaparte basins, Georgina, Bowen and Perth basins as well as several other prospective basins.

Buru Energy (ASX:BRU) is exploring in the Canning Super Basin, and has had early exploration successes. However, most new drilling is focused on the Cooper/Eromanga Basin, which has been Australia's most productive basin historically, with companies like Santos Limited (ASX:STO) and Senex Energy (ASX:SXY) active there.

Foolish takeaway

The US Department of Energy predicts that Australia's shale industry will develop at a moderate pace, due to a lack of production infrastructure. In the short-term it's unlikely to replace the resources boom, but if estimates are correct, Australia could overtake countries like the US and Saudi Arabia and become the world's largest supplier of oil and gas.

Limited oil supply and growing demand mean oil prices are likely to rise over time. Position yourself to profit from this trend now, with The Motley Fool's brand-new FREE research report, "3 Oil Stocks to Send Your Portfolio Gushing Higher".

More reading

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

More on ⏸️ Investing

A white and black robot in the form of a human being stands in front of a green graphic holding a laptop and discussing robotics and automation ASX shares
Technology Shares

Joining the revolution: How I'd invest in ASX AI shares right now

Advances in artificial intelligence (AI) could usher in a new industrial revolution. Here’s how you can invest in it.

Read more »

Close up of baby looking puzzled
Retail Shares

What has happened to the Baby Bunting (ASX:BBN) share price this year?

It's been a volatile year so far for the Aussie nursery retailer. We take a closer look

Read more »

woman holds sign saying 'we need change' at climate change protest

3 ASX ETFs that invest in companies fighting climate change

If you want to shift some of your investments into more ethical companies, exchange-traded funds can offer a good option

Read more »

a jewellery store attendant stands at a cabinet displaying opulent necklaces and earrings featuring diamonds and precious stones.
⏸️ Investing

The Michael Hill (ASX: MHJ) share price poised for growth

Investors will be keeping an eye on the Michael Hill International Limited (ASX: MHJ) share price today. The keen interest…

Read more »

ASX shares buy unstoppable asx share price represented by man in superman cape pointing skyward
⏸️ Investing

The Atomos (ASX:AMS) share price is up 15% in a week

The Atomos (ASX: AMS) share price has surged 15% this week. Let's look at what's ahead as the company build…

Read more »

Two people in suits arm wrestle on a black and white chess board.
Retail Shares

How does the Temple & Webster (ASX:TPW) share price stack up against Nick Scali (ASX:NCK)?

How does the Temple & Webster (ASX: TPW) share price stack up against rival furniture retailer Nick Scali Limited (ASX:…

Read more »

A medical researcher works on a bichip, indicating share price movement in ASX tech companies
Healthcare Shares

The Aroa (ASX:ARX) share price has surged 60% since its IPO

The Aroa (ASX:ARX) share price has surged 60% since the Polynovo (ASX: PNV) competitor listed on the ASX in July.…

Read more »

asx investor daydreaming about US shares
⏸️ How to Invest

How to buy US shares from Australia right now

If you have been wondering how to buy US shares from Australia to gain exposure from the highly topical market,…

Read more »