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Message: Falcon in South Africa

Falcon in South Africa

posted on Mar 27, 2010 03:43PM

http://nohotair.typepad.co.uk/no_hot_air/2010/03/south-african-shale-gas-part-three.html

South African Shale Gas part three

History's like that. Get obsessed with one direction (North America and Russia) and big news comes from somewhere completely different.

Norwegian state energy company Statoil was one of the big investors in Chesapeake's Marcellus shale, where they just took a further interest only this week. The obvious reason was to learn how to use shale technology worldwide, but the first public investment of the Statoil/Chesapeake link was curious. South Africa is a backwater of the world energy industry, with no pressing need to produce gas given its' massive footprint of coal and a mild climate.

Two weeks ago we saw the third party in the venture SASOL reveal shale as being a gas to liquids play, cleverly taking advantage of the big disparity in the gas oil link. Converting low price gas to high priced petrol or diesel is thinking outside the box at its best.

Is this just a flash in the pan? Is this an experiment that won't work? One way to see if something has legs is to see if someone else puts their money where their mouth is. In South Africa, someone who has little energy, but lots of mining experience is breaking cover:

Diversified miner Anglo American - as well as Shell International - have applied to explore for shale gas in South Africa's arid Karoo, Petroleum Agency SA frontier geology manager Jennifer Marot tells Mining Weekly Online.

This follows the news that South Africa's Sasol has teamed up with Statoil of Norway and Chesapeake of the US to do the same.

"There has been a flurry of interest since the US's shale gas successes," Marot tells Mining Weekly Online, pointing out that Petroleum Agency SA – headed by CEO Mthozami Xiphu – should not be confused with the State-owned PetroSA.

Already we see South Africa is getting crowded: Chesapeake/Statoil was good, Anglo American very interesting and Shell - well they're quiet and closed mouthed all over the world. But what is making this South African story really interesting is how the smaller guys are coming in.

Marot says that the first application to explore was from the South African company, Bundu Gas & Oil Exploration, which focused on deep resource gas.

The second application was from American shale-gas explorer Falcon Oil and Gas. Shell International was third, the much publicised Sasol/Statoil/Chesapeake partnership fourth and now Anglo Operations has come in fifth."The whole of the southern part of the country is now covered with people interested in investigating shale gas,"

Falcon has had bad luck in Hungary, is exiting Alberta and is investigating Australia's Beetaloo Basin as I noted last September. But they still keep plugging away in the spirit of the wildcatter. There are only two possibly destinies for wildcatters: They go broke or they make a fortune. But they can't stop trying.

Bundu is financed by two Texans and an Australian entity. They may be in a spot of trouble in that they are up against a UK company in an argument over a game reserve. And if there one thing the British do better than anyone is "not in my back yard". Throw in a few zebras and lions and a super posh game resort and one has to admire Bundu's even trying.

A TRANS-Atlantic battle is brewing in a small Eastern Cape town where two Texans want to drill for gas – but in their way is an internationally-acclaimed British-owned game farm.
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