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Agency moves to process outstanding shale gas applications

7th November 2014

By: Terence Creamer

Creamer Media Editor

  

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The Petroleum Agency South Africa (Pasa) confirmed last week that it would proceed with the processing of pending shale gas applications received prior to February 1, 2011. The applicants affected include Shell South Africa Upstream, Falcon Oil & Gas and Challenger Energy’s Bundu Oil & Gas Exploration.

Regulation division GM Lindiwe Mekwe told Engineering News that the decision was taken following extensive discussion with the Department of Mineral Resources (DMR).

She added, however, that the moratorium on new applications remained in place and would continue until Mineral Resources Minister Ngoako Ramatlhodi announced otherwise.

Final regulations governing the exploration and development of shale gas resources had not yet been published, and Mekwe reported that the processing of pending applications was subject to a condition preventing actual hydraulic fracturing (fracking) “until the appropriate amendments to the regulations have been promulgated”.

She was unable to indicate when the final regulations would be published, saying only that the publication would be made by the Minister of Mineral Resources “after due process to do so has been followed”.

ASX-listed Challenger Energy told shareholders last week that Bundu had been advised by Pasa that a decision had been taken to proceed with processing its application for a shale gas exploration right in the Karoo basin.

MD Robert Willes described the development as a “major milestone” and “very significant and positive news”.

The company reported, though, that its documentation would have to be updated, as “significant time has elapsed since the application was submitted in 2010”.

“Pasa has requested that Bundu review and augment its Environmental Management Programme (EMP), where necessary. In accordance with the Mineral and Petroleum Resources Development Act 2002 (MPRDA), Bundu is required to notify and consult with affected communities and parties in respect of any such revisions. Bundu has been requested to complete this process by February 27, 2015,” Challenger said.

Willes told Engineering News that the company had expected the request to update the EMP and had already started work to do this with reference to the draft regulations. “This requirement is a very positive development and is an indication that all of the parties are committed to ensuring that everything in the run-up to exploration – and beyond – is done properly.”

Mekwe confirmed that the decision could be regarded as a significant development, but that all three applicants had been requested to review their EMPs to ensure that all material provisions prescribed by Section 39(3) of the MPRDA were fully satisfied. The section outlines what the applicant has to consider in preparing an EMP.

She did not expect the revised EMP to be vulnerable to either changes to the regulations, or legal challenge, saying: “Applicants are required to focus only on permitted activities and, as such, the EMP needs to report on the assessment of the impact of such activities.

On when an exploration right determination would be made, Mekwe said: “It will take the Minister of Mineral Resources approximately eight months from now to decide on the recommendations put before him pertaining to the said applications.”

Exploration work programmes, excluding fracking, could start as soon as the exploration right was issued to a holder. Mekwe said that, if the right was granted, “minimum” exploration work programmes could begin towards the end of 2015.

Willes said that, should an exploration right be granted, Challenger Energy would expect to conduct studies and potentially reprocess the original seismic date. “Following this, we would plan to drill one or two core holes to gather fresh core before drilling and fracture-stimulating one vertical well. The precise timing of these activities is yet to be set, and may be dependent on the permits required but this would represent the first phase of activity.”

However, there was still strong and vocal opposition to shale gas mining, with Treasure the Karoo Action Group (TKAG) having threatened legal action unless President Jacob Zuma declared a fresh moratorium on fracking.

Opponents to fracking had serious misgivings about the draft regulations, as well as the quality of the EMPs that had been submitted by potential shale gas miners.

The TKAG also felt that the precautionary principle should remain in place until outstanding scientific questions had been adequately answered.

Edited by Martin Zhuwakinyu
Creamer Media Senior Deputy Editor

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