Australia’s deputy prime minister Barnaby Joyce is supporting proposals that would see the ban on goal seam gas drilling lifted, so long as landowners are given more of the royalties from subsequent gas production.
“In our opinion, this is a significant policy shift as the country seeks to avoid a looming gas shortage,” WH Ireland analyst Brendan Long said in a note.
“It is important to appreciate that the deputy PM is also agricultural minister and we therefore believe his thinking reflects that of Australia’s rural landowning community – the people who count.
“The general idea is to ensure that landholders benefit directly from gas production, which is an incentive that has proven very effective in the USA.”
Long added: “We believe this could pave the way for comparatively positive developments for shale gas developer in Australia, such as Falcon Oil & Gas.”
Falcon, alongside partners Origin Energy and SASOL, is sitting on potentially huge shale gas resources in Australia’s Northern Territory - though operationally progress is paused by a temporary moratorium on shale gas, whilst the authorities conduct a new evaluation of the emerging industry and its practices.
In February, citing figures produced by Origin Energy, the operator of the 16,000-square kilometres of venture, Falcon said the gross best estimate of gas in place was a world-class 496 trillion cubic feet (TCF). That converts to a massive 82bn barrels of oil potential.
The moratorium on hydraulic fracturing – the necessary process to complete shale gas wells – was introduced by the NT Government on 14 September 2016 and subsequently an independent panel has been established to conduct an independent inquiry and report back to the government.
The panel is looking at all the issues such as the potential impact on the environment but also the potential economic impact.