The Northern Territory could be hanging its hopes for future prosperity on 500 trillion cubic feet of "uncompetitive" gas in the Beetaloo Basin.
Research released on Friday by the independent Institute for Energy Economics and Financial Analysis warns that shale gas from the area 500km southeast of Darwin could lose out to large quantities of cheaper LNG due to come online.
The Beetaloo covers 28,000sq km with a resource estimated as being equivalent to more than a thousand times annual domestic gas consumption in Australia - or enough energy to drive a car 483 million kilometres.
But the remoteness means significant new infrastructure investment would be required to pipe and process the gas and transport it to users, mostly on the east coast.
"Beetaloo gas is unlikely to be competitive," report author Kevin Morrison said.
Extraction would also rely on fracking, a high-risk technology that risked contaminating the primary water source for the region and its agriculture, he warned.
He said market forces were also aligning against the Basin's shale gas on several fronts.
"The unprecedented increase in LNG supply under construction means that global markets are likely to face a glut in the second half of this decade," he said.
Australia's relatively high LNG costs would likely make Beetaloo uncompetitive with lower-cost Qatar and the United States projects bringing new capacity online.
Several big players once active in the Basin have walked away despite the lure of multi-billion-dollar, taxpayer-funded infrastructure developments.
The federal and territory governments intend to turn a Darwin Harbour peninsula into an industrial zone for processing gas, hydrogen and minerals.
Junior explorer Tamboran Resources, taking on Beetaloo exploration permits divested by Origin Energy, has become a key player along with Santos and Empire Energy.
Tamboran has raised more than $365 million from investors in six years and has spent more than $300 million on exploration without producing any commercial quantities of gas, according to the research.
Tamboran announced in February that testing had found a significantly larger Beetaloo gas resource, with a final investment decision due by June.
