Australia’s Northern Territory has lifted a moratorium on fracking, the process of extracting gas from shale rock, to replicate the US shale revolution in a vast region with massive mineral resources.
The decision on Tuesday was welcomed by the oil and gas industry, which is promising to invest billions of dollars in exploration and create thousands of jobs in an underpopulated region roughly six times the size of the UK.
Australian energy companies Origin Energy and Santos have identified the Northern Territory as a potential source of gas to meet a shortage of the fossil fuel in Australia, which has led to surging energy prices and prompted Canberra to implement export controls on liquefied natural gas — one of the country’s most valuable exports.
“Member companies stand ready to invest billions of dollars in new projects in the territory,” said Malcolm Roberts, chief executive of the oil and gas industry lobby group Appea, after the territory’s government’s decision to lift the moratorium.
“We are determined to do this in a safe and sustainable manner, and to generate real benefits for all Territorians.”
In February 2017, Origin Energy estimated it could recover 6.6tn cubic feet of gas from its Beetaloo project in the territory — although exploration drilling has not yet proved it can do this at a commercial rate. Santos, Falcon Oil & Gas and Pangea Resources are also exploring for unconventional gas in the territory.
Ben Wilson, analyst at Royal Bank of Canada, said Beetaloo was a big resource on a par with the large US shale plays, Marcellus and Barnett, in the north-eastern and southern parts of the US, respectively.
“Beetaloo . . . has the added advantage of being broadly connected to two export routes,” he said.
Fracking, or hydraulic fracturing, involves pumping water, sand and chemicals under the ground at high pressure into shale rock formations to release oil and gas. It has enabled an energy revolution in the US, which has embraced the technology and more than doubled oil production over the past decade as a result.
Several countries — Germany, France and Scotland — have banned fracking due to environmental concerns linked to greenhouse gas emissions and the potential impact on groundwater.
Greenpeace described the Northern Territory government’s decision as “short-sighted”, warning it would lead to contamination of water, increased carbon emissions and health problems for people in the territory.
“Fracking has proved to be an ecological disaster all over the world,” said Nikola Casule, a Greenpeace campaigner. “The resumption of fracking in the NT could increase Australia’s total greenhouse gas emissions by more than 5 per cent, according to a report published by the Australian Institute [a think-tank].”
In Australia, several states have either banned fracking altogether or put a moratorium on the technology, including Victoria, Western Australia and Tasmania. But the federal government is urging state governments to change the rules to help solve a gas shortage, which in part has been caused by the success of its LNG export industry.
The Northern Territory government said it removed the moratorium following scientific advice that the risks from fracking could be reduced to an acceptable level if certain recommendations were followed. It is introducing no-go zones in national parks and other areas covering 49 per cent of the territory.
But the energy industry warmly welcomed the decision, which it hoped would persuade other Australian states to follow suit.
Kevin Gallagher, chief executive of Santos, said it was ready to resume exploration drilling in the Northern Territory’s McArthur basin region in 2019.
“With exploration and appraisal success, the NT’s McArthur Basin has the potential to do for the NT and Australia what the shale gas revolution has done for America, providing the competitive advantage to breathe life back into energy-intensive industries and generate wealth for the nation,” he said.