The realisation of sustained economic growth for South Africa will require a simultaneous boost to the country’s energy generation potential, which will not be sustainable through the provision of traditional fossil fuels, nuclear power and renewables alone.
Addressing delegates at the Shale Gas in South Africa Conference, in Johannesburg, late last month, Econometrix MD Rob Jeffrey asserted that the country’s economic potential could only be realised through the stimulation of the manufacturing and goods-producing sectors which, incidentally, are also the most energy hungry.
These industries, he said, could not be exclusively supported by traditional energy sources.
“South Africa should use what it has, and it has natural gas,” he remarked.
Jeffrey was referring to a natural shale gas reserve, located in the central Karoo and estimated at around 485- trillion cubic feet, which has been the focus of emotive debates around its exploitation potential.
While he conceded that a natural gas industry in South Africa would have to be built from the bottom up, he added that this would provide substantial job creation, investment, as well as upstream and downstream market potential, and may be a national game-changer.
“The creation of a natural gas industry would create about 704 000 jobs, thus affecting 2.8-million dependants as well as build infrastructure, and contribute billions of rands towards the gross domestic product,” he said.
The prospective move to diversify South Africa’s coal-dominated energy industry would align with government’s push towards a varied energy mix, but would require a level of expertise in natural gas extraction which does not currently exist in the country.
“We’ve long had coal, coal and more coal. Shale gas is very unfamiliar to us,” Industrial Petrochemical Consultants specialist Philip Lloyd told delegates.
He added that the average country sources around 30% of its energy from coal, 30% from crude oil and 30% from natural gas. Tellingly, South Africa sources only around 1% of its energy from natural gas, which is transported through an 800 km pipeline from neighbouring Mozambique.
The lack of a local gas industry also introduces challenges with regard to setting up a regulatory framework and policy. The State has currently imposed a moratorium on hydraulic fracturing, or fracking, for shale gas in the country until a State-commissioned task team report is evaluated.
Meanwhile, energy giant Shell has said it is keen to move ahead with domestic exploration and plans to spend up to $200-million in a prospecting campaign that would involve the drilling of up to 24 wells in a 90 000 km2 area.
Nelson Mandela Metropolitan University professor Maarten de Wit said at the conference that Shell had indicated it would not wait indefinitely for a lifting of the ban.
“Shell has already said that if there does not seem to be a near-term resolution, it would pack up and move on,” he commented.
The most critical area of contention surrounding the shale gas industry in South Africa is its undefined environmental impact, with the proposition of exploration in the Karoo drawing widespread and, at times, emotive opposition.
Jeffrey added that his evaluation of the industry’s potential did not factor in any environmental-impact studies.
“I’m an economist, not an environ- mentalist, so my position is advised purely by economics,” he said.
Opposition organisation the Treasure Karoo Action Group chairperson Jonathan Deal was adamant that it was essential for a structured analysis to not only take into account the industry-claimed benefits of shale gas, but it should also scientifically and economically consider the value of South Africa’s natural capital.
“The effect of fracking on the environment’s ability to provide water, grow crops, produce meat, regulate the weather and earn money from tourism must be taken into account,” he said.
He advanced that, before government gave fracking the nod, it had to be convinced that shale gas mining was the most sustainable mechanism for South Africa to create employment, generate energy and solve the challenges surrounding greenhouse-gas emissions, and added that he did not believe that the task team report would provide a true reflection of the cost-benefit profile.
“It is a flawed investigation. The report upon which government will base its decision will have been compiled in one-tenth of the time it took for the same investigation into fracking in the US, and excludes input from key Ministries such as Transport, Tourism, Agriculture and Rural Development,” he said.
He added that should Mineral Resources Minister Susan Shabangu initiate the issuing of exploration licences based solely on this report, she would face harsh opposition.
“She will literally guarantee litigation involving government, those that would have applied for fracking rights and the South African taxpayer,” he said.
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Article source: http://www.engineeringnews.co.za/article/exploitation-of-shale-gas-deposits-in-karoo-pivotal-for-sas-economic-growth-yet-environmental-costs-remain-uncertain-2012-06-08