AUSTRALIA must eventually develop its shale gas reserves if it is to ensure gas shortages are kept at bay, but a new report into the fledgling industry warns the path for shale will not be easy.
The report from Australia Council of Learned Academies forewarned that populated areas of Queensland and New South Wales may be considered for shale gas operations, especially if proper regulation and environmental provisions could be applied.
Shale gas is extracted from rock by hydraulic fracturing or fracking.
The reserves of this trapped gas are expected to be enormous in Australia, but even with $500 million to be spent on exploration by 2015, there is still little knowledge of the industry's potential.
A report by an expert working group from the ACOLA warned a lack of infrastructure, and so far at least, a lack of regulation, needed to be addressed.
The United States has used shale gas to transform its energy industry, but if Australia wishes to have another gas rush after drilling coal seams, there will be hurdles.
There needs to be "social licence" or community approval for the operations, or else it could face the same hard-line opposition the coal seam gas industry has encountered in New South Wales and in parts of Queensland.
But the potential is there.
According to its report, "(ACOLA) considers that there is a clear need for Australia to quickly move to better assess its shale gas resources and reserves and to consider their potential social, economic and environmental impact, whilst exploration in Australia is still at an early stage".
Many of these gas deposits would be in isolated areas, but "densely populated parts of Queensland, New South Wales" could also be targets for shale gas extraction "as long as social and environmental issues are appropriately addressed".
Both the Queensland and NSW governments have little knowledge of their own shale gas potential.
NSW Department of Resources told APN it had done no assessment of shale resources.
Queensland was ahead, but not by much.
A spokesman from Department of Mines said no formal investigation had been done, but the "potential for these types of resource is significant".
He said the state was encouraging explorers to prospect to learn more.
Report co-author Profesor Peter Cook said shale gas could prove to be important for Australia's energy supply but "the challenges will need to be carefully managed".