South Africa’s shale gas dispute

Fracking in the Karoo

fracking & south africaA man with very little background in activism and social organizing – or film-making for that matter – accomplished in South Africa (briefly) what Josh Fox couldn’t in the United States. Jonathan Deal led a successful grassroots effort to ban fracking in the Rainbow Nation in February 2011. At the time, the Minister of Mineral Resources, Susan Shabango, happily passed the moratorium, citing environmental risks. To all appearances it was the successful conclusion to Deal’s efforts, a ban based on both his organization’s report (which combined the insights of various experts to determine the fracking risks in the Karoo) and a compelling social media platform, too. Shell’s plans to drill across 200,000 km of land were stalled.

Although it’s no small wonder (and actually quite impressive) that public outcry resulted so swiftly in a fracking ban, as of early 2012, EIA analysts were still unsure as to whether the Karoo had any significant shale gas reserves anyways. Speculation of the country’s recoverable reserves ranged between a measly few billion cubic feet or possibly trillions of cubic feet, and the latter would have South Africa sitting on the world’s 5th largest reserves. The degree of uncertainty coupled with a widespread plea for a ban caused industry and public officials to shrug, as if to say, “Sure, ban it! We may not even have gas, and we still have an obscene amount of coal, so big deal!” Indeed the Department of Mineral Resources, in a 2011 publication to investigate fracking, repeatedly wrote that because data on the quantity of shale gas reserves was still unavailable, the Department was cautious about any exploratory drilling. In a chart comparing shale gas reserves among African energy players, Ernst & Young’s figures put South Africa’s proven reserves at 0.

Unsurprisingly, when estimates of the Karoo’s shale gas potential did become more accurate – 485 trillion cubic feet is the newest figure-  the ban didn’t last long. 17 months later, it was reversed. That said, what are the prospects for shale gas development in South Africa now?

Diversifying energy, addressing climate change

karoo fracking comicFracking debates country-by-country are shaped first by whatever relationship exists between the energy industry and government. It is shaped secondarily by perceptions held by the public and the relative degree of concern among citizens; but government responsiveness to public concerns may vary depending on the strength of the state’s relationship with industry and national demand for revenue and domestic energy supplies. When prospects for natural gas development are small and the government is unlikely to gain much in terms of revenue, the state is more likely to regulate (or ban) it impartially, if it pursues gas production at all. As South Africa considers indigenous shale gas extraction, factors may very well include costly imports, greenhouse gas emissions reductions targets, and the ANC’s lucrative shares in Royal Dutch Shell. Shell Oil first vied for exploratory drilling permits in January of 2011, and simultaneously launched a media campaign to promote the safety and benefits of fracking to the South African public. Are the ruling party’s shares in Shell a factor in the renewed interest in the Karoo’s shale gas plays?

africa energy useSouth Africa doesn’t really need natural gas. After-all, South Africa is one of the largest global suppliers and net exporters of coal, not to mention that 90% of its own power supply is coal-based. Yes, South Africa is actively trying to replace fossil fuels and diversify its energy portofolio so that national consumption needs can be met more and more  by a mix of solar, hydro-power, wind, and biomass sources. Targets for reducing emissions include switching between 5-15% of domestic energy use to alternative sources over a 10-year period. Or so this is what the 2003 White Paper on Renewable Energy championed. But there is no mention of natural gas – beyond investing and piping in conventional gas supplies from Mozambique and Namibia – nor has there been a formal energy policy paper released since 2003.

The Department of Energy, on the other hand, has a bit more to say about expanding South Africa’s natural gas industry. But their website merely mentions offshore reserves along the Southwest coast, operations in neighboring countries, and the preeminence of PetroSA’s liquid fuel plant, which creates synthetic fuels for 6% of net energy consumption nationally. Coal gas as an industrial and domestic fuel may not necessitate any need of fracked shale gas from the Karoo.

