adminSouth Africa will auction at least 10 new onshore blocks for shale gas exploration in the environmentally sensitive Karoo region, a government official told Reuters, as the country eyes alternative energy sources to ease its worst-ever power crisis.
South Africa’s first competitive auction for oil and gas resources, expected in 2024 or 2025 once legislation making provision for the bid round is passed, includes acreage once held by Shell.
“We are potentially looking at a minimum of about 10 shale gas blocks in the Karoo that will be released through competitive bidding,” Bongani Sayidini, chief operating officer at the Petroleum Agency of South Africa (PASA) said.
PASA estimates the Karoo Basin holds around 209 trillion cubic feet (tcf) of technically recoverable shale gas resources, although a 2017 study by geologists at University of Johannesburg said this was probably 13 tcf, the lower end of estimates ranging between 13 tcf to 390 tcf.
Even 5 tcf would be enough for a 1 000 megawatt (MW) to 2 000 MW gas-fired power plant to supply electricity for up to 30 years, the Academy of Sciences of South Africa said in its Karoo shale gas action plan released last year.
It isn’t clear how the cost would compare to existing coal fire power stations or the ever-cheaper wind and solar energies that are gradually replacing them.
Fracking in the Karoo Basin, a vast area covering more than half of South Africa’s land surface, has been shelved for a decade because of resistance from environmental activists and farmers, and regulatory uncertainty. Shell’s 90 000 square kms is available after the oil major early last year withdrew an application to explore, Sayidini said. Confirming the withdrawal, a Shell spokesperson said they are focusing upstream investment on fewer basins that align with global strategy and where Shell has competitive advantages.
New shale blocks offered will be smaller to increase participation, Sayidini said. It could take a decade or longer for the first gas output, if sufficient resources are found.
Risk to environment
Falcon Oil & Gas and Bundu Gas and Oil Exploration, a majority-owned unit of Australia’s Challenger Exploration, retained rights to apply for exploration licenses, Sayidini said.
“We believe this is the place to be with the best potential to make it commercially viable,” Philip O’Quigley, Falcon’s CEO told Reuters of the southern part of the basin, where the company is seeking a license.– Bloomberg
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