Australia Has Big Shale Gas Advantage, Texas-Based Investor Says

By Paul Allen and Keira Wright

Australia’s vast shale gas resources give the nation an edge in the global energy sector, especially at a time when the Iran war is constraining supplies across the world, according to Texas-based investor Bryan Sheffield.

The Middle East conflict, which has disrupted gas supplies and lifted prices, is pushing buyers to “refocus” on alternative providers like Australia, said Sheffield, managing partner at Formentera Partners LP, which is helping develop wells in the country’s Northern Territory.

“They’re not going to want to rely on the products coming out of the Gulf,” he told Bloomberg at the Australian Energy Producers Conference in Adelaide on Tuesday. “Australia is sitting on a massive resource and I think a lot of buyers are going to rethink and think about diversification.”

While most of Australia’s production comes from conventional gas assets, the country also holds vast shale resources — trapped in more complex geology — that could be unlocked with the right technology.

Formentera received an investment commitment of up to $619 million in March from Japan’s Inpex Corp. to expand shale-gas exploration across Australia. Inpex will acquire 68,000 acres within Formentera’s 1.9 millon net-acre position in the Beetaloo Basin in the country’s north.

Local gas prices are currently “in the sweet spot” to make the venture viable and the firm will need to drill a few more wells for mid-stream companies to have the confidence to build a pipeline linking the Beetaloo project to processing plants, Sheffield said. He added Australia is an attractive investment destination for international investors, including Americans.

Australia remains one of the biggest exporters of gas globally. It “has a strategic geographical advantage” to supply Asia, where strong liquefied natural gas demand growth is expected through 2050-2060, according to Cecile Wake, the head of the Australian arm of Shell PLC, who spoke at the same conference.

— With assistance from Sing Yee Ong

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