Tag Archive | shale gas

Karoo Fracking

Fracking, shale gas gets nearer

Mineral resources gives update on fracking, shale gas

In what appeared to be justification for cabinet’s support of the furtherance of shale gas exploration, director general of the department of mineral resources (DMR), Thibedi Ramontja, told Parliament recently that the discovery of gas deposits in the Karoo “was an exciting opportunity to create jobs and that this was going to make a difference to people’s lives in terms of the NDP”.

He was briefing the select committee on land and mineral resources on the department’s budget vote, his audience representing a different cluster and a more inclusive one than when DMR briefed the National Assembly’s portfolio committee the week before.

Whilst a gazette had been published in February 2014 imposing certain restrictions on the granting of new applications for shale gas “reconnaissance”, DMR said that current approvals did not yet authorise hydraulic fracturing itself.     If this was allowed, “certain amendments” would be made to the appropriate Act.

EIA to come

An environmental impact assessment would be completed in conjunction with the department of water affairs “within the second quarter of 2014/5” to determine “responsible practices” for hydraulic fracturing and to “provide a platform of engagement with stakeholders”.   DMR said that this process would be “streamlined”.

It was noted by DMR in their presentation to parliamentarians that both shale gas exploration and production, together with coal bed methane, will be authorised under environmental impact regulations.

Warning on BEE

The briefing on the DMR strategic plan for five years and this year’s budget vote for the department was preceded by a statement by the deputy minister of mineral resources. Again the warning was conveyed to the mining and petroleum industry that it was generally in default of the mining charter.

With the tenth anniversary of the charter now present, DG Ramontja said, findings by DMR indicated that whilst some targets had been partially achieved in terms of BEE and the charter, others were very much lagging. “Action will be taken”, she said.

Other articles in this category or as background

Posted in BEE, Electricity, Energy, Enviro,Water, Facebook and Twitter, Fuel,oil,renewables, LinkedIn, Public utilities, Trade & Industry0 Comments

Gas Utilisation Master Plan gets things going

Gas a “game changer” in energy mix…

gas pipelineWith the publication for comment of the Gas Utilisation Master Plan (Gump) by the department of energy (DoE), South Africa came a step further towards the finalisation of its Integrated Energy Plan (IEP), meaning also that the document has received approval by the cabinet.

The document, based on a Green Paper released by DOE some years ago, provides a framework for investment in gas-supporting infrastructure and outlines the role that gas could conceivably play in the electricity, transport, domestic, commercial and industrial sectors.

LNG and gas, offshore -onshore

The Gump outlines, amongst other issues,  the import of liquified natural gas (LNG) and piped gas from Namibia and Mozambique and plans for production of natural and shale gas in South Africa.  A plan to have 67 GW of installed gas generation by 2050 is considered by the paper.
The plan is particularly relevant at the moment with Eskom having to rely, as grid backup during the current winter, on expensive diesel-fueled open-cycle gas turbines. The Gump proposals on electricity generation, talk of conversion to closed-cycle turbine power using gas.

The paper also expands on importing electricity from gas sourced from Mozambique and Namibia with lines to the Eskom system grid including imports from the largest present and mainly undeveloped gas fields in Tanzania neighbouring the northern Mozambique fields.

Learning curve

New minister of energy, Tina Joemat-Pettersson, will have deepen her knowledge base very quickly on such matters as the IEP, energy resources and liquid fuels plans, all urgent and with immediacy.   Such issues as the process of energy integration overall and the issue of the stalled independent power producers (IPP) programme in terms of the held-over Independent System Market Operators (ISMO) Bill, are also waiting for position on the energy starting track.

DoE has also pointed to its intended coal gas programme with an IPP programme for the generation of some 6,500MW of power. The department further states that the Gump takes a 30-year view of the industry. It not only deals, they say, with the regulatory environment and economic predictions but does touch on social issues and environmental matters as well.

The master plan also talks of a gas line from Mozambique to Gauteng via Richards Bay and how gas will be distributed and stored, together with the issue of LNG terminal storage.

As a separate issue to Gump but part of the same overall plan, DOE has also released public comment the issue of investment by private merchants in fuel and gas storage, particularly referring to Saldanha Bay.

