Fracking about-turn hailed
Petroleum group to review Karoo project in light of oil price
RESEARCH into the viability of shale gas extraction in the Karoo remains a top priority for the Eastern Cape, despite Shell’s sudden lack of interest in fracking.
The applicant for the biggest exploration licence area in the Karoo said at the weekend it was reviewing the competitiveness of this critically and other Shell projects outside of the Americas in the light of the low oil price.
While anti-fracking lobby groups were yesterday still celebrating Shell’s refocus as “the beginning of the end of shale gas developments in the Karoo”, academics said shale gas research projects in the province and South Africa would continue unaffected, and could even benefit from Shell’s new positioning.
Shell South Africa spokeswoman Dineo Pooe said the review meant adjusted activities and confirmed the pulling out of certain core personnel.
“In addition, we need clarity on the Mineral and Petroleum Resources Development Act and technical regulations before making any further decisions.
“Should attractive commercial terms be put in place, the Karoo project could compete favourably within Shell’s global tight/shale gas and oil portfolio.
“We will continue our ongoing consultation with the government, industry and the people of South Africa about the long-term opportunities of shale gas exploration and the regulations that will govern this industry,” Pooe said.
Karoo activist and semi-retired hydrogeologist Dr Stefan Cramer said it was not so much the lower oil price that played a role in Shell’s decision to reposition itself, but more the lack of achieving a favourable regulatory regime in South Africa, coupled with the high degree of uncertainty about the resource itself. “I am convinced that this is the beginning of the end of shale gas developments in the Karoo.
“The Shell decision will have a major knock-on effect on the other applicants. Both Falcon and Bundu rely on oil and gas majors to work on their concessions if ever they are getting them granted. Expect the next cold feet message from Chevron,” Cramer said.
Bundu and Falcon, the two other Karoo exploration licence applicants, have cooperation agreements with Challenger Energy and Chevron respectively.
Cramer said exploration companies’ perceived cold feet could mean that research studies were undertaken without undue interference by industry and the regulators, and within the necessary long-term timeframe.
World Wildlife Fund Living Planet Unit head Saliem Fakir concurred that geological and economic impact research needed to play a much bigger role in determining the regulatory environment for fracking in the country. Fakir said it was not simply the government’s dragging of feet with regulations that had caused Shell to back off somewhat from its interests in the Karoo, but also the massive reduction in the oil price.
“I think it is a question of wait and see, they might come back,” Fakir said.
A total of R108-million was allocated in the 2015 national budget for research and regulatory requirements for licensing shale gas exploration and fracking.
Nelson Mandela Metropolitan University is already involved with a shale gas research project, headed by geologist Professor Maarten de Wit.
He said yesterday the university’s research would continue because it was not connected to Shell.
The research project is partly funded by the Department of Economic Development, Environmental Affairs and Tourism.