Publications
Partners
Cape Town - Shell is looking for local partners for investments in “regasification” plants in South Africa, for which it has already earmarked sites in a number of locations, senior executive John Shoobridge said on Wednesday.
Addressing a media briefing on the state of play of the company’s interests in South Africa at a Cape Town hotel, Shoobridge said there are three or four possible sites for the plants, which allow the reconversion of natural gas from a liquefied state back into gas form.
Noting power monopoly Eskom's recent troubles to provide electricity, Shoobridge – who is LNG business development manager for Africa - said Coega in the Eastern Cape, Richards Bay in KwaZulu-Natal, Mossel Bay and Saldanha in the Western Cape are possible sites for such plants.
“We hope to do that in South Africa,” he told journalists. It could take the form of a land-based plant which would allow a much larger storage capacity or even a floating terminal.
Shoobridge indicated that local partners or other oil and gas companies would be sought to build the local infrastructure, such as pipelines to take the gas to markets. Shell is also talking to Transnet, PetroSA, which has a gas to oil plant at Mossel Bay, and Eskom to partner in such projects.
While Shell noted that Eskom has spent about R11bn on burning diesel to produce electricity in the last financial year, which is costing the country “a fortune”, Shoobridge said: “We are working closely with government… (to establish) the pros and cons (of such a project).”
While Shell does not favour one site over another, the development of a deep water port at Coega outside Port Elizabeth may make the Eastern Cape a good place to start.
Any decision to invest in such a venture would need government's go-ahead. Shell expects national government, through the minerals department, to call for tenders for such a project. That would determine the size and parameters of the project, Shell said. Such a tender is expected to go out next year.
Meanwhile both Jan-Willem Eggink, the general manager upstream, and Shoobridge refused to be drawn on whether the government’s move towards building eight nuclear power stations is unaffordable. Shoobridge argued that the investment in the LNG gasification plants “don’t need public money”.
If a country went the nuclear route “that is not a decision for Shell to take”, but he pointed out that Shell could be investing in gasification plants - and their associated pipelines - at its own expense.
The provision of energy, which would be imported, in this way through shipping in liquefied natural gas (LNG) and converting it at these plants would be much quicker than the rollout of nuclear power, coal-fired power stations or even shale gas production. All are long-term projects.
He could not yet tell how many jobs would be created or what impact the building of such plants would have on the economy, but he argued it would have a ripple effect down the value chain as pipelines carrying gas to markets are built.
Fracking plans
Eggink, meanwhile, gave some indication of where the first wells for hydraulic fracturing would be dug in the Karoo. If exploration licences were awarded next year, the first drilling is likely to start in about 2017. Pressed on where the first drilling could take place, he said it could be in the area north of Beaufort West, "west of Sutherland and Murraysburg… it could also be in the Eastern Cape”.
“If you look at the three blocks (of the Karoo)… the shale in that area is thinner in the north, thicker in the south.” Any decision to explore for shale gas would be “a trade-off”; it would be cheaper to drill in the north, "but it would be less deep”.
While Shell has a budget of about $200m for the exploration phase, concerns over legislation which would give government a big stake in the shale gas industry are still worrying Shell before it moves into the production phase.
While it does not in principle oppose government involvement, Eggink indicated that there is a tipping point which could make investment in shale gas extraction unviable. He indicated investment could go up to R1bn.
Addressing a media briefing on the state of play of the company’s interests in South Africa at a Cape Town hotel, Shoobridge said there are three or four possible sites for the plants, which allow the reconversion of natural gas from a liquefied state back into gas form.
Noting power monopoly Eskom's recent troubles to provide electricity, Shoobridge – who is LNG business development manager for Africa - said Coega in the Eastern Cape, Richards Bay in KwaZulu-Natal, Mossel Bay and Saldanha in the Western Cape are possible sites for such plants.
“We hope to do that in South Africa,” he told journalists. It could take the form of a land-based plant which would allow a much larger storage capacity or even a floating terminal.
Shoobridge indicated that local partners or other oil and gas companies would be sought to build the local infrastructure, such as pipelines to take the gas to markets. Shell is also talking to Transnet, PetroSA, which has a gas to oil plant at Mossel Bay, and Eskom to partner in such projects.
While Shell noted that Eskom has spent about R11bn on burning diesel to produce electricity in the last financial year, which is costing the country “a fortune”, Shoobridge said: “We are working closely with government… (to establish) the pros and cons (of such a project).”
While Shell does not favour one site over another, the development of a deep water port at Coega outside Port Elizabeth may make the Eastern Cape a good place to start.
Any decision to invest in such a venture would need government's go-ahead. Shell expects national government, through the minerals department, to call for tenders for such a project. That would determine the size and parameters of the project, Shell said. Such a tender is expected to go out next year.
Meanwhile both Jan-Willem Eggink, the general manager upstream, and Shoobridge refused to be drawn on whether the government’s move towards building eight nuclear power stations is unaffordable. Shoobridge argued that the investment in the LNG gasification plants “don’t need public money”.
If a country went the nuclear route “that is not a decision for Shell to take”, but he pointed out that Shell could be investing in gasification plants - and their associated pipelines - at its own expense.
The provision of energy, which would be imported, in this way through shipping in liquefied natural gas (LNG) and converting it at these plants would be much quicker than the rollout of nuclear power, coal-fired power stations or even shale gas production. All are long-term projects.
He could not yet tell how many jobs would be created or what impact the building of such plants would have on the economy, but he argued it would have a ripple effect down the value chain as pipelines carrying gas to markets are built.
Fracking plans
Eggink, meanwhile, gave some indication of where the first wells for hydraulic fracturing would be dug in the Karoo. If exploration licences were awarded next year, the first drilling is likely to start in about 2017. Pressed on where the first drilling could take place, he said it could be in the area north of Beaufort West, "west of Sutherland and Murraysburg… it could also be in the Eastern Cape”.
“If you look at the three blocks (of the Karoo)… the shale in that area is thinner in the north, thicker in the south.” Any decision to explore for shale gas would be “a trade-off”; it would be cheaper to drill in the north, "but it would be less deep”.
While Shell has a budget of about $200m for the exploration phase, concerns over legislation which would give government a big stake in the shale gas industry are still worrying Shell before it moves into the production phase.
While it does not in principle oppose government involvement, Eggink indicated that there is a tipping point which could make investment in shale gas extraction unviable. He indicated investment could go up to R1bn.
