May 2017 2nd Edition

Shale gas mining to proceed

Written by Stephen Timm
Government  expects to see local economies benefiting directly and indirectly from the intended mining of shale gas, which is also likely to contribute nine per cent to South Africa’s energy mix.

The extraction of shale gas in the Karoo could see South Africa generate thousands of jobs and add as much as R960 billion to the economy over the next 20 to 30 years.

Mineral Resources Minister Mosebenzi Zwane announced in late March that the government intended to proceed with the mining of shale gas.

The estimate is contained in a 2012 report on shale gas by a government task team and is based on the extraction of 50 trillion cubic feet of shale gas, when the rand was at R8 to the US dollar ($) and natural gas was priced at $4 per thousand cubic feet.

PetroSA manager of licensing and legal compliance Tebogo Motloung pointed out that it might be necessary to revise the economic benefits of shale gas in light of changes in commodity prices as well as changes in the recoverable reserves assumed.

He said the expectation is that gas will contribute nine per cent towards the energy mix by 2030. Depending on the amount of gas extractable, and the scale of production, local economies will benefit from direct and indirect employment at power stations, he added.

The South African National Energy Development Institute (Sanedi) is doing a study to quantify the direct and indirect employment opportunities from shale gas extraction.

Motloung said three companies, Bundu Gas, Shell and Falcon, have lodged five applications between them for exploration rights for shale gas. No exploration rights have been granted so far.

Drilling is likely to start towards the end of the second year of the three-year exploration concerning the granting of rights, he added.

Bundu Gas is a local entity but most of its shareholders are listed on the Australian Stock Exchange.

Motloung said geological field mapping and other data gathering activities are under way. PetroSA is not involved in any of the shale gas applications thus far, he said.

At the time the task team said the economic implications of a ban would delay or prevent an improvement of the understanding of the real extent of the potential resource, hamper the development of coal bed methane, and remove the potential economic benefit to severely deprived communities in the Karoo. 

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