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Shale gas – a game changer, but at what cost?

15th November 2013

By: Creamer Media Reporter

  

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By: Radhika Bhuyan

The South African government has a daunting task – on the one hand, it needs to ensure that future energy supply is secure, while, on the other, with crunched information, it needs to make decisions that involve towering energy investments and risks. It has often been that energy projects are commissioned long after energy was first needed, but energy demand plans need to be revised as economic conditions have changed.

Some estimates of energy demand were justifiable when South Africa’s gross domestic product (GDP) growth rate averaged 6% a year. Currently, GDP growth lingers at around 2% a year. This downslide has a characteristically permanent feature to it, for, even if consumer demand increases, it will be much less than what was previously planned for by 2030.

Of the many contentious energy options facing energy strategists in South Africa, shale gas drilling looms with much uncertainty. The American boom in shale gas drilling has raised hopes for other countries, with proponents arguing that they would be able to rely on ‘cleaner’ fuel to meet future energy needs, kindle a ‘manufacturing renaissance’ and refuel industries and create jobs.

But America’s boom emerged under conditions that are so different from those of other countries – a favourable geology, water availability, private land and mineral rights ownership, ‘open access’ pipelines and critical innovations in shale gas technologies. The boom is also attributed to efforts during the 1970s oil crisis, when large sums of money were pumped into risky unconventional natural gas research and development projects and incentivised drillers. From being an importer, American natural gas production increased from 1% to 30% between 2001 and 2010. Currently, it accounts for 16% of the world’s natural gas production and is predicted to outstrip Saudi Arabian and Russian production by 2020 and reach a level equivalent to 50% of global production.

Europe has been trying to break away from Russia’s unstable gas supply dominance for a long time, importing 34%, while Central and Eastern Europe import 69%. Despite the fractious relations threatening to generate ever- increasing costs for European importers, it has not been all hunky-dory for European Union (EU) shale gas companies, as it has for American companies.

Shale gas companies in other countries face stringent environmental regulations, difficult geography and tectonics of shale gas deposits, tight pipeline regulations and a shortage of water. France and Bulgaria have banned fracking, Poland is currently in a regulatory mess, China has a difficult terrain and also has to contend with limited infrastructure, problematic water safety and drilling standards, while Germany will deliberate on new legislation later this year, amid water contamination concerns, the phasing out of its base nuclear plants and dwindling fossil fuel reserves.

A recent issue facing the industry is the estimated amount of methane released into the atmosphere during shale gas drilling. Methane is said to have a carbon footprint between 20% and 100% higher than that of coal and is at least 25% more potent than carbon dioxide. The International Energy Agency says that even the “greenest implementation” of shale gas would raise global temperatures by 3.5 ºC, while the industry counter-argues that flaring or capturing methane emissions will significantly mitigate climate change effects.

There is concern that evidence provided by the industry on the nature and impact of shale gas drillings will never be accurate. Independent third-party assessments would require shale gas companies to disclose intellectual property around the formulations of fracturing fluids. South Africa recently proposed regulations that would require the disclosure of the chemicals used and that certain standards be met. This comes a year after the lifting of a moratorium on fracking.

In early October, local regulations on shale gas drilling in the Karoo (which means ‘thirsty land’ in Khoisan) were brought under the purview of a public consultation process and said to be based on ‘global best practice’. However, shale gas best practices elsewhere are still under intense review and are shrouded in controversy. In the EU, different planning laws, population density, limited infrastructure and water scarcity are causing growing strife, demanding the preparation of a stronger directive that will account for all possible environmental risks.

So, how the cost of its environmental impact will be assessed in South Africa will play a key role in mapping the country’s energy future. It will take several years to determine if the amount of shale gas is commercialisable, another few years before production starts and few more years before shale gas can make a significant contribution to the national energy mix. It has been said that many wells would only produce for about five years, but will leave behind permanent environmental problems in the thirsty and biodiverse land, also home to many rare plant and animal species.

Government must be realistic in addressing shale gas drilling challenges, and must no longer simply focus on the benefits, for there will be significant impacts on air quality and water. These future damages will never be accounted for when making a present day decision.

Shale gas has been a game changer for the US but the true cost of the environmental damage will never be known until well into the future. What are the chances that shale gas will be a game changer for South Africa? Our wish to be part of a clean and sustainable energy future will be lost in a global drive for a cheap energy source, at a great environmental loss.

 

Bhyan is a senior researcher at the Mapungubwe Institute for Strategic Reflection, specialising in green energy technology and innovation policies - radhikap@mistra.org.za

Edited by Martin Zhuwakinyu
Creamer Media Senior Deputy Editor

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