Unconventional gas from shale and coal seams now accounts for half of the gas produced in the US. The gas bonanza has brought US gas prices to a level that is one-third of those prevailing five years ago and are about to transform the US from an energy importer to an exporter (BHP actually dodged a bullet when environmental opposition prevented it building a gas import facility in California).
Environmental opposition to this unconventional gas is rife in the US even though the zealots in the Environmental Protection Agency have, despite exhaustive attempts, failed to find a case of mishap in upwards of 100,000 wells. Obama too, pandering to this constituency, has prevented drilling on federal land and impeding new pipelines. But the US is far less centralised than other nations and enough states are putting out the welcome map for this relatively new form of energy for the boom to be placed in full swing.
Not only has this meant cheaper household gas but it has provided a magnet of low energy prices for industry location – the US is the venue for a resurgence in vehicle manufacturing among other industries (not, of course in the unionized and over-regulated “rust” belt).
Unfortunately, government pandering to green mysticism and strident opposition to perceived threats to farmland by radio personality Alan Jones has politically suffocated the industry in most of Australia. Only Queensland is moving ahead. Exploration is even banned in Victoria. Labor in South Australia declared the state “open for business” on unconventional gas but we have yet to see this tested. In NSW, the government has said it is banning exploration only in some sensitive areas, claimed to be about 4 per cent of the state, but the industry always considered this to be window dressing.
Now we have NSW Premier Barry O’Farrell finding the god-given excuse of Eddy Obeid corruption to gum up further activity. Announcing a “six month” freeze, the Premier boasts, ” former Labor government granted 39 exploration licences while his government had yet to grant a single one”. So we have impedence of development claimed as a political plus!
Australia has prospectivity for unconventional gas comparable to that of the US. Unfortunately, we have governments that are proving themselves all too willing to sacrifice income levels and future development on the sacrifice of cautious populism. Few people will vote for potential new wealth, while for small vociferous bodies who see no particular personal gain it can be crucial.
A perennial difficulty with the Australian federation is that political delinquency by an individual state carries less demerits than it should because of fiscal equalisation. Some means is required to ensure that the states are better motivated to capitalise on opportunities than is presently the case.