Potential gains from natural gas extraction

south africa electricityNevertheless, natural gas development would be hard to turn down; if current estimates hold, nearly $9.5 billion could be added to the South African economy. Moreover, despite South Africa’s largess in coal, there have been major national electricity shortages. Eskom, the state-run company charged with providing power to the nation, has faced a lack of capacity to generate enough supply while facing shut-downs in plants that desperately need investment, if only to be modernized. Shortages occur whilst rural populations have yet to be connected to the grid. Eskom has been forced to ration electricity, though it can, at the very least, predict and evenly allocate shortages across industrial sectors and communities. In the face of a struggling power sector, a different energy company called Sasol recently opened a fully functioning gas-powered plant this week, a move that will help the company reduce its emissions by a million tons annually. More importantly, if other companies invest in gas-powered plants, their reliance on the power sector will dwindle and there will be less stress on electrification programs. Smaller businesses have resorted to expensive gas generators, and would perhaps benefit from access to cheaper natural gas. Now, the supply gap is mainly filled by thermal generators, hydro-power plants, and co-generators.

It’s unclear if South African government will embrace fracking in the near future. The ANC’s Batho Batho government trust has a 12% stake in Shell’s refining sector, and the ANC relies on the trust for donations. Because of this cozy relationship, the ANC may well allow Shell, Falcon, and a joint venture between Sasol, Chesapeake, and Statoil to begin exploratory drilling. But the barriers are not small: water issues, land ownership constraints, a displeased public, and lack of sufficient infrastructure will likely thwart any fracking operations.

 Risks & concerns with fracking in South Africa

U.S shale gas development has largely informed the South African public’s concerns with fracking. The situation between the countries is not dissimilar, but there may be greater cause for not pursuing shale gas on the African subcontinent. For starters, the shale gas industry doesn’t do well in measures of stability and sustainability. Flighty investors and the fluctuation of prices has harmed agricultural and mineral resource industries in multiple African countries for decades.

In post-apartheid South Africa, the ANC  promised greater investment in industries that would provide jobs to poor black South Africans in a program called BEE. Yet, critics maintain that an entrenched black elite continues to invest only in industries like mining, thus propagating the need for cheap black labor and little else. And the ANC doesn’t exactly have a great track record for regulating the mining sector. Mounting frustration tragically culminated in the Marikana mining massacre between government police forces and striking miners in August 2012. In terms of employment, developing shale gas would hire workers as long as wells were producing, but there has been little talk of whether or not that gas will go toward the power sector and toward expanding electricity infrastructure for the 1/5 of the population that lives without it.

After the Department of Mineral Resources lifted the ban on fracking in September 2012, it asserted that existing environmental regulations would cover all possible concerns for water, land, air and health. But Jonathan Deal counters that the Karoo’s astounding biological and plant diversity would be put at risk, as well as an agricultural belt that provides wine, honey, meat, fruits, wool, and olives for domestic consumption and export. Moreover, even though the Karoo is sparsely populated, water shortages are not uncommon. Trucking in water from elsewhere would be difficult for operators, and local communities were not previously notified of Shell’s drilling plans (until Deal launched a massive campaign to educate and involve San communities and farmers).

“In South Africa, the people don’t own the mineral rights, this is crucial, the government does. So this limits public interactions, there is no financial cushion here, no money to be made by individuals. There are only two players, industry and the government.” Jolynn Minnaar, South African filmmaker for new fracking documentary called Unearthed.

solar panels townshipDeal courageously discussed his position on a TedXTalk in terms of climate change: South Africa was heralded for recent efforts to construct advanced solar energy projects in townships and other peri-urban zones. Extracting gas would discredit South Africa’s turn away from coal, and make the country less likely to “disembark from the fossil fuel train.”

Likelihood of shale gas extraction in S. Africa

Fracking is only conditionally approved in South Africa. Exploration and field mapping are (evidently) overseen by a monitoring committee intent on determining the extent of known shale reserves before formulating any national energy security plan that would include shale gas. At present, in the midst of its other energy projects, it doesn’t look likely that South Africa will become a major player in hydraulic fracturing for natural gas. If they do, the Treasure the Karoo Action Group (TKAG) is prepared to launch legal action against the government, especially if rules and conditions for the practice are not established.

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