Falcon Oil and Gas Ltd.

If South Africa was to realistically achieve the objective of lowering its carbon emissions, the southern Karoo’s shale gas deposits had to be thoroughly investigated, Econometrix MD Rob Jeffrey said on Tuesday.

Speaking at a shale gas conference hosted by the Fossil Fuel Foundation, in Johannesburg, he said natural gas, which was 50% cleaner than coal, was also set to yield various other economic benefits, provided that it was successfully and safely used.

The use of shale gas could assist in pushing South Arica’s gross domestic product (GDP) growth to beyond the current 3% and rescue its declining relative importance in the Southern African Development Community, which fell from 78.2% in 1995 to 63.7% in 2011 and was projected to reach 49.7% in 2030.

Shale gas could also stimulate growth the in lagging goods-producing sectors, such as mining and manufacturing.

Jeffrey added that shale gas could address South Africa’s position of being a net importer of energy by creating an entirely new and significant energy avenue. “A growing economy is directly related to growing power supply,” he pointed out.

The country is currently getting about 1% of its energy from natural gas, which it sourced from Mozambique and Namibia. This compared poorly to some other countries that sourced 30% of their energy from natural gas.

Econometrix published the findings of its report, titled ‘Possible Economic Benefits of the Potential Shale Gas Resource in the southern Karoo of South Africa', in March, before the sudden death of economist Tony Twine. Hydraulic fracturing or 'fracking' proponent Shell funded the study.

The report detailed scenarios that offered quantitative support for the idea that the large gas finds in the Karoo could be a “transformational and potentially game-changing” development for South Africa.

The report warned that the lack of energy growth would slow economic growth and increase unemployment, impacting the most on the mining and manufacturing sectors. “The impact of not increasing energy growth from resources that offered international competitive advantage, would be felt primarily by the poor,” it read.

However, full government support and overcoming hurdles that included unemployment, skills and insufficient infrastructure would be central in positioning natural gas as an efficient energy source.

“Anything less than further investigation would not be doing justice to the people of South Africa…an opportunity might exist for major improvements in living conditions of the people of the country, provided it can be undertaken without significant environmental damage,” Jeffrey urged.

The shale gas deposit in the southern Karoo was discovered around 1967. The estimated reserve of 485-trillion cubic feet is the world’s fifth largest. If 10% of the Karoo’s shale gas reserve is explored, it could contribute up to R200-billion to South Africa’s GDP and create 704 000 jobs over 25 years.

“It will also attract skills and investment to the country, boost our export industry, resolve the energy deficit and result in infrastructure development,” Jeffrey said.

Commenting on the Square Kilometre Array (SKA) Organisation’s announcement on Friday that South Africa would host three-quarters of the SKA radio telescope project, with Australia being awarded the rest, he said that although there were minimal prospects of the SKA and shale gas projects in the Northern Cape affecting each other, it had to be considered in the environmental study.

“The SKA does have an impact on our economy; however, the long-term impact of using shale gas deposits safely are enormous,” he told Mining Weekly Online, stressing that the interests of the SKA had be protected.

The Department of Mineral Resources placed a moratorium on fracking for shale gas in the Karoo, pending the completion of a report on the matter. The report, compiled by a special task team, would be submitted to Cabinet in July.

Nonprofit organisation Treasure the Karoo is opposing shale gas exploration in the Karoo, saying fracking is unsustainable, water thirsty and would damage the environment.

Meanwhile, a special World Energy Outlook report on unconventional gas released by the International Energy Agency (IEA) on Tuesday, presented a set of “golden rules” to meet the concerns about the associated environmental and social impacts of shale gas.

"The technology and the know-how already exist for unconventional gas to be produced in an environmentally acceptable way. But if the social and environmental impacts are not addressed properly, there is a very real possibility that public opposition to drilling for shale gas and other types of unconventional gas will halt the unconventional gas revolution in its tracks. The industry must win public confidence by demonstrating exemplary performance; governments must ensure that appropriate policies and regulatory regimes are in place," said IEA executive director Maria van der Hoeven in a statement.

The rules underlined, among others, the importance of full transparency, measuring and monitoring of environmental impacts and engagement with local communities, as well as careful choice of drilling sites and measures to prevent any leaks from wells into nearby aquifers.

"If this new industry is to prosper, it needs to earn and maintain its social licence to operate. This comes with a financial cost, but in our estimation the additional costs are likely to be limited," said IEA chief economist Fatih Birol.

The report argued that there was a critical link between the way governments and industry respond to these social and environmental challenges and the prospects for unconventional gas production.

The application of the rules was projected to underpin a brisk expansion of world unconventional gas production, primarily shale gas, which could more than triple between 2010 and 2035 to 1.6-trillion cubic metres.