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Sep 17, 2012

Shale gas to ‘dramatically’ change global energy scene

Johannesburg|Africa|CoAL|Consulting|Environment|Exploration|Gas|Mining|Nuclear|Renewable Energy|Renewable-Energy|Resources|Water|Africa|Asia|Europe|North America|China|Japan|Russia|South Africa|United States|Chemical|Chemicals|Complimentary Electricity Source|Discovered Shale Gas Reserves|Electricity Supply|Energy|Energy Assets|Energy Markets|Energy Scene|Energy Source|Insatiable Energy Needs|Manufacturing|Natural Gas|Oil And Gas|Recoverable Shale Gas Reserves|Renewable Energy|Service|Shale Gas|Shale Gas Development|Shale Gas Extraction|Shale Gas Production|Shale Gas Resources|Shale-gas Licence Applications|Solutions|Dominic Goncalves|Michael Mbogoro|Power|Middle East|Fracturing|Wastewater Treatment
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JOHANNESBURG ( – The development of shale gas resources is set to “dramatically” change the energy scene globally and, if managed effectively and responsibly, it could provide an affordable feedstock for cleaner burning gas-fired power plants in South Africa, Frost & Sullivan (F&S) energy and power industry analyst Dominic Goncalves said on Monday.

South Africa, which has the fifth-highest estimated technically recoverable shale gas reserves in the world, recently lifted its 18-month moratorium on shale gas development.

The Department of Mineral Resources stated that it would consider shale-gas licence applications for the Karoo basin, but that actual hydraulic fracturing, or fracking, would be prohibited until mining regulations had been adapted.

While no timeframes were provided for the possible start of fracking activities, Frost & Sullivan estimated that if exploration and pilot studies were to get under way soon, commercial development could start in the next seven to nine years.

“Although this development will fall outside of South Africa’s current critical electricity supply, shale gas as a feedstock post-2020 could become a complimentary electricity source with renewable energy, as the country weans itself from coal,” Goncalves stated.

F&S consulting analyst Michael Mbogoro said that the development of shale resources was set to “dramatically change” the current energy landscape globally. But opponents to shale gas extraction argue that fracking is unsustainable, water thirsty and damaging to the environment.

In a new study by the research firm titled ‘Analysis of the Global Shale Gas Market’, it is stated that newly discovered shale gas reserves around the world were likely to promote consumption of gas as an energy source and an affordable feedstock for a wide variety of chemicals and materials.

The study further suggested that Europe would, in the long term, decrease its dependence on supplies from Russia and the Middle East, thus reducing their dominance in energy markets. This was likely to give rise to new geopolitical alliances at the expense of the old.

The majority of demand in Asia was anticipated to come from China and Japan, following China’s insatiable energy needs and Japan’s expected increased dependence on natural gas following the Fukushima nuclear disaster.

Further, large chemical companies were shifting investment patterns to exploit the rich shale gas reserves in the US, at the expense of the Middle East and other natural gas-rich regions.

North American natural gas prices were found to be the lowest globally and chemical companies were fuelling a revival of the US manufacturing sector by capitalising on this cheap supply.

The report also found that opportunities existed for companies that produced hydraulic fracturing chemicals, as well as for wastewater treatment companies, owing to the high volumes of water consumed in shale gas production.

"The hydraulic fracturing chemicals market is projected to grow by approximately 10% yearly through to 2020,” Mbogoro explained.

"The market is dominated by large energy service companies that enjoy close relationships with oil and gas participants. However, chemical companies still have a significant market share. Gelling agents are the major fracturing chemicals by volume, followed by friction reducers and corrosion inhibitors."

While some chemicals were commoditised, innovative solutions to water treatment continued to emerge.

As a result of the significant volumes of water needed for shale gas production and increased regulations limiting toxicity levels in wastewater, innovative firms could tap into a market with promising growth prospects over the next 20 years.

Meanwhile, owing to increased shale gas production in North America, demand for gelling chemicals, such as guar gum, has risen, resulting in severe global shortages and high prices.


Edited by: Mariaan Webb
Creamer Media Senior Researcher and Deputy Editor Online
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