In the US, the shale gas revolution ensured that the development costs of unconventional natural gas plummeted to the levels of $2-$3/Mcf. This success has motivated the development of shale gas in other regions, including Australia and Europe. This study, focussing primarily on aspects of economic impact analysis, estimates the development costs of shale gas extraction in both Australia and Europe, based on both direct and fiscal costs, and also suggests policy initiatives.The increasing liquefied natural gas (LNG) developments in Australia are already straining domestic gas supplies. Hence, the development of more natural gas resources has been given a high priority. However, a majority of the Australian shale resources is non-marine in origin and significantly different to the marine-type shales in the US. In addition, the challenges of high development costs and the lack of infrastructure, service capacity and effective government policy are inhibiting shale gas development. Increasing the attractiveness of low risk investment by new, local, developers is critical for Australian shale gas success, which will simultaneously increase domestic gas security. In the European context, unconventional 2 gas development will be challenged by direct, rather than fiscal costs. High direct costs will translate into average overall gas development costs over $13/Mcf, which is well over the existing market price.Keywords: Unconventional gas, Development costs, Shale gas, LNG IntroductionThe global energy sector is confronted with soaring energy needs of a growing population, improving standards of living and expanding economies of the world. Global energy consumption is projected to rise by 41% over the next two decades, while fossil fuels will still remain as the dominant form of energy, supplying around 80% of world energy consumption in 2040 (BP, 2014). Under this prolonged dependence on fossil fuels in conjunction with intensifying global concerns of increasing carbon emissions and climate warming, natural gas is becoming an important resource in catering to global energy needs.The International Energy Agency (IEA) (2014) asserts that world's remaining recoverable gas resources are sufficient for over 230 years at the current production rates. Moreover, natural gas is the fuel of choice for power generation as gas-fired power plants have the lower capital costs with less than half of the CO2 emissions of coal-fired power plants (Dormer, 2013; EIA, 2014a;Tay, 2014).In addition, the emergence of unconventional oil and gas has added a whole new dimension to the fossil fuel industry. The term "unconventional" refers to the requirement of some form of reservoir stimulation, which makes the recovery process more complex. The stimulation process is referred to as hydraulic fracturing, which leads to an increase in the permeability of the underground geological formations, such as shale, that are holding the oil and gas, easing the hydrocarbons out of entrapment and towards the well bore and, subsequently, the wellhea...

Geological and petrophysical parameters are critical in evaluating the production potential of prospective shale gas plays and their economic viability for commercial development. However, based on the US experience, these characteristics can vary widely. Furthermore, the non-marine shale plays of the Cooper Basin, South Australia are distinctively different from the marine shale plays in the US. Non-marine shale may consist of higher clay content and, thus, may be less responsive to hydraulic fracturing due to the increased ductility. Conversely, the availability of sufficient amounts of quartz and siderite may counteract this effect and maintain brittleness. In this study, the mineral, total organic and gas content, thermal maturity, Poisson's ratio and Young's modulus data obtained from the Roseneath and Murteree formations of the Cooper Basin have been compared with US shale formations. The results show that the formations compare well in terms of thickness, thermal maturity, Young's modulus and Poisson's ratio, but not in clay mineral content and formation temperature and values for TOC, porosity and gas-in-place are comparatively lower. To determine whether such plays are economically viable will require technical, as well as 2 economic, analysis of the hydraulic fracturing process, including the potential for horizontal and vertical well development or basin centred gas developments. A shale play that has unfavourable prospects may have upfront infrastructure and major capital costs that outweigh the potential receipts from gas production.

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