Aug 05, 2011
There are still many unknowns about shale gas extraction in the KarooBack
Exploration|Water|United States|Bank|Gas And Oil Extraction|Oil And Gas|Shale Gas|Shale Gas Debate|Shale Gas Extraction|Transport|Environmental|Infrastructure|Rick Murray|Water
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One has to give the conference organisers credit. They allowed decent time for the antifrackers to ask questions, contest views and put their point of view across.
I came home distilling three issues that, I think, will continue to matter in the shale gas debate.
The first is that there is a great deal of uncertainty about how much shale gas there is in the Karoo and whether there is an economically viable reserve. Estimates vary from 31-trillion cubic feet to 485-trillion cubic feet. One can only tell what the exact number is after exploration has been undertaken, but that, too, will be within degrees of probability, not absolute certainty.
There was debate about whether the resource/reserve estimation can be done without having to use invasive techniques like fracking. The experts are divided on this issue. However, those who need to prove the commercial viability of what lies below need to frack for no other reason than to assess how much gas the wells can produce at economically viable rates. Basically, they cannot go to the bank and say: “Give me a loan”, without proof that the wells can produce something valuable in sufficient volumes over a long enough time to cover the capital costs that will have to be incurred upfront.
While most economic aquifers are between 100 m and 300 m below the surface, there is always the danger that, if fracking wells are not well managed, both in the early phases and in the post- production phases, there could be irreversible damage to the aquifers. What Murray alluded to is that the cost of abstraction and the stringent mitigation measures that need to be taken will be an important determiner of the cost of the shale gas. All this could make groundwater abstraction in the Karoo an expensive exercise. Murray also consistently reminded the audience that the Karoo is a complex ecosystem and that how shale gas extraction would be done would need to be carefully managed.
How clean a fuel is shale gas? We should certainly have more science and, perhaps, the US’s Environmental Protection Agency Report, due next year, will tell us more about the cleanness of shale gas. But, currently, scepticism about industry claims abounds.
Whether shale gas is cheap is also debatable. The US is not a great example of how cheap shale gas can be because so much of what goes on in the US is distorted by subsidies and other forms of support given to the oil and gas industry.
Costs associated with extracting shale gas and getting it to markets depend on a whole lot of factors, namely how easy or hard it is to get the gas out, the cost of mitigation, the cost of water, whether there will be a carbon tax or not and the cost associated with transport and support infrastructure. If one adds all these costs up, some- thing that is said to be cheap will look somewhat different in the absence of empirical studies.
The industry likes parlaying figures from one part of the world to another, but is that really useful? It would be useful, though, to have a good costs study on the table so that different cost assumptions can be debated. So far, figures bandied about on how cheap shale gas can be should be treated as nothing but a guess for South African conditions. We need figures that make sense for a South African context.
What was clear at the end of the conference is that there are still many known unknowns and unknown unknowns about shale gas extraction in the Karoo.
Edited by: Martin Zhuwakinyu© Reuse this Comment Guidelines (150 word limit)
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