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Karoo fracking debate builds a head of steam

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There is still no certainty on whether South Africa is ready to be “fracked” with different interest groups all pleading their case for or against developing the shale gas industry.

Econometrix director Rob Jeffrey said at a conference hosted by the Fossil Fuel Foundation this week that the development of a shale gas industry could be a “game changer” for South Africa.

Some estimates put SA’s potential shale gas resource at 485trillion cubic feet of gas, or about the fifth-largest resource in the world.

According to a recent report by Econometrix (commissioned by Shell) the shale gas industry could add up to R200-billion a year to the country’s GDPand create 700000 jobs. Currently, South African petrochemicals giant Sasol contributes about R60-billion a year to the country’s GDP.

However, Maarten de Wit, a professor at Nelson Mandela Metropolitan University who has been studying the Karoo shale gas area for years, warned at the conference that these numbers might be overestimated and more of a “thumb suck”.

“Nevertheless, even at lower numbers, it still is a lot of gas,” he said.

Currently, hydraulic fracturing, or fracking, is either banned or under a moratorium in 146 regions across the globe, including South Africa.

“There is a reason why these regions have chosen to forego the economic benefits that can be derived from fracking,” said Jonathan Deal, chairman of the Treasure the Karoo Action Group, which is opposed to fracking.

A recent report by the International Energy Agency stated that following best practice when extracting shale gas, which includes steel casings, could increase the cost of a typical well by about 7% but could greatly assist with the safe development of the shale gas industry across the world.

However, Gerrit van Tonder, a professor at the University of the Free State, said cement and steel casings in the Karoo would inevitably deteriorate and fail over time, resulting in the upward migration of fracking fluids to ground water zones.

The controversy over fracking stems from concerns about the safety of the technology, which uses large amounts of clean water mixed with sand and a “chemical cocktail” to crack underground rocks and release the shale gas.

Different sectors of the SA government all seem to be fighting for their own mandate in the shale gas debate.

The National Development Plan states that SA has to move away from coal-fired electricity to cleaner fuels, but also promises clean drinking water for all, which could be compromised by shale gas extraction.

Last year, Mineral Resources Minister Susan Shabangu announced a moratorium on fracking and set up a task team, which included representatives of relevant state departments, to investigate the method further.

Since then, Energy Minister Dipuo Peters has voiced her hope that shale gas exploration will go ahead. She said the development of a shale gas industry will greatly assist the country to build up energy supplies and move to a lower carbon economy.

However, the announcement that South Africa will host more than 70% of the Square Kilometre Array (SKA) radio telescope project in the Northern Cape could also affect fracking plans.

Science and Technology Minister Naledi Pandor warned that fracking will not be allowed to threaten the SKA’s highly sensitive equipment.

Another problem is the fact that SA does not have much expertise in the oil and gas industry. The country has been extracting minerals commercially for more than 100 years, but has just about no experience, skills, infrastructure or regulation when it comes to a gas industry.

Doug Bentley, manager of Schumberger, which has been working on shale gas operations for the past 11 years, said at this week’s conference that “people want to work” and these hurdles can be overcome.

He said the US is currently completing a four-year review of fracking and the shale gas industry and that SA will do well to look at the US review to set up possible regulation in the country.

The National Energy Regulator is also excited at the prospect of fracking, with regulatory member Ethel Teljeur emphasising that there is a lot of room to grow the country’s gas industry.

But Deal warned that it is very hard to “close the stable door once the horse has bolted”. He called for a comprehensive assessment of fracking in SA across the scientific, environmental, social and economic spectrum.

Shell has said it will abandon its plans if the process to start exploration for shale gas becomes too onerous.

The oil and gas giant estimates that it will take about nine years (including regulatory delays) to explore the basin in the Karoo. If Shell does get the go-ahead, earliest production can be expected in about 2020. It takes about three years to construct a gas-fuelled power station.

Sasol is also considering shale gas possibilities in the Karoo. It put its Karoo exploration plans on hold late last year but recently bought into a shale gas project in Canada in which it will invest around $12-billion over the next five years.

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Article source: http://www.businesslive.co.za/southafrica/sa_markets/2012/06/02/karoo-fracking-debate-builds-a-head-of-steam

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