SA gives cautious “yes’ to shale gas


[] — SOUTH AFRICA has given a very conditional green
light to the exploration of shale gas in the Karoo basin, according to Minister of
Mineral Resources Susan Shabangu, saying the government would have to assess
every step towards full scale hydraulic fracturing for possible “unacceptable

Shabangu on Tuesday presented the findings of a task team commissioned early 2011
to evaluate both the possible positive and negative effects of shale gas exploitation in
the Karoo. The task team’s deliberations coincided with a ban on the exploration of
shale gas – the ban was lifted last week.

For now, Shabangu said applicants would be allowed to proceed with the initial stages
of exploration, including geological field mapping and other data gathering activities,
until such time when an appropriate regulatory framework has been put in place.
Actual fracking activities, essential during the later stages of exploration when
determining the financial viability of a potential project, would for the time being
remain prohibited.

Initial exploration would go a long way towards confirming whether the Karoo indeed
held the estimated technically recoverable resource of 485 trillion cubic feet (Tcf) of
gas, Shabangu said.

“It is impossible to quantify the resource accurately, other than to say that it is
potentially very large,’ read an executive summary of the task team’s report. “It is
essential that additional, modern subsurface information be obtained through drilling
or a geophysical survey to constrain these estimates.’

The report said that while exploration right holders conduct their so-called initial
activities under the legal framework provided by the Mineral and Petroleum Resources
Development Act (MPRDA), a new working committee would work on the
establishment of appropriate regulations, controls and co-ordination systems – a
process expected to take between six to twelve months.

“Once all the preceding actions have been completed, [Government would] authorise
hydraulic fracturing under strict supervision of the monitoring committee,’ read the
report. “In the event of any unacceptable outcomes, the process may be halted.’

Among the report’s listed fears count the impact of shale gas mining on the
environment, water use and air pollution.

“The use of hydraulic fracturing in shale gas exploration is perceived to have the
attendant risk of polluting sources of drinking water by fracturing fluids and/or
methane, and induced seismic events,’ read the report. “In the Karoo, there is the
additional concern that the volumes of water required may compromise other uses
and, in a large part of the area, there is a further geological risk entailed by the
presence of extensive intrusions of dolerite and kimberlite, the influences of which are
not easily predicted.’

The Departments of Mineral Resources and Science and Technology would also have
to come up with a strategy on how shale gas mining and the recently awarded Square
Kilometre Array Radio Telescope project could co-exist in the same environment.

Still, the task team found that shale gas exploitation would hold massive benefits for
South Africa’s economy and reduce the country’s reliance on fossil fuels.

“Making a moderately optimistic assumption that ultimately 30TcF will be produced.
the gross sales value would be almost R1 trillion,’ read the report, based on the
assumption of a $4 per thousand cubic feet of gas and an exchange rate of R8/$.

It said MossGas’s 1TcF gas-to-liquids project was sufficient to provide around 5% of
the national demand for liquid fuels and entailed 1,500 jobs.