Australia on Friday reached a historical milestone as oil and gas company Santos Ltd launched the country's first commercial shale gas well in South Australia's Cooper Basin.

James Baulderstone, Santos' vice president of Eastern Australia, said the company's Moomba-191 shale well had begun production and that its output had been connected to the eastern states' gas grid.

It is flowing natural gas at a stabilised rate of 2.7 mmscf/d from the Roseneath, Epsilon and Murteree shale targets, the company added.

"While this is the first commercial shale well, and more work will be required to unlock the areas full potential, this is clearly a landmark for Australia's natural gas industry," Mr Baulderstone said in a statement.

"The connection of the Moomba-191 well is a significant step forward as we work to unlock the vast unconventional potential of the Cooper Basin," he added.

One of the launch's success was the well strategic location, being only 350 metres from the existing pipeline network and eight kilometres from Moomba's gas processing plant.

"It enabled the gas to be brought on line quickly, illustrating the importance of Santos' existing infrastructure position in commercialising the region's significant resource potential," Mr Baulderstone said.

Santos has plans to perform further drilling in the area.

"The connection of the well is the first step in the next wave of Cooper Basin development that will lead to natural gas from unconventional sources being increasingly used in households across SA and eastern Australia more generally," said South Australian Premier Jay Weatherill, who turned on the tap on the Moomba-191 well.

"Shale gas is revolutionising the economy of the United States, it's producing energy security there, it's also kick-starting their manufacturing sector so this is an incredibly important game changer for the South Australian economy."

"Unconventional gas has always been regarded as something that would happen in the future but today's opening demonstrates that that future has arrived," Mr Weatherill said.

Santos holds a 66.6 per cent stake in the South Australian Cooper Basin Joint Venture. Other stakeholders include Beach Energy at 20.21 per cent and Origin Energy, 13.19 per cent.

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