Ibhubesi has potential to raise R40b FDI

31st January 2014

By: Ilan Solomons

Creamer Media Staff Writer

  

Font size: - +

Gas exploration and development com-pany Sunbird Energy is scheduled to start its front-end engineering design work on its Ibhubesi gas project, in the Western Cape, in the first quarter of this year.

It has also targeted 2015 for the final invest-ment decision on the development of Ibhubesi, MD Will Barker said at the Johannesburg Indaba: Investment in Resources and Mining in Africa, held at the Hilton Hotel, in Sandton, Johannesburg, in November.

The Ibhubesi gas discovery is located within a 5 000 km2 production licence area in the Orange basin, 380 km north-west of Cape Town and 70 km off the Northern Cape coast.

Barker explained that the company acquired the rights to the Ibhubesi gas project in late 2012 from oil and natural gas companies Forest Oil Corporation and Anschutz Corporation.

Barker said that Sunbird Energy had focused on maturing the project over the past year to what was currently South Africa’s largest undeveloped gasfield, with proven gas reserves of 540-billion cubic feet, equivalent to about 90-million barrels of oil. Barker highlighted that 11 wells had been drilled in the Ibhubesi gasfield, resulting in seven commercial gas discoveries. He added that these results were “extremely good” for a frontier gas basin.

In addition to the drilling, the company has collected a large data set of 1 770 km2 of high- quality three-dimensional seismic coverage over the proven field and new exploration targets.

He noted that, since 2000, R1.2-billion had been spent on the exploration and appraisal of the Ibhubesi gasfield.

He highlighted that the previous operators had transitioned Ibhubesi from an exploration title to a production right in 2009.

Barker stated that the production right covered 5 000 km2, within which Sunbird Energy’s proven field reserves only occupied about 5% of the company’s licence area.

Barker said this provided highly significant exploration expansion potential for the project, which had existing approvals for a 25-year production life.

Sunbird Energy has a 76% interest in the Ibhubesi project and national oil company PetroSA a 24% interest. He added that other major oil and gas companies, such as Royal Dutch Shell, Anadarko Petroleum Corporation, Cairn India, Exxon Mobil Cor-poration and BHP Billiton, were actively exploring exploration titles near Ibhubesi, which was an indication of the high levels of interest in oil and gas potential in the area.

Barker emphasised that the Ibhubesi pro-ject would provide the first route to market for the nascent gas-producing industry in South Africa and could lead to further strategic infrastructure in the Orange basin area.

Local Project Benefits

Barker noted that the project would provide a local gas energy supply for the Western Cape, which would assist in meeting South Africa’s growing energy needs, improve energy security, alleviate the occurrence of power shortages and create a new gas industry with the potential to create hundreds of job oppor-tunities, particularly for gas contractors and service providers.

He pointed out that the new gas industry would provide government with additional revenue through the payment of royalties and corporate taxes, and it would create new upstream and downstream industries.

Moreover, he said the Ibhubesi project succinctly tied into the Presidential Infra-structure Coordinating Commission’s Strategic Integrated Project (Sip) 5, which is one of 18 such projects aimed at improving national infrastructure.

Sip 5 aims to link Saldanha, in the Western Cape, to the Northern Cape region in an integrated manner through rail and port expansion and back-of-port industrial capacity, and to strengthen maritime support capacity to create economic opportunities from oil and gas activities along the West Coast of Africa. Additionally, it aims to support the expansion of the Northern Cape’s iron-ore mining production activities.

“Our Ibhubesi project has the potential to raise between R20-billion and R40-billion in foreign direct investment for South Africa,” he stated, adding that it would generate between 500 MW and 2 000 MW of cleaner electricity a year, thus directly reducing South Africa’s carbon dioxide emissions by 20-million tonnes a year.

Additionally, Engineering News reported earlier this month that State-owned power utility Eskom had signed a memorandum of understanding (MoU) with Sunbird Energy to jointly investigate the feasibility of securing gas from Sunbird’s offshore Ibhubesi gas project to supply Eskom’s 1 350 MW Ankerlig power station, some 40 km north of Cape Town.

This came as Eskom was advancing its plans to replace Ankerlig’s existing high-cost diesel feedstock with natural gas and convert the plant from an open-cycle gas turbine (OCGT) to a closed-cycle gas turbine facility.

Under the MoU, ASX-listed Sunbird and Eskom had agreed to jointly investigate the economic and commercial viability of the development of Ibhubesi in the 5 000 km2 Production Right Block 2A.

The utility would be tasked with completing several studies to determine the viability of indigenous gas sales from Ibhubesi, including identifying the governance process for the replacement of the existing diesel feedstock with indigenous natural gas, in conjunction with Ankerlig’s OCGT conversion project.

Edited by Megan van Wyngaardt
Creamer Media Contributing Editor Online

Comments

The content you are trying to access is only available to subscribers.

If you are already a subscriber, you can Login Here.

If you are not a subscriber, you can subscribe now, by selecting one of the below options.

For more information or assistance, please contact us at subscriptions@creamermedia.co.za.

Option 1 (equivalent of R125 a month):

Receive a weekly copy of Creamer Media's Engineering News & Mining Weekly magazine
(print copy for those in South Africa and e-magazine for those outside of South Africa)
Receive daily email newsletters
Access to full search results
Access archive of magazine back copies
Access to Projects in Progress
Access to ONE Research Report of your choice in PDF format

Option 2 (equivalent of R375 a month):

All benefits from Option 1
PLUS
Access to Creamer Media's Research Channel Africa for ALL Research Reports, in PDF format, on various industrial and mining sectors including Electricity; Water; Energy Transition; Hydrogen; Roads, Rail and Ports; Coal; Gold; Platinum; Battery Metals; etc.

Already a subscriber?

Forgotten your password?

MAGAZINE & ONLINE

SUBSCRIBE

RESEARCH CHANNEL AFRICA

SUBSCRIBE

CORPORATE PACKAGES

CLICK FOR A QUOTATION