Nersa ‘ready to oversee’ shale gas industry

THE National Energy Regulator of SA (Nersa) was ready to oversee the mooted shale gas industry, its official responsible for piped gas, Ethel Teljeur, said yesterday.

If a shale gas industry materialises in SA, Nersa will find itself responsible for a bigger gas market, and this will test its regulation, compliance and monitoring abilities.

According to the Gas Act, Nersa must monitor and approve, and, if necessary, regulate transmission and storage tariffs for piped gas.

The regulator had devised tariff guidelines, price methodology and a body of licence conditions. “We are ready,” she said. Shale gas was just another form of hydrocarbon, “there is nothing special about it”.

The controversy was about shale gas exploration, and Nersa did not regulate exploration activities.

Meanwhile, anti-fracking campaigners are preparing for a legal wrangle with the government, as time ticks on towards the scheduled announcement of the Karoo fracking report, expected this month.

The Treasure the Karoo Action Group has set up a legal team to refocus its legal strategy in preparation for an all-out effort to prevent fracking in the Karoo. The lobby group’s chairman, Jonathan Deal, said the Cabinet was expected to decide this month whether to lift the existing moratorium and allow exploratory drilling.

Nersa said yesterday it had approved a methodology on maximum prices for piped gas.

This followed Nersa’s determination that competition in the pipedgas market was inadequate, which allows it to intervene and implement its methodology to approve the maximum price of gas to be charged to distributors, reticulators and all classes of consumers.

The total maximum price for piped gas included the price for gas energy, transmission costs and a trading margin.

Last year Nersa held “dialogues on gas infrastructure investment” with players in the gas industry at which some of the factors holding back the industry’s growth came under scrutiny. Nersa wanted to attract more players to the industry, in which Sasol was dominant. “We know that a lot of downstream companies have great ideas.”

The methodology on maximum prices, which came into effect last month, will apply immediately to Spring Lights Gas, Novo Energy and to Virtual Gas Network, Ms Teljeur said. It would not immediately affect Sasol Gas. The Gas Act includes a special regulatory dispensation for Sasol Gas, which was formulated to enable Sasol’s project to pipe gas from Mozambique to SA.

This is in force for 10 years and ends in March 2014.

Meanwhile, Nersa’s executive manager for electricity regulation, Mbulelo Ncetezo, said the regulator expected Eskom’s application for the next round of electricity tariff increases by August 15. Public hearings would be in November and a decision by the end of February next year. With Sapa