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Sep 24, 2010

24/09/2010 (On-The-Air)

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Every Friday morning, SAfm's AMLive's radio anchor Caesar Molebatsi speaks to Martin Creamer, publishing editor of Engineering News and Mining Weekly. Reported here is this Friday's At the Coalface transcript:

Molebatsi: Welcome to you this morning, Martin. We hear that the government has given the world's biggest mining company permission to search for oil and gas off South Africa's West Coast?

Creamer: Yes, that biggest mining company in the world, of course, is BHP Billiton and it's long overdue. They've been trying to get these rights since 2005. In fact, they had a rig at once stage ready to come out to South Africa to start drilling and then the Treasury held them up and said "No, no, no. We must first work out the fiscal arrangements and everything." They've been going on now for five years debating, and finally the Petroleum Agency SA is able to announce that the right has been given to BHP Billiton to drill off South Africa's West Coast, both shallow and deep.

They've got 3A/4A, that's their concession area, as well as 3B/4B. The one is fairly shallow, close to the coast and not so deep and they're targeting gas there, and the other is fairly deep, it can go down to 2 000 m and they're looking at oil there. They've got partners: BHP Billiton's partner that we know very well is Sasol, that's one of the partners, and also the State-owned PetroSA. That is on the 3A/4A concession.

The other partner in the deeper level is a smaller partner and is an American company, but BHP Billiton will be the operator. If we can find some gas and we can find oil off our coastline here, it'll be a tremendous bonanza for South Africa.

Molebatsi: Brilliant. I'm sure though that there is a reason why they've targeted that place, so what will it actually mean to the South African economy?

Creamer: Well it could be a game changer. If you get sufficient energy coming through right on your doorstep like that, that would be, from an energy perspective, it would be a game changer for us.

Molebatsi: The petroleum giant Shell is confident of finding shale gas on South Africa's arid Karoo.

Creamer: Yes! Again, in the Karoo, South African's have been slow because a small company, Falcon, has been the first to win rights there and they've also been granted by Petroleum Agency SA, which is our regulatory body. But then coming in a little bit later was Shell and they've got about 100 000 km2 there, so that's a nice big area that they've got around the Falcon area.

Then, coming in third, was Sasol. They've also got some area, but it's on the periphery, it's not in the heart of it, and then fourth: Anglo American who, I think, have still got to have their rights awarded. So again, you see these international companies are quick off the mark. They get in fast and now we find Shell saying at the World Energy Congress, in Montreal, that they are quite confident that they're going to find shale gas here.

You know, shale gas is the name of the game these days because there's been a technological breakthrough, which enables us to exploit this shale gas. In America it's called the ‘shale gale', it's actually lowered the natural gas price. So this could also be a game changer. Of course, we're going ahead of ourselves, we're being very optimistic here: they've still got to find it. But I mean, for the CEO of Shell to say at the World Energy Congress, in Montreal, that he's confident, that's what he's telling the media, I think he feels that they've done their studies already that there is something there. Whether it's in the right quantities, of course, that remains to be seen, but they've begun to build their wells.

Molebatsi: What does that mean in terms of infrastructure? Of delivering it to domestic workers, and converting that into other products which our manufacturers, for instance, are looking for?

Creamer: We have got very poor infrastructure when it comes to gas. That's why some people are saying it can be a shale gale in America, but it be a shale gale in South Africa? Because we haven't got that same infrastructure, that they can just plug into the infrastructure with this gas now. But, we have got a very big electricity grid and we could use that gas to produce electricity, maybe locally, and then put it into that grid, so you're still sending the energy out in a different form.

Molebatsi: South Africa's big project, Mafutha petroleum refinery, is stalling on climate change issues?

Creamer: You see, again, people chasing gas here as we saw with BHP Billiton and now Shell looking for shale gas it's linked to climate change because one of the fastest ways and one of the most cost effective ways to lower your carbon is to go for gas. And now we see we were going to have a big inland refinery here. It was going to be tantamount to Sasol Four. It was called project Mafutha, which is Zulu for ‘oil'. But you can see that's it's stalling.

It's stalling on climate change issues, because this is going to be in the Limpopo province, it's going to be inland, it's going to be coal-based, and now what do you do with all that CO2? In this new environment with Copenhagen and all these instructions of how we've got to deal with CO2, where are you going to put your carbon? And so that's why they're not going beyond the prefeasibility study now. We should have already been well-advanced with this project Mafutha. They're going to keep it in prefeasibility study until they can solve the issue of carbon capture and storage. Storage is the big thing: where are you going to put it? People inject the CO2 into the ground, but they need a saline aquifer nearby and this, of course, corresponds with Minister Dipuo Peters, she's just announced this atlas for our carbon capture and storage, but most of the places where they want to store it is along the coast and it'll be very difficult not, if you've got this inland refinery to have such a long pipeline. Although, Sasol is doing this project Mafutha, that is their project, it was going to be tantamount to a Sasol Four. Sasol are also doing a similar coal-to-liquids project in China and they say they've got no hang-up with the carbon storage side, so they've already solved it in China, we need to solve it here.

Molebatsi: But at least we are taking climate change seriously, that can be something that is good for us. Well, thank you very much, Martin. Martin Creamer is publishing editor of Engineering News and Mining Weekly, he'll be back with us At the Coalface at the same time next Friday.

 

Edited by: Creamer Media Reporter
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