The discovery of large gas deposits on the Southern African coastline in the last three years could potentially result in significant benefits for the region; however, the lack of adequate infrastructure may hinder the full realisation of these opportunities, says global management consulting firm AT Kearney principal Martin Sprott.
Engineering News reported in April that, in 2010 and 2011, Mozambique’s offshore gas discoveries ranged from 50- trillion cubic feet (tcf) to 100 tcf at depths of 1 000 m to 3 000 m.
“Gas is a low-cost flexible power source that can provide generation primarily above the base in peak-demand periods. Replacing expensive diesel generation during these hours would also contribute to reducing the cost of electricity gene- ration for State-owned power utility Eskom and mitigate price rises for consumers,” Sprott highlights.
However, he adds that coal is expected to maintain its high position in the Southern African energy mix, as South Africa’s Department of Energy’s (DoE’s) Integrated Resource Plan (IRP) 2010 predicts that by 2030 coal will account for a 46% share.
In a report presented to the South African Parliament in March 2012, Public Enterprises Minister Malusi Gigaba stated that the two open-cycle gas turbines (OCGTs), which started operating in August 2011, consumed about 220-million litres of gasified diesel a year – about 2.5% of South Africa’s total diesel consumption.
Sprott says energy produced by OCGTs is expected to comprise about 8% of South Africa’s total energy use.
“If gas were increased to 25% and based on combined cycle turbines, the coal share [of the energy mix] could be reduced to one-third of the total generation capacity,” he highlights.
Sprott notes that gas generation also plays a role in ensuring the reliability of renewable energy such as wind and solar.
He explains that there are periods of downtime for wind and solar units when they cannot generate power, owing to intermittent loss of wind or cloudy conditions.
“Since these periods are unpredictable, there is a need for short-term generation sources to cover the loss of output and gas turbines, with start-up times of between ten minutes and 30 minutes, are ideal to meet this need,” Sprott points out, adding that, with more Southern African countries developing renewable- energy projects, the need for gas supplies increases.
Further, he says, since gas generates only about half the carbon dioxide (CO2) emissions of coal and two-thirds of the CO2 emissions of oil-fired power facilities, increasing the gas share would significantly lower South Africa’s overall CO2 emissions.
According to AT Kearney, the development of Southern African gas solutions is subject to several constraints, with one of the major constraints being the locations of the gas deposits.
“Mozambique gas deposits are several hundred kilometres from the major consuming regions in South Africa, which means that either more pipelines would have to be constructed near harbours in the Eastern Cape and KwaZulu-Natal, to pump gas to Gauteng, or gas would have to be imported into South Africa using liquefied natural gas (LNG) terminals,” Sprott says.
He points out that a LNG terminal solution will allow for flexibility in addressing the related constraints of supply stability.
Further, Sprott adds that, should supply be interrupted from a principal source, a pipeline leaves no room for alternatives. By comparison, LNG terminals will enable South Africa to import from any available low-cost supplier.
He also notes that this option will reduce the likelihood of South Africa becoming politically dependent on its neighbours, as a result of their supplying the country with gas.
Meanwhile, AT Kearney highlights that immediate supplies of gas are available on the coast of South Africa, either from Mozambique or from national oil company PetroSA’s Mossel Bay fields, in the Western Cape.
Additionally, Sprott notes that PetroSA’s Mossel Bay gas-to-liquids (GTL) plant is operating at 60% capacity, according to the company’s yearly report, and there is immediate potential to increase the use of this existing asset.
However, he states that PetroSA plans to extend its operations to its F-O gas field, located 40 km south-east of its F-A production platform off the south coast of South Africa, which should return operations to 100% capacity.
Sprott emphasises that South Africa must improve the efficiency levels of its existing GTL refineries and construct new GTL plants to increase gas supplies and make up for shortfalls.
Shale Gas Conundrum
“The largest supply of gas in South Africa is the unconventional shale gas from the Karoo basin, which straddles parts of central and southern South Africa; however, exploiting these reserves have been challenging to date,” Sprott notes.
According to the ‘Investigation of Hydraulic Fracturing in the Karoo Basin of South Africa’ report by South Africa’s Department of Mineral Resources (DMR), published in September 2012, the US Energy Information Administration has a first pass estimate of a technically recoverable resource of 485 tcf of gas in the Karoo basin.
Further, the DMR report says Petroleum Agency South Africa evaluated this assessment and concluded that, owing to the limited amount of available data in the area, it is impossible to quantify the resource accurately “other than to say it is potentially significantly large”.
The report also recommends that additional, modern subsurface information be obtained through drilling or a geophysical survey to constrain gas estimates for the Karoo basin region.
Technical Aspects of Hydraulic Fracturing
US-based hydraulic fracturing chemical registry FracFocus’s website, states that, contrary to many media reports, hydraulic fracturing (fracking) is not a drilling process.
FracFocus says hydraulic fracturing is used after the drilled hole is completed.
“Hydraulic fracturing is the use of fluid and material to create or restore small fractures in a formation to stimulate production from new and existing oil and gas wells,” says FracFocus, adding that this creates paths that increase the rate at which fluids can be produced from the reservoir formations, in some cases by many hundreds of per cent.
In October 2012, Engineering News reported that nonprofit organisation Treasure the Karoo Action Group (TKAG) chairperson Jonathan Deal said that oil and gas company Shell had not provided any viable proof to support claims that fracking would improve South Africa’s energy security, create jobs and assist in reducing greenhouse-gas emissions.
TKAG stated that major problems were emerging in the US due to fracking.
“Exposure to fracking chemicals has been found to be extremely hazardous,” stated Deal.
He highlighted a case, reported on by a US government watchdog organisation in 2008, where a Colorado nurse nearly died of organ failure after being exposed to a worker who had been soaked in fracking liquids.
Shell South Africa GM for upstream operations Jan Willem Eggink questioned TKAG’s claims, adding that the chemicals used for fracking by the company would not pose health risks to the people in the Karoo, as the company would ensure compliance with health and safety legislation.
Eggink stressed that Shell would implement the highest operating standards during drilling and fracking procedures.
“Before a well is drilled, a steel-casing tube is put in place and cemented to the rock and then a pressure test is performed,” he explained.
Eggink added that regular pressure tests would ensure that incidents, such as gas flowing outside the casing, would be prevented.
Sprott says over the longer term the Karoo basin offers significant – albeit little defined at this stage – opportunities and that chemical companies must treat this underdeveloped area as an option that could potentially increase greatly in value over time.
He believes chemical companies must ensure that this opportunity is fully recognised and developed as the chemical composition and economics become clearer and that chemical firms must increasingly take concrete steps to work with companies developing the Karoo basin to access its gas as a feedstock.
“Companies must work with governments and their customers to identify manufacturing opportunities and assist by investing to realise the tremendous opportunities,” Sprott concludes.