Shale gas development in “catch-22”
The shale gas industry in South Africa could potentially alter the country’s economic and energy landscape, but the industry remained in a “catch-22” situation.
Frost & Sullivan energy and power systems industry analyst Dominic Goncalves on Tuesday said that shale gas as a feedstock for electricity generation could be a beneficial addition to South Africa's electricity mix, as well as its economy.
An earlier Econometrix report indicated a potential R80-billion contribution to gross domestic product and the creation of about 293 000 direct, indirect and induced jobs based on a 20-trillion cubic feet (tcf) recoverable resource.
However, shale gas needed to be extracted without harm to the environment in the Karoo, in the Northern Cape – where the potential for shale gas lies – and extracted at an affordable price on a large scale.
He noted, though, that without making use of the much-contested, and prohibited hydraulic fracturing process during the exploration phase, it was difficult to obtain a comprehensive and accurate understanding of the quantity of extractable gas and the potential extraction costs.
All the industry could do was follow best practice as the shale gas deposits of the Karoo still posed more questions than answers, said Goncalves, adding that it would take about seven to ten years to reach commercially viable shale gas production.
Further, significant key infrastructure was required, including transport, power, gas and water industries development in the arid, underdeveloped area.
Current estimates of the cost of extracting shale gas in South Africa were between $9 and $16/MMBTU.
It has been said that the Karoo held technically recoverable reserves of 485 tcf, but Goncalves disputed this, saying that if the resources were broken down and extensive exploration undertaken, it was likely that South Africa would only produce a supply of about 10 tcf to 50 tcf of commercially viable shale gas.
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