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Sep 11, 2012

Shale licensing to proceed, but exploratory fracking prohibited for now

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South Africa’s Department of Mineral Resources (DMR) says it will move to consider the shale-gas exploration licence applications for the Karoo basin, but indicated on Tuesday that only “normal” exploration “excluding actual hydraulic fracturing”, or fracking, will be allowed until the country’s mining regulations had been “augmented” to take account of the unique issues posed by the process.

Mineral Resources Minister Susan Shabangu clarified normal exploration to include “drilling”, as well as geophysical and geochemical mapping. But exploratory fracking would not be allowed during the 6 to 12 months it would take to formulate “appropriate regulations, controls and coordination systems”.

Both drilling and fracking are integral to the shale-gas exploration process, with the drilling used to confirm the existence of the shale formations and fracking to prove whether the gas will indeed flow from the shale.

No timeframes were offered for the issuance of licences, nor for the start of a broad-based consultation process that had been stipulated by Cabinet when it gave the now contextualised “conditional” approval to fracking at its meeting of September 4.

A monitoring committee would be established to oversee the augmentation of the mining regulations, as well as to supervise possible fracking operations, Shabangu said, quoting from Cabinet-endorsed recommendations arising from a task team probe of the potential and appropriateness of allowing fracking in South Africa. This committee had not yet been appointed.

The task team had comprised representatives from the departments of Mineral Resources, Environmental and Water Affairs, Energy and Science and Technology (DST), as well as from Eskom, the Council for Geoscience, the Water Research Commission and the Square Kilometre Array (SKA). It also included academics from the universities of the Free State and Western Cape.

The report also called for collaboration between the DMR and the DST to ensure “co-existence” between the SKA radio astronomy research and any shale gas mining, as well as for further geohydrology investigation.

Shabangu also insisted that a far-reaching consultation process would be pursued on the basis of Cabinet’s cautious endorsement of fracking and the inclusion of unconventional gas into South Africa’s future energy supply considerations.

A number of questions were posed at the briefing, including by the Treasure the Karoo Action Group’s Jonathan Deal, about the fact that the consultation and regulatory strengthening processes had been sequenced in parallel with the licensing process and possible limited exploration.

But Shabangu insisted that government had no previous mandate, or basis, for consultation, which the task team report now provided. Government would consider amending its processes should well-founded suggestions and objections be raised during consultations with affected parties and stakeholders.

The Minister stressed the licensing would proceed in line with the administrative guidelines of South Africa’s Mineral and Petroleum Resources Development Act, which made it incumbent upon the DMR to consider the merits of five applications received to date. Failure to do so could result in court challenges by the applicants.

Shabangu refused to confirm the names of the applicants, stating that the department would need to reconfirm whether all the applicants remained interested. It is known, though, that Shell South Africa has made application to the department, while names such as Anglo American, Bundu, Falcon Energy, Chesapeake and Statoil have also been linked to the process. Sasol also applied in a joint venture with Statoil and Chesapeake, but withdrew following a desktop evaluation of the project's technical feasibility.

Shell South Africa upstream GM Jan Eggink told Engineering News Online that the prohibition of exploratory fracking during the period when the monitoring committee and new regulations were being established and finalised was not a worry for Shell.

The group still needed to secure an exploration licence and complete an environmental-impact assessment (EIA) for the exploration wells, which could take up to two years to finalise. Shell is yet to go out to tender for an independent consultant to conduct the EIA.

“What the Minister has proposed, therefore, makes sense. She wants to set up a monitoring committee and before that monitoring committee is installed you wouldn’t like hydraulic fracturing to start, because it is there to oversee that process,” Eggink added.

But in the longer run, an exploration permit that disallowed fracking activities would “not be a very valuable licence to hold”.

The full task team report, entitled ‘Investigation of Hydraulic Fracturing in the Karoo Basin of South Africa’, would be made available once it had been edited. But the executive summary, which was released, argued that conditional fracking was considered more appropriate than an outright ban or unconditional sanction.

The report highlighted the risks posed to water resources and astronomy research, but said that the socioeconomic and energy benefits could be material.


 

Edited by: Creamer Media Reporter

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