Oil and gas producer AWE Ltd (ASX: AWE) has identified a potential gas resource at its Perth Basin Shale Gas play.

The company said in a statement on Tuesday it now sees a very large potential gas resource in one of three key shale sequences in AWE's acreage holding in close proximity to one of Australia's key domestic gas markets.

In particular, following the analysis of the Woodada Deep-1 core results, AWE estimates that the middle interval of one of these shale intervals alone holds a gross Gas in Place of 13 to 20 trillion cubic feet.

AWE now holds a position in approximately 1 million gross acres of prospective Shale Gas acreage in the Perth Basin, with high levels of equity in the majority of the permits and licences.

The company said it has been reviewing the prospectivity of shale gas in the Perth Basin area for the past two years, and has substantially progressed the understanding of the potential in the region.

"Further work will be required to ascertain the commercial viability of these shales within the Perth Basin. However, AWE is encouraged by the progress to date and plans to aggressively pursue further investigations on these opportunities."

According to AWE, the strong commercial drivers apparent in the Perth Basin could allow this Shale Gas opportunity to provide Australia's first commercial venture in the growing global phenomenon of "unconventional" Shale Gas production.

Shares in AWE lifted 9 cents on the news and was trading at $1.735 at 1157 AEDT.