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Shale gas industry plan takes shape

business/news /
11 March 2016 at 07:30am
By: Siseko Njobeni

Johannesburg - The government’s announcement that shale gas exploration would commence next year could kick-start progress in the development of a shale gas industry in South Africa, Frost & Sullivan energy & environment programme manager Johan Muller said yesterday.
Muller said while regulatory uncertainty had slowed down progress in the establishment of a shale gas industry, government clarity on how the Mineral and Petroleum Resources Development Act Amendment Bill would impact on shale gas developments would help to give an indication of where the industry would go.
Read: Official warns of fracking pollution
“Now the bigger question that needs to be answered is whether the sluggish South African economy will have a large enough appetite for the power that can be generated by shale, nuclear and LNG (liquefied natural gas)... and how much will be exported and to where?” Muller said.
The government said this week that shale gas exploration was scheduled to commence next year.
Muller said companies, such as Shell South Africa, had previously voiced concern about a lack of meaningful progress in the development of shale gas but the announcement would create a great deal of movement in this space.
Shell is among the companies eyeing a slice of the shale gas resources in the Karoo region.
The company said this week that it was watching the shale gas developments closely. “We are following recent media reports on this matter. To date no exploration licences have been issued in South Africa for shale gas development.
“We will continue our ongoing consultation with government, industry and the people of South Africa about the long-term opportunities of shale gas exploration and the regulations that will govern this industry,” Shell said.
“Should supportive petroleum legislation and attractive commercial terms be put in place, the Karoo project could compete within Shell’s global shale gas and oil portfolio.”
Commenting on the government’s announcement, Sasol said it also was eyeing potential shale gas opportunities in the Karoo. It was among the first companies to show interest in shale gas resources in the area.
Sasol received a 12-month permit to evaluate existing and available geological information to determine the potential for extracting shale gas in 2010 together with Norway’s Statoil and US company Chesapeake Energy Corporation. But when the permit expired in 2011, the company did not proceed with exploration plans.
“Shale gas fracking remains on Sasol’s radar and should an opportunity with favourable geology present itself in South Africa, we will assess its viability. Importantly, we are supportive of fracking undertaken in an environmentally responsible manner, and will not support activities that do not comply with this principle,” Sasol said.
Sasol has not held a licence within the Karoo region since the Technical Co-operation Permit expired in 2011.
“Our view is that the area we evaluated was too challenging to explore, develop and produce. However, we will continue to monitor the South African shale gas landscape for any new developments,” Sasol said.