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Shell pledges R1.4bn for Karoo exploration

Sep 01 2011 15:30 Reuters

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Cape Town - Royal Dutch Shell said on Thursday it hoped to invest $200m (about R1.4bn) to explore for shale gas in the Karoo - plans facing tough opposition from farmers and greens worried about the environmental impact.

Ecological concerns led the government to place a moratorium on oil and gas exploration licences in the region, where the controversial shale extraction technique of hydraulic fracturing or "fracking" might be deployed.

“If exploration efforts prove that shale contains commercially producible gas volumes, then South Africa could see production from this source within a decade,” Jan Willem Eggink, general manager upstream ventures for Shell’s South African unit, told a news conference.

Petrochemical group Sasol, Anglo American and Falcon Oil and Gas are among those eyeing shale gas in the region, with Shell leading the pack with exploration rights pending to 90 000km².

Farmers and conservationists are worried about the possible impact of fracking, in which drillers blast millions of litres of water, sand and chemicals at high pressure into underground rock to create cracks for the gas and oil to escape.

The sparsely-populated Karoo is renowned for its rugged scenery and is home to rare species such as the mountain zebra and riverine rabbit, putting it high on the radar screen of conservationists.

Those in favour of fracking in the Karoo say the discovery of gas would help South Africa plug a chronic power shortage and reduce dependence on harmful coal-fired power stations. About 90% of the nation’s electricity is supplied by coal.

“By drawing on potential abundant domestic gas supplies, you can meet rising energy demand while maintaining energy security,” Eggink said.

He said he believed South Africa could well have at least half of an estimated 13.73 trillion m³ of trapped shale gas, enough to be commercially viable and allow the country to become energy self-sufficient for decades to come.

Eggink said the company would not compete with farmers for scarce water resources and would likely truck in water initially before trying to pipe it by using the brackish water found deep underground.

Eggink said Shell would also consider paying landowners for access to their land, although no compensation policy has been finalised yet.
shell  |  fracking  |  shale gas
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