Find out more about...Shale Gas

+ Shale gas has revolutionised the US economy and cut emissions to their lowest level in 20 years.

Did you know?

Santos developed Australia’s first commercial shale gas well

in South Australia in 2012.

Australia has up to 437 trillion cubic feet in shale gas resources – equivalent to about 200 years of total Australian gas production.4

By 2035, 46% of the United States’ natural gas supply

will come from shale gas.3

US CO2 emissions are at their

lowest level in 20 years due to the increased substitution of low cost natural gas (made possible by shale development) for coal.2

Shale gas is simply natural gas, composed mostly of methane.

It was first commercially produced in the US in 1821.1

US shale gas production alone will create some

2.4 million jobs by 2035.2

18 21 2.4M

What is shale gas?Shale gas is natural gas. It is found in hard, dense underground rocks called shale (in the past shale was called slate). Shale gas is odourless, colourless and mostly methane, exactly the same as natural gas used in homes and businesses.

Shale gas was first extracted in the United States in 1821, but it is only in the last decade that advances in technology have made production viable on a large scale. As a result, shale gas has grown from 1 per cent of the United States’ natural gas production in 2000 to over 26% today.*

The United States Energy Information Administration has estimated that Australia could have 437 trillion cubic feet of recoverable shale gas, the equivalent of over 200 years of production at current rates.

*U.S. Energy Information Administration (EIA)

Where is shale gas found?Shale gas was formed over tens of millions of years from the compressed remains of organic material such as plants. Over time, increases in heat and pressure trapped this organic material in dense shale formations and it decomposed to form natural gas.

Shale formations are typically 2,500-4,000 metres below the earth’s surface.

The parts of Australia most likely to hold commercial shale gas deposits are in:

• Northern South Australia• Western Australia (the Canning Basin and Perth Basin)• The Northern Territory• Western Queensland

Currently shale gas exploration and appraisal programs are underway in Western Australia, South Australia and the Northern Territory.

Benefits of shale gasThe benefits of shale gas are much the same as for natural gas in general. Natural gas is widely used in electricity generation. Because it can be quickly started and stopped, natural gas can be used for both baseload and peaking power, and to fill gaps in renewable power generation when wind or sunshine are not available.

Natural gas is also used for cooking, heating houses and buildings and heating water.

In addition, natural gas fuels many industrial operations, including glass and steel foundries and aluminium and nickel smelters. It is also compressed for use as a transport fuel.

Natural gas is also a key ingredient in fertilisers and a wide range of industrial products, including plastics and polymers, textiles, paints and dyes.

China and the US are potentially the biggest shale gas exporters, with Argentina and Mexico not far behind. (Figures in trillion cubic feet)

Source: US Energy Information Administration

573

43739048

75

567

545

802

245

Canada

Australia

South AfricaChile

Paraguay

US

1,115 ChinaMexico

Argentina

Brazil

63India

105Pakistan

137France

707122

Algeria

Libya

UK 26 148 Poland

Shale gas reserves all over the world

Shale gas as share of total dry natural gas production in 2012 Billion cubic feet per day

0 10 20 30 40 50 60 70 80

US39%

Canada15%

China<1%

See next page for industry references to more information

Santos and shale gasIn 2012, Santos’ Moomba-191 well in the Cooper Basin became the first commercially producing shale well in Australia.

The Moomba-191 shale well was another milestone for Santos’ Cooper Basin unconventional gas program, which began in 2004.

The well was only 350 metres from the existing pipeline network and eight kilometres from Moomba’s gas processing plant, which enabled it to be brought on line quickly, illustrating the importance of Santos’ existing infrastructure position in commercialising the region’s significant resource potential.

Further exploration has been undertaken in the area, including an ongoing vertical well appraisal program and Santos’ first horizontal shale well.

How do you produce shale gas?To produce shale gas, we drill wells deep underground into the shale. These wells are surrounded by steel and concrete to ensure they are separate from other underground layers, such as water aquifers.

Because the shales are hard and dense, we need to fracture them to create pathways for the gas to escape, using a process called hydraulic fracturing. This involves pumping a mixture of water, sand and small quantities of chemicals into the shale at pressure. The water and chemicals are then pumped out and the sand remains in the shale, holding open the fractures to allow more gas to be released.

The gas is then pumped through a network of pipes to stations where it is compressed, purified and sent on to customers.

Shale gas and the environmentNatural gas is the cleanest burning fossil fuel available. In fact, when it is used for electricity, it produces nearly half the emissions of coal and uses less water.

Using gas is one way that Australia and the world can reduce carbon emissions. The United States is one of the world’s leading producers of shale gas and US carbon dioxide emissions are at their lowest level in 20 years. The US government credits this decline to the increased substitution of low cost natural gas (made possible by shale development) for coal. In 2013 alone, the increased use of natural gas in the US saved 212 million metric tons of carbon dioxide from entering the atmosphere.*

*Source: US Energy Information Administration Monthly Energy Review September 2014

Geology of natural gas

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6

5

4

2

3

1 Wind Turbine: 65m

Onshore Oil and Gas Drilling Rig: 43m

Gas Wellhead: 1.5m

Typical Coal Seam Gas Well: 500m-1200m

Typical Oil or Sandstone Gas Well: 1200m-3000m

Typical Shale Gas:2500m-4000m

Registered and Head Office Ground Floor, Santos Centre 60 Flinders Street Adelaide South Australia 5000

GPO Box 2455 Adelaide South Australia 5001

Telephone: 61 8 8116 5000 Facsimile: 61 8 8116 5050 www.santos.com

Santos – an Australian PioneerAn Australian energy pioneer since 1954, Santos is a leading oil and gas producer, supplying Australian and Asian customers. With over 3,000 employees across Australia and Asia, Santos’ foundations are based on safe, sustainable operations and working in partnership with host communities, governments, business partners and shareholders.

Industry references1 aapg.org.

2 APPEA/IHS Report 2012 http://www.appea.com.au/oil-gas-explained/benefits/the-shale-gas-opportunity/

3 Stevens, Paul (August 2012). “The ‘Shale Gas Revolution’: Developments and Changes”. Chatham House.

4 U.S. Energy Information Administration (EIA). ‘Technically Recoverable Shale Oil and Shale Gas Resources’, June 2013

5 U.S. Energy Information Administration, April 2014

Interested in learning more about natural gas?Visit santos.com for more fact sheets on a wide range of gas-related topics.