WITH the oil price rising from about $90 to $115 over the last three months and following South Africa's largest petrol price hike in 22 years, is cabinet approval for the lifting of the moratorium on shale gas exploration really that surprising?
Fracking is a relatively simple process (described below) and has been occurring in different forms since the mid-1950s. Apart from its simplicity, South Africa is committed to reducing its greenhouse gas emissions as per global agreements. Shale gas may be the solution both to this and the current energy deficit.
The industry also has the potential to alleviate poverty by creating significant employment opportunities, developing new industries and increasing foreign direct investment.
Fracking is a simple process and developing a fracking industry has potentially significant ramifications for South Africa. So do the positive effects not negate the negative ones: the use of large amounts of water and the addition of chemicals into the system?
Fracking, in a nutshell, consists of the following four steps:
1. Vertical drilling commences till a target depth is reached, at which point the drill goes horizontal.
2. A perforating gun blows holes through the walls of the well, creating channels for the fracking fluid (a mixture of water, sand and chemicals) to reach the surrounding shale.
3. The fracking fluid is injected at high pressure to fracture the shale, while the sand in the fluid keeps the cracks open.
4. Part of the fluid flows back to the surface (the amount depends on the depth, horizontal distance and number of times a well is fractured). The natural gas then flows up through the well.
The sand and chemical additives help to eliminate bacteria from the water, lubricate the fracking process and prevent scale deposits that can build up on piping and equipment; they are, therefore, essential to effectively extracting shale gas.
South Africa cannot rely on coal forever – it is a non-renewable source of energy – and so alternatives must be sought. Shale gas is one such alternative.
Yet the possible trade-offs cannot be ignored. As the debate reaches boiling point, it is interesting to note that an MIT study found that the evidence of natural gas migration into freshwater zones was probably the result of sub-standard well completion practices, and that hydraulic fracturing poses no risk to groundwater.
Wells, therefore, need to be completed to the highest quality and strictly regulated.
If shale gas exploration goes ahead, the South African Bureau of Standards and the National Regulator for Compulsory Standards will play pivotal roles in ensuring that Karoo fracking provides maximum economic benefits for minimal costs, and to minimise the trade-offs South Africa faces.
* Geoffrey Chapman is a guest columnist and trade policy expert at the SABS.