Huge prospects, much protest

Falcon is a global energy company with projects in Hungary, Australia & South Africa

Developing large acreage positions of unconventional and conventional oil and gas resources

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solyomtwo

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Huge prospects, much protest

posted on Jul 08, 2011 08:36AM

South Africa has such large shale-gas reserves that they could neutralise the balance of payments deficit.

According to Tony Twine, an Econometrix economist, incorporating unconventional natural gas into the primary energy mix of the country, in which crude oil is the single largest import, could revolutionise the position on the balance of payments. "Displacing oil and gas imports would remove part of the necessity for keeping high positive rates to attract foreign capital."

It would also have an impact on electricity generation, liquid-fuel synthesis and petrochemical feedstock production, Twine said.

There is an estimated 14-trillion cubic metres of natural gas in the Karoo and, according to the United States Energy Information Administration, South Africa has the world's fifth largest recoverable shale gas reserves.

Hydraulic fracturing involves forcing a fluid, typically 99% water and sand and about 1% chemical additives, into the shale at high pressure. This technology has been in use for more than 60 years but has only recently become contentious in South Africa.

Fracking of the shale rock formations under the Karoo came to light when Royal Dutch Shell applied for prospecting rights. A moratorium has since been placed on all applications by the department of mineral resources.

An estimated 28-trillion cubic metres is recoverable in North America and, according to the American Petroleum Institute, the natural gas industry supports nearly three million jobs and adds about $385-billion to the national economy.

Impacts

A study released by PricewaterhouseCoopers last month, "The Economic Impacts of the Oil and Natural Gas Industry on the US economy in 2009: Employment, Labour Income and Value-Added", showed that the US's oil and gas industry remained a steady source of economic activity and job creation even during the recession. In 2009, the industry supported 9.2-million people in the country and accounted for 7.7% of gross domestic product (GDP).

Oil companies have identified natural-gas prospecting areas that account for more than 20% of South Africa's land surface and the potential economic impact is significant.

Koos Pretorius, the director of the Federation for a Sustainable Environment (FSE), said companies such as Anglo American, Sasol, Falcon Oil and Bundu Oil and Gas were all looking at gas exploration in areas that included KwaZulu-Natal, the Free State and the Eastern Cape.