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fuse lit for shale gas boom

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    Such great potential.

    "HOUSTON-BASED ConocoPhillips has emerged as the first of the big overseas oil and gas groups to back the idea that the US shale gas boom can be brought to Australia.

    The group has struck a farm-in deal with locally listed junior New Standard Energy (NSE) under which it could fund $US109.5 million ($A103.2 million) in exploration work at NSE's Goldwyer shale gas project in Western Australia's Canning Basin.

    NSE shares popped 3?, or 15 per cent, higher to 23? on the news.

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    ConocoPhillips is one of the lead groups in the US shale gas industry, one that has grown from a standing start in the late 1980s to now account for about 23 per cent of US gas production.

    Of more strategic importance is that US shale gas reserves now stand at more than three times the country's reserves of conventional gas.

    Unlike conventional gas supplies, liberating gas from deeply buried shale formations requires the hydraulic fracturing of the shale, as is the case in the recovery of gas from coal seams - now a boom industry in Queensland.

    According to a recent report from the US Energy Information Administration, the development of shale gas plays has become a "game changer" for the US natural gas market. The report was nevertheless one on the EIA's initial assessment of shale gas resources outside the US.

    It estimated the ''risked'' potential of the Canning Basin was 229 trillion cubic feet of gas. The North-West Shelf gas export project was developed on an initial conventional gas resource estimate of about 20 tcf.

    While the ConocoPhillips farm-in deal with NSE marks the first entry of a US major into the shale gas sector here, there has been two-way dealing, with BHP Billiton this year spending $US4.75 billion to acquire its first shale gas properties in the US from Chesapeake Energy.

    Earlier this week, Adelaide-based Beach Energy highlighted the shale gas potential of South Australia's Cooper Basin. Beach revealed that its first shale gas well had flowed gas at a daily rate of up to 2 million cubic feet.

    Beach had expected a flow rate of as little as 100,000 cubic feet a day because the well - Holdfast 1 - was drilled vertically through the prospective zones, primarily as a data-gathering exercise. In any future production, horizontal wells would enable enhanced drainage of the shale beds."

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