The Petroleum Agency of South Africa (Pasa) has decided to proceed with processing the application by Bundu Gas and Oil Exploration – a subsidiary of Challenger Energy – to undertake shale gas exploration in South Africa’s Karoo basin.
The initial application was filed in 2010 and Challenger said it was necessary to update its environmental management programme. The process needs to be completed by 27th February 2015.
“The applications for shale gas exploration rights have been on hold since 2011, so the decision to proceed with the processing of Bundu’s application represents a major milestone and signals that the South African Government is ready to move forward with the exploration and appraisal of this potentially vital national resource,” said Robert Willes, MD of Challenger Energy in a prepared statement.
In accordance with the Mineral and Petroleum Resources Development Act, Bundu Gas was required to notify and consult with affected communities and parties in respect of any such revisions.
The decision is the more significant, since only three weeks ago Stefan Cramer, a hydro-geologist who had been advising communities in the Karoo on the implications of fracking, argued that drilling for shale gas in the region did not make economic sense.
“The high cost of gas production in the Karoo makes the huge infrastructure investments, both from public and private sources, viable only at hugely higher energy costs,” Stefan Cramer said at his seminar held at the University of KwaZulu-Natal.
“I will not see fracking (for shale gas) in my lifetime,” said Cramer, who is the science adviser to the Southern African Faith Communities’ Environment Institute in Cape Town.
In his seminar entitled “Six reasons why the Karoo will not be fracked, if reason prevails”, Cramer listed obstacles to shale development in the Karoo, which included:
- unknown geology, where too little is known about the deeper levels of groundwater and the preferential pathways along which contamination from fracking fluids could travel upwards into drinking water supplies,
- not enough water, with trucking water from outside the Karoo potentially too expensive, and impractical,
- the lack of infrastructure and inadequate gas pipeline network and power transmission lines,
- no economic incentive for local communities which do not own mineral rights and therefore will not benefit financially from shale exploration,
- lack of satisfactory legal framework,
- “very poor” investment climate which would make it difficult to raise sufficient amount of funds to finance shale development in the country.
The decision of Pasa shows that South Africa is serious about shale gas exploration – despite the potential difficulties listed by Cramer. It is, however, only the first – and a very tentative – step on the road to unconventional energy exploration.
Nevertheless, Robert Willes sounded optimistic when he said: “We are greatly encouraged by this development, and look forward to engaging with local communities and stakeholders.”
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