According to Economist Intelligence Unit research South Africa has the fifth largest technically recoverable shale gas resources in the world – concentrated in the Karoo region.
The Karoo shale gas report details the fact that if the estimated reserves of shale gas in the Karoo is accurate, South Africa could enjoy 400 years’ worth of energy supply.
This means that South Africa’s energy woes should come to an end and energy supply should significantly increase, reports consulting and risk management firm Deloitte.
In South Africa, fracking has been the subject of heated debate. In 2010, international oil companies such as Shell SA, Bundu Gas & Oil and Falcon Gas & Oil, applied for shale gas exploration permits in the Karoo.
In April 2011, a shale gas exploration moratorium was imposed by the South African government as a result of environmental groups such as Treasure the Karoo Action Group (TKAG), which believe fracking will cause irreparable damage to the Karoo’s biodiversity and underground and ground water reservoirs.
Significant contribution to GDP
Econometrix economist and principal analyst in the Karoo shale gas report, Tony Twine, indicated that shale gas exploration will satisfy the country’s future energy needs and will have a significant contribution to GDP.
It will add up to R200 billion to GDP and will contribute to the establishment of up to 700 000 jobs.
Twine, however, questions the cost of impending shale gas exploration in the Karoo.
The Karoo is an already fragile ecosystem which is under threat and activists have been campaigning to prevent fracking but despite their resistance and pleas, fracking, turning into a reality, may be inevitable.
Eighty-five percent of South Africa’s current electricity originates from coal and shale gas is seen as a viable alternative, with its relatively smaller carbon footprint and cheaper cost.
Exploitation of a 24-trillion-cubic-foot resource will power about 20 GW of combined cycle gas turbines, generating about 130 000 GWh of electricity a year over a 20-year period, according to Gideon Steyl, Associate Professor at University of the Free State (UFS) Faculty of Natural and Agricultural Sciences.
Last year, shale provided 29% of USA crude oil production and 40% of its natural gas production.
Further advancements in shale gas and oil production could mean that the USA will meet all of its energy requirements by 2030, according to the Economic Intelligence Unit report.
This is a remarkable progression as the USA was for decades the largest oil importer, noted Deloitte.
Fracking in South Africa will require significant initial capital investment and a sizeable budget will be required to maintain the infrastructure.
The Energy Information Administration warns that turning technically recoverable resources into commercially viable production depends on the variations in their geologic structure.
Economic recoverability also depends on the costs of extraction and the price received for natural gas. The body warns that small local variations can make gas extraction uneconomic.
It calculates that a shale-gas well costing twice as much to develop and producing only half what a typical well in the US does is unlikely to be economically viable at current prices.
It is impossible to predict the potential value of developing South Africa’s resources until there is more certainty to how much can actually be extracted economically, cautioned Deloitte.
It said the fracking is seen as an alternative energy source for South Africa that has a significant energy shortage.
However, concerns still linger about the long-term costs whether or not there are better alternative sources of energy.
In the case of the exploring for shale gas in the Karoo, the fight continues to save the region, but if fracking goes ahead the quiet Karoo towns will be changed forever.