Gas Glut Will Push Prices Down in Australia

Development of unconventional gas reserves in Australia is likely to follow the US model with a supply glut pushing gas prices back down towards the end of the decade, said Santos managing director David Knox.

Sydney Morning Herald reported Knox as saying that the new drilling rigs that would tap shale and deep conventional gas reserves were already coming into Australia in anticipation of the rise in gas prices from 2015, as the Queensland coal seam gas-to-liquefied natural gas (LNG) projects come on stream.

''North America is a different market to us, but it's a really fine example of what could, over the longer term, happen in Australia,'' the newspaper quoted him as saying.

The federal government this week released estimates that Australia had 390 trillion cubic feet of gas reserves and shale gas could double that resource.

Meanwhile Santos' eastern Australia vice-president James Baulderstone said he believed sentiment against the coal seam gas industry has reached a peak.

"We've gone through a bit of a peak in the sentiment, but I'm very much encouraged by the conversations I've had with farmers' groups and communities and government," Baulderstone said.