21 November 2014
South Africa is likely to be forging ahead with exploration for shale gas in the Karoo. This week cabinet said fracking regulations would be out soon. Big oil and gas companies seem poised to be granted licences to do what many believe is an environmentally messy business - starting with exploration - within the next year.
Shell has carried out an aggressive marketing drive to “sell” shale gas extraction through a process of hydraulic fracturing at great depths in the Karoo, but claims its recent moves to recruit local partners for a number of regasification plants it intends constructing in South Africa are unrelated to its fracking ambitions.
The latter plans
Its advanced plans for setting up regasification plants are nevertheless widely seen as an indication of just how upbeat Shell is about its local prospects. The plants are to be situated at deep-sea harbours in Saldanha Bay, Mossel Bay, Coega (Port Elizabeth) and Richard’s Bay. Shell will import gas in liquid form and “regasify” it at these harbours, to be piped to markets such as Cape Town, Durban and the Gauteng metropoles.
There has been speculation that once gas from shale comes on stream, the pipeline network will be used to ship the shale gas to these markets, but Jan-Willem Eggink, the top upstream manager for Shell, notes that even if sufficient quantities of shale are found to make the project viable, it will be more than a decade before we will smell the first whiff of shale gas at the “markets”.
Coega in the Eastern Cape may prove to be the most viable place for such a regasification plant because, if there is to be a shale gas industry in the country one day, it will be in the nearby Karoo. The network taking the (initially imported) gas to markets will be close at hand and easy to tap into to distribute gas from the fracking fields in the future.
While the promised payoff from shale gas is tempting, right now government still appears intent on going the nuclear power route – with plans to build up to eight mini nuclear power stations.
Shell senior executive John Shoobridge was cautious at a recent press briefing in Cape Town not to knock nuclear power, but he did point out that all the investment in fracking – and regasification plants – would be done by the investing companies (and not the government). Or just about all the investing: he admitted that the local partners Shell was hoping to sign up include state owned enterprises PetroSA, Transnet and Eskom. With nuclear power much more – too much more – of the burden and risk are likely to fall on the taxpayer.
Fracking is a controversial activity. It carries the whiff of water contamination and farm devastation in certain states in the United States of America. But Eggink believes that if it is done properly – the famous "if" – there is little risk of water contamination.
Politically, however, South Africa appears to have accepted that hydraulic fracturing is needed – and that gas is a key element of our energy future. We don’t know yet where the shale gas industry will be centred. Shell hints at areas like Murraysburg and Beaufort West. “It could also be in the Eastern Cape,” said Eggink, although he did not mention Graaff-Reinet – the most likely capital if this area turns out to be shale gas rich – in particular. Graaff-Reinet is the hometown of the Rupert family, major funders of the anti-cracking lobby.
Having apparently given its approval to fracking in the Karoo, all that remains to be finalised is what interest the state will have in the potential business. That is probably not good news for the Friends of the Karoo Action Group which believes that the Karoo's water resources and its tourist potential would be permanently destroyed by such activities. It appears inevitable that if vast quantities of gas are found, the 21st Century could see a “New Rush” to the Karoo. If all goes well from the oil and gas companies' perspectives, it will, no doubt, be on a bigger scale than the great rushes to the diamond fields in the 1870s and to Johannesburg for gold at the end of the 19th Century.
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