Reports lists obstacles on the road to South Africa’s shale development

South Africa flag
Source: DollarPhotoClub

South Africa – a country with the eighth largest shale gas deposits in the world – will not see any progress on shale until it invests in its infrastructure and develops local expertise – according to a report by the World Energy Council and Accenture, released at the Africa Gas Forum during the Africa Energy Indaba on Monday in Johannesburg.

“South Africa has the potential to become a major unconventional gas producer and should persevere despite the current low prices since gas is a long term game,” Christoph Frei, Secretary General, World Energy Council, said in a statement.

The biggest shale promise for South Africa is located in the Karoo desert; where the U.S. Energy Information Administration (EIA) estimated reserves of 390 trillion cubic feet. The Karoo is a semi-desert stretching over 400,000 square kilometres and home to a population of around 1 million people. Although rich in hydrocarbons, the Karoo significantly lacks pipeline coverage. Sasol and Transnet own all major pipeline infrastructure and there is no coverage in the Karoo basin, the report noted.

“While it appears some development will occur without major infrastructure investments, eventually infrastructure will be required to realise the potential of the basin in a sustainable manner,” the report showed.

Other hurdles in South Africa include technical expertise in shale gas development and the lack of appropriate laws and tax incentives.

“To improve market attractiveness, a new Infrastructure Development Bill was implemented to address the risks of expropriation,” it explained.

“However, a clearer stance on tax incentives and subsidies, and ownership of mineral rights should be taken and formalised to further attract potential partners and foreign investment,” it said.

The lack of access to suitable water resources is another obstacle in developing shale resources in the Karoo – which means “thirsty land”.

When it comes to water management, the report said: “There is opportunity for shale gas to drive the development of road, pipeline, water management, and municipal infrastructure that could improve the services available to communities and build goodwill with the industry. The basin currently has poor road infrastructure.”

Low rainfall levels and high evaporation make South Africa the 30th driest country in the world, which is especially concerning to many opponents of fracking given the semi-desert environment of the Karoo. Local villages are especially vulnerable to water shortages, often depending on a small number of wells for drinking, washing, and irrigating. South Africa is projected by some to run out of water by 2025, and 95% of available fresh water was allocated by 2005.

Proponents propose transporting water from areas with a surplus in the immediate area, avoiding the depletion of local supplies. Other strategies could involve piping in seawater after it has been purified or taking water from the Orange River, although these strategies have limitations. Transportation burdens existing infrastructure, and purification of seawater is costly.

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Meanwhile, Botswana’s Ministry of Environment, Wildlife and Tourism has denied that it has issued fracking rights for the exploration of shale gas in more than half of the Kgalagadi Trans-Frontier Park (KTP).

Many news outlets reported in December 2015 that a British company Karoo Energy, had been issued with permits to explore for natural gas in the KTP.

However, in a statement issued on Tuesday, the Ministry responsible for National Parks in Botswana said that it “would like to assure all stakeholders and concerned parties that there is no fracking in the Kgalagadi Transfrontier Park. There are also no licenses for fracking in the KTP.

“This Ministry, which is responsible for Environmental Impact Assessments (EIA), has no intention to issue any approvals for fracking in the KTP or any other national park or national game reserve anywhere in Botswana,” the statement said.”

Adding to the confusion, Karoo Energy’s website shows four large shale and coal bed-methane gas exploration licences in Botswana, including a 7,237,935 acres (29.291 square kilometres) concession in KTP which straddles the border with South Africa, south of the border town of Lobatse.

“Karoo Energy is a natural gas company, owning a significant portfolio of exploration licences for shale gas and coal-bed methane in the Kalahari Karoo Basin of Botswana. The Company’s licences cover in excess of 140,000 square kilometres, making it the largest holder of hydrocarbon licences in Botswana.

“Karoo Energy is intent on unlocking Botswana’s untapped unconventional hydrocarbon resources that can be used within the local energy market of Botswana, and Southern Africa to help alleviate the on-going power shortage in the region,” the company claimed in the statement posted on its website.

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