Shale gas in South Africa

Of the 32 or so reported shale gas plays in the world, South Africa supposedly has the 5^th largest. BTW, the Marcellus play is # 2. The hopeful 400+TCF of shale gas in South Africa is unproven, since the data comes from a few cores taken in the 1960s. Shell and other companies are asking for exploration rights. South Africa currently has a moratorium on exploration. Guess why? Yes, uncertainties, perceptions, and a very strong anti-fracking group.

The play is located in the Karroo (see image), a semi-arid region with annual rainfall of a few hundred millimeters. Comparatively, we in PA have over 1000 mm per annum. Furthermore the rain comes in the form of thunderstorms – not good for storage. However, geologists claim there is a saline/brine layer that lies a few thousand feet down that can be used as a water source. So, water is a big issue, as is a fear of earthquakes, as well as an impact on the unique biodiversity of the Karoo. Another confounding issue is the likelihood of South Africa been chosen to host the Square Kilometre array telescope, also located in the Karroo.

The Karroo is very sparsely populated and is mainly a sheep farming area. The anti-fracking group is mainly made up by wealthy farmers and city folk. It’s not clear what to locals or broader South Africans think of the economic potential since few to no surveys have been done. A big issue in my mind is that the government owns all the sub-surface rights, so how will the landowners/farmers and locals benefit? We all know that outside expertise will be needed to work the rigs, but jobs will be created. Some reports talk about 700,000 jobs. These numbers should obviously be used with caution. We all know the over-estimation of jobs and ‘boom’ in our neck of the woods. There is also the concern about the capacity of the government to handle the development of the play. A decision is expected soon whether to allow Shell, to explore. There are lots the government needs to deal with, least of which is adequate rules and regs. You can’t blame them – we are still learning about impacts from this relatively new technology. South Africa is heavily dependent on imported energy so shale gas could be a game changer. Haven’t we heard that before?