EXTRACTING even a fraction of the estimated shale-gas reserves in the Karoo could contribute R35bn-R90bn to government revenue and generate up to 700000 permanent jobs over two and a half decades, according to a report by Econometrix, the economic research provider.
The report, sponsored by Shell, the oil company that is seeking permission to start extracting for the gas, was launched in Johannesburg on Friday morning.
It measured the potential impact of shale-gas development on the South African economy, assuming a constant price of $8 per 1000 cubic feet and a rand/dollar exchange rate of R7,303.
The US Energy Information Administration estimates there are about 485-trillion cubic feet of shale-gas reserves in the southern Karoo.
Extracting between 4% (20-trillion cubic feet) and 10% (20-trillion cubic feet) of the estimated shale-gas resources would have an economic impact of R80bn-R200bn a year on South Africa’s gross domestic product, Econometrix said.
Average government revenue would be between R35bn and R90bn a year, and the process would generate 300000-700000 permanent jobs for a period of 25 years, it said.
“This is a lot of money, a lot of jobs. To walk away from values like these is going to be a difficult decision,” said Tony Twine, economist and managing director at Econometrix.
“The case for gas is truly compelling,” said Bonang Mohale, chairman of Shell South Africa.
Mr Twine also said large-scale shale-gas development might ease South Africa’s energy deficit, making it easier for the country to grow.
“If we want to grow (the economy), we must find a whole lot of energy to drive the economy,” he said, adding that if the amount of shale gas lying 4000m-5000m below the surface of the Karoo was confirmed, it could provide the equivalent of 400 years’ worth of energy consumption in South Africa.
OPPOSITION
Shale-gas exploration in the Karoo has, however, run into stiff opposition due to the “fracking” technique used to extract the gas.
There is a government moratorium on fracking, which involves injecting millions of litres of water, chemicals and sand into the earth at high pressure to free pockets of natural gas.
The Econometrix report “has clearly been commissioned by Shell, which already calls its independence into question”, said Jonathan Deal, chairman of the Treasure the Karoo Action Group, on Friday.
“I am sceptical of anything that is published by oil and industry anywhere that promotes their own interests. They have a history of publishing statistics that suits theoretical objectives that frequently do not represent the true picture,” he added.
“There is no consensus yet on the employment figures in terms of the jobs created and jobs destroyed, where you have agricultural and tourism jobs replaced by mining and drilling jobs,” Mr Deal said, adding that there also was no reliable data on how much gas could be extracted by fracking. “The average gas-well yields in the US are depleting so fast that from full yield on its first day, within 36-48 months it is offering sub-economic yields.”
The Econometrix report also made no mention of the possible environmental impact of fracking, Mr Deal said. “Should aquifers in this country become contaminated, it doesn’t matter how much money you have got, you cannot fix it. It is physically impossible to remove it, clean it and put it back. We are an arid country, and by 2025 we won’t have enough water.”
On Friday, another new report said that scientific tests in Poland had found that extracting shale gas produced some toxic waste but that the waste was reused and did not harm the environment.
The report was compiled by the Polish Geological Institute, which carried out a study last year when Canadian Lane Energy began test-drilling in northern Poland.
It said some highly toxic liquid waste and some solid refuse was generated by fracking, but that it was all reused. Laboratory studies found no pollution to ground water, soil or air, it said.
In South Africa, Mineral Resources Minister Susan Shabangu set up a task team in April last year to investigate the impact of fracking. In August, she extended a moratorium in applications for licences to prospect for shale gas using fracking for a further six months.
According to Ms Shabangu, the task team is expected to forward its report to the Cabinet by March 31.
With NICKY SMITH, SAPA and SAPA-AP













