Conventional gas 101 – from the formation to the economy

Oil and natural gas can be found in a number of different rock formations or reservoirs.

Depending on the type of rock where the oil or natural gas is found determines whether it is called ‘conventional’ or ‘unconventional’.

For example, oil or natural gas found in a sandstone formation is ‘conventional’. However, the same product found in shale or coal seams is called ‘unconventional’. We’ll explain how these processes work below.

It’s a bit confusing but the important point is that natural gas is primarily methane, no matter where it is found and methane at its core is simple: a single carbon molecule surrounded by four hydrogen molecules – CH4.

So, why the difference? Put simply, the early oil and gas wells were mostly conventional wells because the hydrocarbons are under pressure and relatively easy to extract. As technology advanced and hydraulic fracturing was developed, oil and natural gas could be recovered from ‘unconventional’ rock formations.

Conventional gas: Conventional gas is obtained from reservoirs that largely consist of porous sandstone formations capped by impermeable rock, with the gas trapped by buoyancy. This means that the gas can generally move to the surface through the gas wells without the need to pump.

Unconventional gas: This category includes shale and tight gas formations and generally require hydraulic fracturing to extract the resource. This is due to the nature of the geological rock it sits within – what geologists call the formation – for example shales are fine-grained sedimentary rocks, formed from the compaction of silt and mud, with the gas becoming trapped among the shale formation. Tight formations are typically limestone and sandstone, meaning it has very low levels of permeability.

We’ve outlined this information and more about other formations in greater detail on our website.

Types of Gas Wells

Where is conventional gas found in Australia?

Onshore conventional gas reserves are primarily concentrated in the Cooper and Eromanga basins in South Australia and Queensland. While more recent discoveries have been made in the Waitsia formation in Western Australia which is reported to be the country’s largest onshore conventional gas find for 40 years.

Conventional exploration and development moratorium in Victoria lifted

In March 2020 the Victorian Government introduced a Bill to “allow for an orderly restart of onshore conventional gas exploration and development from 1 July 2021.”

The decision follows three years of detailed investigation by the Victorian Gas Program, which found an onshore conventional gas industry would not compromise the state’s environmental and agricultural credentials.

The investigation was overseen by Victoria’s Lead Scientist, Dr Amanda Caples, who chaired an independent Stakeholder Advisory Panel including farmers, environmentalists, industry representatives and local councils.

These studies have identified potentially significant onshore conventional gas resources particularly in the Otway Basin which stretches across the border to South Australia where a productive industry has been established.

Commenting on the decision to recommence the exploration and development of conventional resources in Victoria, Minister for Resources Jaclyn Symes said:

“Three years of research shows securing local gas supply for Victorians will not come at the cost of the state’s groundwater supplies, agricultural industries or our farming’s clean and green reputation.”

According to the Victorian Gas Program’s Progress Report No.4 (March 2020) there could be between 128-830 petajoules of commercially feasible gas that’s yet to be discovered in the state – equal to enough gas to supply 500,000 Melbourne homes with natural gas cooking and instantaneous hot water systems for 100 years*. Further exploration is required to fully assess the resource potential.

And importantly, there is minimal environmental impact from greenhouse gas emissions as modelling shows that the commercial development of 128–830 petajoules of onshore gas would produce the equivalent of 0.1-0.3 per cent of Victoria’s net 2017 greenhouse emissions.

The availability of gas into the future is important as gas is widely considered as a transition fuel towards a lower carbon intensive energy mix. Experts around Australia agree that natural gas will play an important role in this future effort.

Energy Users’ Association of Australia said:

“Gas fired power stations are also likely to play a key role in the transition to a cleaner energy system and will be a key aspect of maintaining system reliability as old coal fired power stations close.”

And recently Australia’s Chief Scientist Dr Alan Finkel outlined during an interview with ABC’s AM program:

“I think that the attention really should be on low emissions technologies such as solar and wind, but they need to be supported. In the long term they will be supported by batteries and pumped hydro and hydrogen that’s been stored to regenerate electricity, but that takes a lot of time so for ten, twenty, maybe even thirty years the most efficient way to bring a lot of zero emissions solar and wind into this system is to support it with natural gas, because natural gas is a much lower emissions technology even though it’s a fossil fuel, it’s much lower than coal and it’s much more flexible in terms of only needing to be used when there’s a shortage of solar and wind.”

It’s also important to consider the economic impact of the Government’s decision, for which it outlines:

“Up to 242 jobs, $312m in gross regional product and $43m in royalties could be generated annually if all the gas was developed.”

Victoria won’t be the only state benefitting from a robust onshore oil and gas exploration and development program – states such as Western Australia and Queensland are also reaping the rewards from their resources.

But is exploration and development safe?

Simply put, yes.

Multiple inquiries and studies have taken place in Australia and around the world to assess the potential impacts and risks associated with drilling and operating onshore.

In fact, since 2011 14 separate inquiries and investigations have been conducted in Australia into differing aspects of onshore gas activities. We covered off the findings in this blog post.

The bottom line: Australia has been exploring for and producing onshore conventional natural gas resources for many decades, and Victoria is set to benefit with the science-based decision to lift its moratorium.

 

*Average annual gas use of 17GJ per home per year (link)

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