Two major players in the oil and gas exploration industry agree that Australia would be the largest exporter of liquefied natural gas (LNG) by the end of the decade.

Exxon Mobil Asia Pacific, Africa and Power head Emma Cochrane said on Thursday that LNG will emerge as a power source which would be a decisive shift in energy history. She forecast that Australia would supply 20 per cent of the global LNG supply by 2020. After two decades, Australia would be the largest LNG exporter in the world with Asia as its biggest market, Ms Cochrane forecast.

While Santos Chief Executive and Managing Director David Knox told Business Spectator that the future appears bright for Australia's LNG industry, he said the maturation of its production, export and domestic demand markets will not be done overnight.

"What we need to do in Australia is follow the American model.... What will happen is, as gas prices rise, industry will start to invest and then as we're successful, then the gas prices will start to come down. As soon as you restrict prices in effect we won't get the drill but out because we won't be able to afford to do it," Mr Knox told Business Spectator.

The Australian Petroleum Production and Exploration Association conference, however, warned that cost blowouts and capacity constraints could threaten the large number of LNG ventures underway in Australia.

At least $170 billion in committed capital expenditure have been made in LNG projects in Australia. Exxon is a partner in the Gorgon LNG project off the northwest coast. Santos aims to extract shale gas from the Cooper Basin reserves.

Despite falling gas prices, Ms Cochrane forecast that demand for gas will go up by 60 per cent by 2040 and even overtake demand for thermal coal since it has 60 per cent lesser emissions than coal.

But green groups opposed to natural gas argue that it still emits carbon and has the potential to threaten the environment via unconventional extraction methods such as that of coal seam and shale gas.

Between 2008 and 2011, more than 1,000 CSG wells have been drilled in eastern Queensland and more are expected to be drilled in the next 20 years. For the same period, more than 15,000 shale wells have been drilled in the U.S.

On the same day that Ms Cochrane expressed optimism over the future of LNG in Australia, the Queensland Water Commission released a study that found a connection between CSG mining and bore water levels. The findings belie claims by CSG companies that their operations do not affect bore water used by farmers.

The study said out of the 21,000 private water bores presently used in main CSG mining areas in western Darling Downs, 85 would likely be affected within the next three years by gas exploration and 528 would be affected in the long term.

The report said that when CSG companies operate at full capacity, it takes out of the Surat Basin every year 215,000 megalitres of water, but 95,000 megalitres would also be taken out of the basin through CSG operations which involves pumping water out of the ground to start the gas flows.

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