Relief as Karoo fracking plans are put on hold

ANTI-FRACKING lobby group Treasure Karoo is “encouraged” that Royal Dutch Shell is putting its Karoo fracking plans on hold.

Head of the group Jonathan Deal said yesterday Shell’s pulling back from its fracking proposals in South Africa would give the government the time to “slow down their rush to frack, and to think clearly about what they are doing”.

The group was reacting to Shell’s announcement that because of the lower global oil price and the uncertainty around South Africa’s legislation governing fracking, it had “adjusted activities” in shale oil and gas outside the Americas “as well as local exploration resources, such as staffing, in South Africa”.

After critically reviewing projects globally, Shell was going into a holding position in South Africa.

However, it would continue discussions with the government about exploration in the Karoo.

“Should attractive commercial terms be put in place, the Karoo project could compete favourably within Shell’s global tight/shale gas and oil portfolios,” Shell said.

Business Times reported that Jan-Willem Eggink, who Shell sent to South Africa from Libya to oversee the company’s shale gas “opportunity” in South Africa, would be pulled out of the country within weeks and other skilled staff would follow.

The company also cited uncertainty around the Mineral and Petroleum Resources Development Act.

The government has said it wants to take a 20 percent stake in Shell’s South African fracking projects – before the company had recouped its exploration costs.

Deal said although Shell’s decision may have arisen through the drop in the global oil price and the government’s “mishandling” of the issue, he believed that in the long term fracking would be exposed as “a bridge to nowhere”.

“The data from the US continues to show that shale gas is not producing the profits they thought it would.”

Other problems were that the shale gas industry had not produced the numbers of jobs initially claimed; jobs were specialised, not sustained; gas wells were rapidly depleted and large-scale environmental pollution, including pollution of groundwater, were hidden by non-disclosure agreements.

In the last four months, fracking had been either banned or placed on extended moratoriums in two Canadian provinces, in Algeria, Scotland, Wales and New York state.

“Internationally, we’re increasingly seeing the response to fracking being a ‘no’,” said Deal.

Last March Niall Kramer, Shell’s upstream manager, said there was no certainty that fracking for shale gas in the Karoo would be economically viable as no one knew how much gas was available.

Initial estimates in the 1960s put the amount of gas in the Karoo at 485 trillion cubic feet, later revised to 379, and currently estimated to be 40.

Increasingly, we’re seeing the response being ‘no’