Storage, a vexed issue

Fuel storage at the present moment is traditionally undertaken by the major oil companies, in some cases integrated with state facilities and who can more easily absorb some of the more riskier aspects of this sector with their vertical interests both upstream and downstream.

DoE sees a greater contribution from investment by private merchants in storage and is currently attempting to re-structure the system to attract and build the industry to counter present storage problems and for early consideration as part of South Africa’s strategic fuels plan and as part of a licensing and regulation background.

In the short term, DoE says in its Gump programme, such a system is needed in terms of LNG holding reserves, imported as LNG or from state owned PetroSA’s gas-to-liquids plant at Mossel Bay, until more natural gas comes down the envisaged pipelines from the current exploration areas.

At the moment Sasol pipes 188-million gigajoules a year of gas into South Africa from Mozambique.  The possibility of LNG re-gasification plants offshore on the West coast in the near future is also debated in the Gump programme released.

Other articles in this category or as background

Posted in Electricity, Energy, Facebook and Twitter, Fuel,oil,renewables, LinkedIn, Public utilities, Special Recent Posts, Trade & Industry0 Comments

Shale gas exploration gets underway

Intensive shale gas exploration in Eastern Cape….

The Eastern Cape Departmento f Economic Development, Environmental Affairs and Tourism (DEDEAT) has launched a R16m shale gas exploration across four of its district municipalities, says Mining Weekly. This is the first phase of such exploration.

The department said in a statement that their shale gas exploration plans would extend from the Little Karoo right across to Buffalo City; the Joe Gqabi district municipality, which included the towns of Aliwal North and Burgersdorp; and the Chris Hani district municipality, which included the towns of Cradock and Queenstown towards Graaff-Reinet.

Groundwater reserves being established

The statement said that the initial phase of the project, which had been named Field Level Operation Water Watch, or FLOW2, would create a baseline for shallow groundwater reservoirs in the Eastern Cape ahead of shale gas exploitation, through a groundwater monitoring programme with community-based participation to stimulate capacity building and entrepreneurship.

The department said that the DEDEAT project would essentially determine a forensic analysis of water and gas fracking in the Karoo to determine whether it was safe, cost-effective and beneficial.

In understanding many of the issues and what was not known about shale gas and the extent of the reserves would be assisted and an assessment of the technical skills needed by the provincial economy to increase the benefits of shale gas exploitation made.

Posted in Earlier Stories, Energy, Facebook and Twitter, Fuel,oil,renewables, Land,Agriculture, LinkedIn, Trade & Industry0 Comments

Fracking moves in November, says Minister Davies

Fracking equals jobs…….

frackingFracking for shale gas is under serious consideration by the minister involved and the department of energy, Deputy President Kgalema Motlanthe told Parliament recently, giving his reasons to parliamentarians for this statement as resulting from a cabinet discussion on economic imperatives, the need to create jobs and advance growth.

Minister of trade and industry, Rob Davies, also weighed in on the subject with a comment a few days later.  He also said that the cabinet had discussed the issue recently and they had concluded that the country could not rely just on a tentative upturn in the United States and Europe to help local growth and job creation but must commence its own initiatives.

Lobby for and against

Minister Davies acknowledged that there was indeed a strong environmental lobby against hydraulic fracturing but said government now needed to consider proposals for and against starting exploration in the light of the “cabinet lekgotla that had discussed global economic developments and which had decided to advance the work on taking a decision on the matter.”

Davies said Cabinet believed shale gas could be a vital component in South Africa’s quest for energy security, but at this stage the potential extent of local reserves remained unknown. “It is our intention to move before the end of this administration”, meaning before mid-November when Parliament closes.

Gas nearby

He said that also Mossgas has a resource of about one trillion cubic metres of gas, Mozambique having about an estimated hundred trillion cubic metres with some estimates that the shale gas deposits in South Africa are far bigger.

“If this was the case, this whole question could be a very, very significant game changer in terms of the energy situation in South Africa”, he said.

Handle with care

On the subject of opposition from the Karoo anti-fracking lobbies, he said that government would not proceed in an irresponsible way.  “We obviously have to bear in mind all the environmental implications including, of course, the nature of the relationships with any company that gets any kind of permit – what is going to be the delivery in terms of a positive impact on the economy.”

