South Africa prepares for shale gas exploration

SA shale gas-kobiecanka pixabaySouth Africa is a net natural gas importer, primarily from neighboring Mozambique and Namibia. (Image source: Kobiecanka/Pixabay)South Africa has finalised regulations on shale gas exploration and will gazette them by June 2015 as companies reconsider investments due to volatile oil prices and delays in awarding licenses

In March this year, Shell announced that it was pulling back from its shale projects in South Africa’s semi-arid Karoo Basin, which is believed to hold up to 11.6 trillion cu/m of technically recoverable reserves.

Minister of mineral resources Ngoako Ramatlhodi announced in the Parliament, “We have finalised the regulations. It would be gazetted in a month’s time,”

The Karoo Basin is believed to have some of the largest reserves in the world and Shell had applied for an exploration licence covering more than 95,000 sq km, amounting to almost a quarter of the region. A study commissioned by the company said extracting 1.4 trillion u/m or 12.8 per cent of potential reserves, would add US$20bn or 0.5 per cent of GDP to the South African economy every year for 25 years and create 700,000 jobs.

Besides Shell, Falcon Oil and Gas, in partnership with Chevron, and Bundu Gas have applied for exploration licenses in the region.

But environmentalists and land owners in the Karoo Basin, situated in the heart of South Africa, have argued that exploring for shale by fracking, or hydraulic fracturing, would cause huge environmental damage in the water-scarce region.

“We have taken into consideration the issues of water and regulations are going to address this sufficiently, providing proper guidance on how to undertake hydraulic fracturing,” added Thibedi Ramontja, director general in the department of mineral resources.

It would take companies about three years of exploration to determine if the Karoo reserves were commercially viable, before moving into possible production, he added.

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