M a r k e t N e w s

'Give SA its own fracking agency’

Posted on : Monday, 17th October 2016

 There is a clean future without coal-fired power stations in South Africa. It is a future in which wind and solar plants feed power into the national grid for 80% of the year. These will be backed up by gas-fired generators. But the dangers of getting that gas out of the ground means a patient process has to be followed to answer any questions and quell concerns.

That’s because South Africa refused to join most other countries in rushing to embrace hydraulic fracturing — fracking — of its underground gas reserves.
With fracking, pipes are drilled into the ground. A liquid chemical mixture is then injected into gaps in the rock so that any trapped gas is put under so much pressure that it goes up the pipes to the surface.
The process has allowed the United States to become energy-independent, with bans taken off energy exports because the country has so much gas that oil cannot compete. But fracking started in the US before proper laws were in place, so legislation is constantly playing catch-up. This has meant large-scale pollution of water resources and gas leaks, including methane, near drilling sites. 
That same future almost unfolded in South Africa at the turn of this decade, when companies such as Shell starting asking for permission to search for shale gas deposits under the Karoo. But a moratorium was placed on processing these applications until more research was done. The country applied the principle of precaution.
The first outcome of that process was released earlier this year, with the publishing of the Strategic Environmental Assessment for Shale Gas Development. It noted how poorly prepared the rural Eastern Cape and Northern Cape were for the fracking industry that could spring up there.
These are municipalities that are already struggling to discharge their duties, with high unemployment rates and a history of poor governance. They also tend not to have the specialised skills that would allow for the oversight of a new industry.
The government report also warned that the country has a track record of failing with oversight over extractive industries. “South Africa has a long history of inadequate controls when it comes to externality costs related to mining and abandoned mines,” it said.
The government is already paying to clean up some 6 000 abandoned mines. “This must be avoided at all costs in the case of shale gas exploitation in the Karoo,” the report said.
This week, that report was followed up by one from the Academy of Science for South Africa and the South African Academy of Engineering. The former is the country’s official science academy.
South Africa’s Technical Readiness to Support the Shale Gas Industry report took two years to produce. The study panel’s chairperson, Professor Cyril O’Connor, warned at its launch that the country was going into “virgin territory” with fracking.
The report called for “immediate steps” to be taken to establish a new government agency “whose overall function is to enable and facilitate the development of the shale gas industry in South Africa”.
That would allow several departments to be involved in the industry and address a key criticism of resource extraction in South Africa — where the minerals department gives permits without consulting the water and environment departments on the impacts of mining.
Fracking cannot happen under the current legal framework, the report said. This is because “much needs to be done” to change laws that are currently focused on conventional mining. But with more research into fracking, legislation can be updated to cover any eventualities, it said.
Speaking after the Cabinet considered the recent report in late September, Minister in the Presidency Jeff Radebe said: “The report will be used as the basis to develop the shale gas research, development and innovation plan.” 
The government plans see that as a game-changer for the country. South Africa is currently a net importer of energy, in the form of oil and gas. The gas mostly comes from Mozambique, along a Sasol pipeline. The oil comes from tankers docking and unloading at the major ports. Both of these mean the country is at the mercy of markets and the fluctuating currency. Local natural gas production could change this.
Speaking earlier this year, Mineral Resources Minister Mosebenzi Zwane said this would provide “not only cost-competitive energy security, but also significantly reduce the carbon footprint and drive our industrialisation and beneficiation programme”. 
In such a future, gas would power generators that work as backup for the renewable energy programme. The Council for Scientific and Industrial Research calculates that wind and solar plants could cover most of the country’s energy demand, and at a cheaper rate than Eskom’s new coal-fired power stations.
Gas plants — which can be rapidly turned on and off — would provide backup for these wind and solar plants during peak demand times and would run for about 20% of the year.
The Academy of Science report has estimated that, after all the research has been done, a five- to 10-year exploration phase will be needed to work out where South Africa’s natural gas is. But even this process is being delayed, because the government adheres to a six-year-old energy plan.
The academy said, although there is a “strong commercial appetite” for fracking and gas energy infrastructure, the government is its own worst enemy. “The limiting constraint is national energy policy and regulation. This shortcoming needs to be addressed immediately.” 
Companies have already worked out how to get around these constraints. A number of them, such as Rhino Oil and Gas, have successfully applied for rights to prospect for gas. Rhino has been given exploration rights for 1.5‑million hectares in KwaZulu-Natal and 74 000km2 in the Free State and Eastern Cape.
The companies involved in this rush towards gas have managed to get around the current moratorium by saying they will not do fracking, and will instead extract gas with conventional drilling.
That means a gas-rich future could be on South Africa before it’s ready to legislate for one. This is what happened with mining and the cost of correcting that mistake runs into billions of rands, not even to mention the human cost.

Source : mg.co.za
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