He mentioned that in an overall picture, the main constraint to growth that requires immediate attention was the energy situation. He said that discussions now were at senior government level.

previous articles on this subject

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Move by minister to qualify shale gas exploration

Drilling OK but no “fracking”

Mineral Resources Minister Susan Shabangu has said her ministry is to consider Karoo shale-gas exploration licence applications but such would be on the basis of excluding  fracking until the country’s mining regulations had been “augmented” to allow for what hydraulic fracturing involved.

She said that normal drilling could take place as well as geophysical and geochemical mapping but the fracking process itself could not take place during the time it would take draft “appropriate regulations, controls and coordination systems”.    The waiting period to allow for this would be about six months to a year, she said.

The minister did not state when the issuance of licences would commence as a result of the cabinet’s “conditional” approval of fracking exploration at the beginning of September but said that a monitoring committee would be established to oversee the augmentation of the mining regulations, as well as to supervise possible fracking operations.

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To ignore fracking is “an opportunity lost”

Paraphrasing the Working Group task team’s Fracking Report

Because of the uncertainty regarding the extent, or even existence, of economically producible reserves, any assessment of the potential economic impact of fracking is subject to enormous uncertainty”, says the government’s Working Group tasked to report  back on the possibility of shale gas extraction in the Karoo.  The report goes on to add that the economics of “opportunities lost” are so great that it would unwise to halt exploration and research at this stage.

The task team was set up by the minister, Susan Shabangu, last year to investigate the hydraulic fracturing or fracking of shale gas in the Karoo and at the same time, the minister imposed a moratorium on the exploration.

The task team’s report has now been approved by cabinet and the moratorium on exploration lifted but the minister has also said that exploratory fracking would not be allowed during the 6 to 12 months it would take to formulate “appropriate regulations, controls and coordination systems”. (Refer separate report)

While the existence of a significant gas resource in the Karoo would have implications for South Africa’s energy security by reducing national dependence on other fossil fuels, the magnitude of this potential is subject to considerable uncertainty owing to the difficulties in quantifying the resource, the report argues.

Consequently, says the report, “Extensive hydrological and geohydrological studies before exploration and production drilling will be required in order to minimise or eliminate potential impacts.”

The report is also quite clear that the impact on the national economy would be great and the report draws some parallels.

“If 1 trillion cubic feet (Tcf) was sufficient to launch PetroSA’s gas-to-liquids project in Mossel Bay, which provides approximately 5% of the national demand for liquid fuels and now entails 1500-1600 jobs, by making a moderately optimistic assumption that ultimately 30 Tcf will be produced (in the Karoo project) and using an indicative pricing of US$ 4 per thousand cubic feet of gas and an exchange rate of R8 per US dollar, the gross sales value would be almost R1 trillion”.

Aside from the ability to cut South Africa’s reliance on oil imports, the production of shale gas must have, the report assumes, an effect as an economic contributor, to South Africa’s growth “and its GDP would be enhanced by the necessary creation of service industries with all the attendant implications for sales of goods and services.”

Even though this process would be spread over a period of 20–30 years, the report notes that “the production of shale gas would thus clearly have the potential to make a major impact on the national economy.”

On this subject, the report notes that, “Although income tax and royalties accruing to the fiscus depend on profitability, it is expected that such amounts will run into tens or hundreds of millions of rand, augmented by VAT. The potential long-term direct employment opportunities are likely to number in the tens of thousands, with similar numbers in the industries consuming the gas extracted”.

Already, world production of shale gas has sent coal process plummeting down, even to a small degree affecting South Africans exports, although these are much protected from lower prices by the devaluation of the rand. However, the Working Group’s fracking report does not report on the effects on the coal industry or the coal fired energy market but confines itself to the viability and advisability of gas fracking alone.

Nevertheless, commentators note that the USA has cut its oil imports by 20% as a result of fracking.

The report, now released in full after the lifting of the moratorium on fracking but with a limitation on the start date of the hydraulic fracking process itself, is really all about a recommendation to proceed on exploration therefore and undertaking a lot more research particularly on water resources and the hydrological effects of fracking.

This raises the question of how limited the exploration will be from a hydrological viewpoint unless  some sort of limited fracking is done as testing. The second question on the need to draw lines of engagement on environmental issues during the exploration period.

