Business Times Source: Business Times Fracking in the Karoo takes a big step forward by Loni Prinsloo, October 20 2013, 11:48
Clip this article BIG PLANS: Shell has reserved another $250m for drilling exploration wells in the Karoo. Picture: THE HERALD Picture: THE HERALD Related articles
Anti-fracking protesters march to Shell SA’s offices Shell SA optimistic on its search for oil, gas in Orange Basin
AFTER four years of intense lobbying by all sides over hydraulic fracturing (fracking), South Africa appears to be readying itself to get fracked.
The government this week gazetted draft regulations to govern the further exploration and exploitation of the country’s sizeable shale gas resource — covering almost a fifth of South Africa’s land area — through the process known as fracking.
Government stands to be one of the biggest beneficiaries of the shale gas exploration.
This is because amendments to the Minerals and Petroleum Resources Development Bill currently under consideration by parliament makes provision for the state to take shares of up to 50% in gas companies.
The guestimate is that the country has a shale gas resource of 485-trillion cubic feet, about the fifth-largest such resource in the world. It may, depending on who you ask, add R200bn to the economy if even 10% of that resource is mined commercially.
Shell, the oil and gas major that has been most vocal about ambitions to extract shale gas in SA, welcomed the progress in regulations — even though it was still unsure about the scale of State participation.
“Between our plans for offshore and onshore exploration in South Africa, Shell plans to invest up to $1bn in the country,” said Shell’s Jan Willem Eggink.
’’The risk is very high as we may end up finding nothing. Therefore, we need to consider what we will be left with after state participation and BEE requirements.”
The company plans to drill up to 24 wells during the exploration phase.
Major multinational oil and gas companies first approached the government for permits to exploit the country’s potential riches in shale gas back in 2009, but were met with a tidal wave of opposition.
“The strong opposition in South Africa took us all by surprise — especially the depth of the venom of it was a bit stark,” said Bonang Mohale, Shell SA chairman and the man leading the quest to frack the Karoo.
The push by the opposition led by nonprofit organisations such as the Treasure the Karoo Action group and the Karoo Action Forum, a lack of regulation and technical know-how in South Africa as well as international doubts about the environmental impact of fracking led to the government calling for a moratorium on fracking in 2011.
In September last year, the cabinet lifted the ban on exploration of shale gas.
Many thought that the moratorium had also been lifted, but that was not the case.
“The moratorium has not yet been lifted,” said Ayanda Shezi of the Department of Mineral Resources.
Ms Shezi explained that while the ban on exploration was lifted, it was decided that no hydraulic fracturing could take place until draft regulations had been gazetted — the process that took place this week.
It’s now being assumed that the moratorium is about to be lifted. Mr Mohale is hoping that he will have the exploration licence in his hands before the end of the year.
Treasure the Karoo’s Jonathan Deal, who has put a great deal of his retirement money into the fight against fracking, said he would appeal against the granting of any licences, and that court cases were imminent.
Despite all the opposition — essentially leading to a four-plus year hold-up for Shell, Mr Mohale said he never doubted in the end the company would get the licences needed.
“Through all the pain and tribulations I never had a doubt that we will get our technical approvals. In business, you have to push and drive for what you want as if your life depends on it.”
Looking at some of the negative experiences related to shale gas extraction in the US, some people’s livelihoods may actually depend on it.
“In fact, these days the debate around shale gas forms intricate plots in movies such as Promised Land. It shows how a big gas company goes about convincing, deceiving and manipulating landowners to sell their properties.
“We don’t have to force ourselves on farmers,” said Mr Mohale.
There were a lot of farmers in the Karoo who understood the case for shale gas mining, he said.
The big fight in the Karoo is about water, or rather, the lack of it. About two million litres of water is needed to drill a single well. Hydraulic fluids are typically made up of 99% water and sand and about 1% chemical additives.
Reports from the US, where this type of gas extraction has rocketed in the past decade or so, suggest that the method pollutes water supplies, putting the environment and people’s health at risk.
But Shell gives its assurance that it will not be a problem.
The group says this is so because tight and shale gas reservoirs are thousands of feet below the underground fresh-water aquifers, and at least two barriers of casing and cement would isolate the hydrocarbons and fluids in the wells from the groundwater in the Karoo.
Shell also undertook not to compete with the people of the Karoo for its water needs. The company hopes to find brackish water to use as it drills during the exploration phase. Alternatively, the company said it would look to municipalities for sewage water.
Mr Eggink said the crucial difference between the US and South Africa was that landowners in the US also owned the mineral rights, whereas in South Africa the state owned the mineral riches.
“Essentially this means that US landowners who wanted to get their hands on some money did not always get the bigger gas companies to extract the gas, but often got the cheapest contractor. This has led to pollution problems in some cases,” he said.
Shale gas mining in the US has meant that instead of having to import natural gas it will probably become an exporter this year.
“South Africa probably will not get a single opportunity as big as this again,” said Mr Mohale.
He said the country had to tackle its high unemployment rate, and its energy demand could probably treble in the next 30 years.
Hopefully the time is getting near Good luck all
michealjs
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