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Let’s get fracking!

14th March 2014

By: Creamer Media Reporter

  

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Following the recent pronouncement by Mineral Resources Minister Susan Shabangu that the finalised technical regulations for petroleum exploration and exploitation, the so-called fracking regulations, will be published imminently, South Africa is one step closer to joining the ranks of the world’s leading shale gas producers.

Given its decision to exploit the shale gas reserves, government (and shale gas producers alike) must proactively rebuild public trust in fracking, which has been eroded in recent years. This requires an approach that is factual, underpinned by research and rational dialogue, and devoid of emotive, sceptical and confrontational dogma. In addition, the monitoring mechanism around fracking operations must be robust in order to ensure that operators abide by the rules, thereby providing further comfort for the public.

According to the US Energy Information Administration, the Karoo basin holds technically recoverable natural gas reserves in the region of 390-trillion cubic feet (tcf), at least 100 tcf of which is estimated to be economically recoverable. This positions South Africa’s Karoo basin as the eighth-largest shale gas bed in the world, and exploiting these reserves would be a game changer for South Africa, given the industrialisation opportunity that this presents.

In the US, the shale gas revolution has transformed the energy mix to the extent that shale gas has become a substitute for oil and coal. It has resulted in the slashing of the price of natural gas and has turned the US from a net energy importer into a net exporter. In comparative terms, the effect of exploiting a similar-size reserve by coal-dependent South Africa is potentially greater.

South Africa consumes 220-million barrels a year. A trillion cubic feet of natural gas is the equivalent of 175- million barrels of oil. At the latest estimate of 390 tcf, the Karoo deposit is akin to an oilfield sufficient to meet the country’s needs for the next 310 years.

Based on the Econometrix report of February 2012, a conservative estimation of South Africa’s recoverable shale reserves would create 850 000 jobs and, for a minimum of 25 years, generate yearly economic growth equivalent to 9.6% of the 2010 gross domestic product. The economic potential for South Africa is huge.
The draft fracking regulations, which were released for public comment towards the end of last year, seek to balance environmental, social and economic considerations in a manner that mitigates the real risks pertaining to fracking. The draft fracking regulations, for the most part, meet and, in certain respects, exceed international best practice across the hydraulic fracking cycle. Government should be applauded for this.
However, without a measured process of understanding and rebuilding trust, South Africa runs the risk of focusing attention on unsubstantiated perceived risks attendant to fracking, thereby sig- nificantly compromising our ability to unlock the opportunity for this and future generations. Government would be well advised to focus, as a matter of urgency, on two areas – public buy-in and monitoring capability – in the context of developing the shale gas reserves in the Karoo.

Public Buy-In
Government must secure public trust (as has been demonstrated with the development of the National Development Plan) in order to focus on realising the opportunity that exists. This is vital in the context of an activity that has the potential to generate signifi- cant revenues, create jobs and alleviate poverty. The formulation and implementation of a multipronged engagement strategy aimed at educating the public on the real, as opposed to perceived, risks pertaining to fracking are critical and well overdue.
The upstream petroleum industry also has a role to play in securing a social licence to operate. It must continuously educate the public on the science of shale gas and demonstrate how it will conduct itself as a responsible corporate citizen in terms of its fracking practices and how it will be held accountable.
Public buy-in can also be secured through the establishment of a centre for sustainable shale gas development that is made up of government representatives, academics, environmental organi- sations, energy companies and nongovernmental organisations. The objective of such a centre would be to share expertise in order to encourage the responsible development of shale gas resources.

Monitoring Capability
Water is a scarce resource in the Karoo, and its possible contamination lies at the heart of the concerns around the envi- ronmental impact of fracking. This is exacerbated by the unique geology of the area, where underground water is stored at high pressure.
As the process of fracking requires significant amounts of water, this may affect the availability of water for other uses and may also negatively impact on aquatic habitats.
Further, groundwater may be contaminated as a consequence of accidents that occur close to the surface, which are caused by both fracking and non- fracking activities.
The chemicals which are mixed into the water that is injected into rock formations to access gas also pose significant health risks.
Lastly, as fracking produces large amounts of wastewater, which may contain dissolved chemicals and other contaminants that could require treat- ment prior to disposal or reuse, the treatment and disposal of wastewater require attention.
These risks need to be consistently monitored and the likelihood of their materialising mitigated. In this regard, the regulations provide for a designated agency, whose responsibility is to oversee fracking activities. The public must be given comfort, given the lack of capacity that we have seen and experienced elsewhere in some of South Africa’s regulatory functions, that this regulator is capacitated with qualified and experienced professionals to monitor operators’ activities and empowered to impose appropriate sanctions on com- panies or operations which breach the regulations.

Edited by Martin Zhuwakinyu
Creamer Media Senior Deputy Editor

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