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Apr 13, 2012

Shale exploitation could yield energy, economic benefits – Manuel

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Gas, including the “controlled” extraction of the Karoo’s shale gas resources, needs to play a more significant role in South Africa’s future energy mix, Minister in The Presidency Responsible for the National Planning Commission Trevor Manuel said at the recent Integrated Energy Plan (IEP) colloquial in Johannesburg.

In fact, both Manuel and Energy Minister Dipuo Peters said that gas could play an important role in helping the country transition to a lower-carbon economy and in ensuring that the cost of that transition could be borne by the economy and its citizens.

Shale gas could also play a role, along with imported natural gas from Mozambique and Namibia, in diversifying South Africa’s electricity mix, which was still dominated by coal, which formed the primary energy for more than 90% of the country’s power generation.

A task team had been established by the Department of Mineral Resources to assess the potential costs and benefits of the exploitation of South Africa’s indicated shale gas resources in the Karoo basin, which have been estimated by the US Energy Information Agency as being 485-trillion cubic feet.

In the meantime, a moratorium had been placed on the issuance of shale gas exploration licences and the prohibition would only be lifted once Cabinet had applied its mind to that report.

Manuel noted that the National Develop-ment Report, which had been drafted by the 25-member National Planning Commission, said that the country should factor more gas into the Integrated Resource Plan (IRP) for electricity, which set out a framework for the development of power generation capacity for the period 2010 to 2030. The IRP would be reviewed in 2012, but was only expected to be revised during 2013 once the IEP processes had been completed – the IEP2012 is a multifaceted plan that will guide South Africa’s broader energy policy and guide its electricity and liquid fuels investments over a 20-year horizon.

“The capital costs of gas are cheaper and, in a capital-scarce country, this is an important consideration,” Manuel said, noting that gas could also complement renewable energy and improve the economics of renewables facilities.

He, thus, appealed for a “rational” and “informed” discussion on the potential exploit-ation of South Africa’s unconventional gas resources. “We want to raise the quality of the debate, not the volume.”

But Manuel also indicated that South Africa was unlikely to pursue the unregulated model deployed in the US, referring particularly to the country’s relative water stresses as a key constraint.

“But it can’t be all or nothing,” he said.

Peters added that South Africa’s shale gas potential “cannot be ignored”, as it could bolster supply-side security, contribute to eco-nomic growth and development and help the country in meeting its emission commitments.

“We are cognisant of the controversies asso-ciated with shale gas extraction processes, such as ground water and soil contamination. However, with the ongoing developments, I am confident that these challenges will, in the not- too-distant future, come to pass,” Peters said.

Proposed amendments to the Gas Act would also be presented to Cabinet soon, which could help facilitate greater gas importation and might also facilitate the development of unconventional gas resources.

Edited by: Martin Zhuwakinyu
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