PERTH (miningweekly.com) – ASX-listed Challenger Energy is in advanced discussions regarding a possible farm-in agreement over its Cranemere shale gas project, in South Africa.

“We are working on a compelling partnership,” Challenger MD Robert Willes told Mining Weekly Online on the sidelines of Paydirt’s Africa Downunder conference.

Challenger’s Cranemere project covers about 4 300 km² in the Karoo basin, which itself is estimated to host a potential 370-trillion cubic feet of technically recoverable gas. Cranemere also played neighbour to oil major Shell, which has a significant land-holding in the region, while US-based Chevron also has interests in the area.

The company’s permit application was centered around a discovery well drilled in 1968, where gas flowed to the surface from a vertical unstimulated well.

Willes noted that while no exploration had been undertaken at the Cranemere project since that time, the project could contain as much as 32-trillion cubic feet of gas, based on the resource estimate for the Karoo basin.

“Until exploration is done, no one knows what the project will look like or how it will play out,” Willes said during an interview, adding that the timing of exploration would depend on the South African government awarding exploration licences to shale gas projects in the country.

Earlier this week, Mineral Resources Minister Ngoako Ramatlhodi reported that the government would shortly have clarity on the legislative policy for the oil and gas industry, which was expected to play a significant role in meeting the country’s energy demand.

“Timing is, to a large extent, something that will be driven by the government. We are all waiting for exploration licences, and it looks like momentum is building,” a hopeful Willes said.

Despite the current legislative uncertainty, Willes was confident that the Cranemere project could deliver a viable energy solution to the power-tight South Africa market once in production.