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SA should explore fracking - economist

Mar 02 2012 11:46
Johannesburg - South Africa needs to get moving on exploring the potential of its suspected shale gas fields in the Karoo, a top economist said on Friday.

Speaking at an event sponsored by Shell - the oil company seeking permission to start test fracking for the gas - Econometrix economist Tony Twine said this had to happen soon if the country hopes to meet its future energy needs and boost its coffers.

"This is big stuff in terms of contribution to GDP (gross domestic product), in terms of employment potential. Even if the gas finds turn out to be a lot smaller than the estimate... we are talking about a mighty big fish," he said.

Econometrix was commissioned to produce a report on the macroeconomics of the project. First discovered by Soekor in 1967, the Karoo shale gas is currently only a "suspected resource" of about 485 trillion cubic feet.

"To get the production rolling by the early part of the 2020s, we have got to start exploring soon," Twine said.

"Even under modest growth of the South African economy, we are going to need this exploration and a decision to move it or not with minimum delay."

400 years of energy supply

If the amount of shale gas - lying about 4000 to 5000 metres below the Karoo surface - is confirmed, it could provide the equivalent of 400 years' worth of energy consumption in South Africa.

"This is a big chicken; she is a big puppy," Twine said.

Information is needed to confirm the size of the resource and the distribution of the shale gas.

However, concerns over the environmental impact of fracking - the technique used to remove the gas, also called hydraulic fracturing - have dominated much of the debate around the planned project.

Fracking involves pumping a mixture of water, sand and chemicals at high pressure down a borehole into the rock strata containing the shale gas. The process releases the gas, which flows out up the borehole to the surface, where it is captured and contained.

Twine said the project could lead to the creation of up to 700 000 jobs in a proposed first phase to 2035, after the initial proposed nine-year exploration period.

Speaking at the event, Shell's commercial general manager in South Africa, Bonang Mohale, said his company has been working in the industry for many years, and understands the environmental risks involved with fracking.

It also knows how to mitigate them.

He said that if the project is approved, it could address the "energy poverty" experienced by at least 10 million people in South Africa.

"I think this will be bigger than the discovery of gold in Gauteng."

Mohale said Shell accepted the government's moratorium on the project.

"Democracy presupposes that the majority view will prevail."

Asked if Shell was worried about possible nationalisation of the resource, Mohale responded: "If we were worried, we would not be pouring so much money into this."
fracking  |  shale gas  |  karoo



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