The report notes that initially the projects involved deal with some thirty drilling points using two hectares of land per drill site and this over three years. Most job opportunities will be specialised skills from overseas. The location of the boreholes is yet to be decided.

On the subject of water use, the report says, “Hydraulic fracturing has been used in the oil and gas industry for more than 50 years and, in the last 20 years, together with the practice of horizontal drilling, has been instrumental in making the exploitation of unconventional resources technically and economically feasible.”

It goes on, “The initial stages of exploration can be conducted without the use of (water) reservoir stimulation. However, in order to assess the ‘producibility’ of a resource during the later stages of exploration and, finally, in order to produce the gas, hydraulic fracturing is essential in the exploration process.”

“The process requires the use of significantly large quantities of a base fluid, usually water, together with a small fraction of sand and chemicals pumped into the reservoir with sufficient pressure to create artificial fractures, thereby improving the permeability of the rock and allowing the gas to be produced.”

The report acknowledges that should the exploration period eventually result in large scale production, it is essential that during the earlier exploration period the possible later use of large volumes of water and chemical additives make it essential that the environmental and social implications of this process should be worked out and considered.

Presumably with the acid mine experience from mining operations in Gauteng over the years and with new legislation coming into place to bolt this down, the report remarks “Whereas existing environmental regulations adequately cover most of these factors, an immediate and important concern requiring additional attention is water usage and disposal: in particular, the volume and transportation of the water, the potential contamination of water resources and the disposal of ‘used’ fracturing fluid.

“There has to be further research in this area to investigate all potential sources of input water, as well as means of water disposal before any large scale operation gets off the ground and its seems that the exploration period is part of this. The use and disposal of water in such large amounts is expected to require a water use licence under the National Water Act.”

On dust and air pollution the report seems quite dismissive, saying that, “Noise, dust, emissions and naturally occurring radioactive mineral (NORM) contamination levels will differ at different stages and locations and can be controlled under existing legislation.” There will be no piles of rock and sand, the report says, “as seen in the mining industry”.

“South Africa’s regulatory framework must be robust enough to ensure that, if hydraulic fracturing associated with shale gas exploration and exploitation were approved, any resultant negative impacts would be mitigated”, the report warns.

The report goes into considerable detail regard astronomic effects on the Square Kilometre Array but says in conclusion that this can be controlled by the use of the Astronomy Geographic Advantage Act which clearly can and could control where fracking may and may not be undertaken.

“Astronomy research projects and shale gas in the Karoo may be mutually exclusive”, the report adds, “but the ‘footprint’ of the astronomy installations is only a fraction of the area presently considered to be prospective for shale gas.”

In its summing up, the report measures the “economic values of an “opportunity lost” against concern that the volumes of water required that may compromise other uses for this resource but says whilst the exact “hydrogeology of the Karoo at depth is unknown, potable aquifers are expected to be far removed from shale gas target formations and safe from contamination from injected fracking fluids”.

Presumably that is now is believed by the Working Group and what has to be proven.

Furthermore, the report says whilst the report is working on 30 Tcf, figures of up to 500Tcf have been expressed  and “further drilling, sampling and testing will be required to improve confidence in the existence and, subsequently, extent of the resource. A large resource would have the potential to reduce national dependence on other fossil fuels and may contribute to energy security and the reduction of our carbon footprint. These factors are a powerful justification for further investigation.”

In the event that a real resource is proven, the report adds, “It is possible that its size will be sufficient to justify proceeding to production which maybe coupled with, for example, the establishment of additional gas turbine electricity generation installations or gas-to-liquids (GTL) plants with associated employment opportunities in field operations and plant operation, potentially numbering in the thousands.”

“There would then also be significant implications for the GDP, with as much as R960bn added over 20–30 years. [Calculated at 30 Tcf @ US$ 4/Mcf and R8/US$].

Based on the conclusions set out above, the Working Group “considered a spectrum of options that might be recommended to the minister, ranging from (1) an outright ban; (2) unconditional approval of hydraulic fracturing under the existing regulatory framework.”

“Neither of these extremes was deemed suitable and, thus, an intermediate option (Option 3), specifically the ‘conditional approval of hydraulic fracturing”, was considered to be most appropriate” the report concludes.

Ongoing research is now to be conducted and facilitated by all relevant institutions and appropriate government departments

* the full report is available on http://www.dmr.gov.za

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