Australian oil and gas explorer Challenger Energy has applied for a right to explore for shale gas in South Africa’s Karoo.

Challenger’s 95%-owned South African subsidiary, Bundu Gas & Oil Exploration, was the first mover in the shale gas belt where Shell and Falcon, with Chevron, are also awaiting exploration licences. The remaining 5% is owned by Bundu's black economic empowerment partner Don Ncube.

“We’ve got some pretty good neighbours,” Challenger MD Robert Willes said on Monday (also see attached video interview).

Bundu’s interest was kindled by prior work carried out by South Africa’s former State-owned exploration company Soekor, which drilled several wells in the area that all had gas shows in the shale.

In particular, the well in the middle of Bundu’s exploration area has caught the attention of the ASX-listed junior.

“When they penetrated the shale, they actually took such a kick from gas that they had to activate the blowout preventers and then the gas flowed to surface. This is an incredibly exciting and encouraging prospect,” said Willes, a former GM of BP’s North West Shelf liquefied natural gas project, in Australia, who joined Challenger in April.

Challenger is currently fixated on what it describes as a fast emerging, world-scale shale gas province, which is part of the South African government's economic growth, jobs and energy plans.

Shell has been paving the way for development of the area for some time and more recently, oil major Chevron and Falcon announced that they would be cooperating in the potential unlocking of unconventional gas opportunities in the region.

Challenger, mindful of intensive debate on shale gas exploration, in South Africa, and globally, is committed to the application of global best practice and engagement with all stakeholders.

The US Energy Information Administration estimates that the Lower Permian Ecca Group shales in the Karoo basin contain 1 559-trillion cubic feet (Tcf) of risked shale gas-in-place, with 370 Tcf as the risked, technically recoverable shale gas resource.

One trillion cubic feet of natural gas is enough to heat 15-million homes for one year, generate 100-billion kilowatt hours of electricity or fuel 12-million natural-gas-fired vehicles for one year.

The current US estimate excludes the thicker Upper Ecca shales on the basis that they have a lower reported total organic carbon content.

The South African Cabinet last year approved the gazetting of the technical regulations on Petroleum Exploration and Exploitation, representing a key milestone in the progress towards the award of exploration rights for shale gas exploration.

Permitting is now awaited, subject to the promulgation of the new regulatory framework.

In the interim, Challenger is having farm-in discussions with potential strategic partners.

“This is absolutely the place to focus right now. This is a company-making prospect,” Willes told Mining Weekly Online.