Shell forges ahead with gas exploration plan

Thursday, March 3, 2011

Johannesburg - Oil giant Shell has detailed its plans to explore natural gas in the Karoo basin.

The company has already applied to Petroleum Agency South Africa for exploration rights in the south-western Karoo basin to assess viable, unconventional gas resources. It has also appointed an independent consultancy to compile an environmental management programme (EMP). 

In a media session on Thursday, Shell vice president Bonang Mohale said the exploration activities would include geophysical studies and data acquisition, the drilling of exploration wells with possible gas stimulation and flow testing. The permit covers an area of approximately 185 000 km2.

If successfully developed, Mohale said shale gas could become a viable alternative for South Africa's power generation, which now relies on coal for 95 percent of supply. It could also help reduce the country's carbon footprint. Shale is a natural gas produced from shale rocks and used for power generation.

Shell's announcement comes as the country is trying to boost power supply to prevent a repeat of the 2008 electricity crunch. The country has been looking at ways to produce clean energy, while cutting its carbon emissions.

Shell's general manager for new ventures, Graham Tiley, said it could take about nine years to determine whether natural gas could in deed be viably exploited in the Karoo.

He said there were good indications that the natural gas was present.

"The shale gas potential is quite high, because there is a high volume of shale and therefore the potential for gas development is very big. But great uncertainty prevailed as to whether it could flow and at what rate, and whether it would be economically viable to extract," Tiley explained. 

Though the precise locations in the proposed area where exploration activities might take place had not yet been identified, Tiley said Golder Associates would undertake the EMP and embark on a public consultation process.

Asked about the impacts of the study on the community, Mohale said Shell will provide any Karoo landowners with documentary proof of any direct damage or loss that they might suffer as a consequence of Shell's activities on their properties. Shell would then make full compensation. 

The process is also water intense, a scarce commodity in the inland region. On the usage of water, Tiley said Shell would not compete with the people for their scarce water resources. 

An independent advisory committee would be set up to provide advice on the environmental and social impact of the gas project. He said the company was also looking at importing water from other parts.

"In all, we will work with the community ... we want the whole process to be honest and transparent," Tiley said, adding that the company was also willing to listen to all views and concerns about the project, as well as to cooperate with the Karoo community.

Interactions with communities around the area are ongoing and the second interaction will be in March. - BuaNews