Falcon Oil and Gas Ltd.

Financial Post

By Franz Wild and Andres R. Martinez, Bloomberg News

Sep 7, 2012 9:18 AM ET

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China, U.S., Canada and Argentina have the biggest shale gas resources, the study shows, and South Africa’s are equivalent to about 7.3% of the world total.

South Africa, which has the world’s fifth-largest shale gas resources, lifted a moratorium on the exploration of natural gas trapped in rock, the mines ministry said.

The Cabinet accepted the recommendations from the Department of Mineral Resources to lift the ban, Zingaphi Jakuja, a spokeswoman for the country’s mines ministry, said in an interview Friday.

The government last year halted plans for hydraulic fracturing, or fracking, as it studied the environmental repercussions of allowing companies including Royal Dutch Shell Plc, Falcon Oil & Gas Ltd. and Bundu Oil & Gas (Pty) Ltd. to employ the practice. Fracking, which involves blasting water mixed with sand and chemicals underground to free trapped hydrocarbons from shale formations, has been banned in France.

“We need to explore the possibilities of us having a resource of shale gas in the country in order to address our energy needs,” Collins Chabane, the minister in the presidency, said in an interview with Johannesburg’s eNCA television channel.

South Africa, an oil importer that’s threatened by power shortages, has about 485 trillion cubic feet of shale gas resources, according to a study by the U.S. Energy Information Administration that was published last year.

China, U.S., Canada and Argentina have the biggest shale gas resources, the study shows, and South Africa’s are equivalent to about 7.3% of the world total.

Sheep Country

Developing one-tenth of South Africa’s resources may boost the economy by about 200 billion rand (US$24-billion) a year, a study by Johannesburg-based research company Econometrix Ltd. and commissioned by Shell showed earlier this year.

The resources stretch across the Karoo, an arid area in western South Africa, best known for sheep farming.

Shale gas should contribute to energy production, Energy Minister Dipuo Peters said May 17. “If extraction of the gas can be done safely, let’s go and do it,” she said.

Bob Govender, a spokesman for Shell in South Africa, didn’t immediately respond to a request for comment.

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