Economic impact analysis of natural gas development and the policy implications

The increasing liquefied natural gas (LNG) developments in Australia are already straining domestic gas supplies. Hence, the development of more natural gas resources has been given a high priority. However, a majority of the Australian shale resources is non-marine in origin and significantly different to the marine-type shales in the US. In addition, the challenges of high development costs and the lack of infrastructure, service capacity and effective government policy are inhibiting shale gas development. Increasing the attractiveness of low risk investment by new, local, developers is critical for Australian shale gas success, which will simultaneously increase domestic gas security. In the European context, unconventional gas development will be challenged by direct, rather than fiscal costs. High direct costs will translate into average overall gas development costs over $13/Mcf, which is well over the existing market price.