Shell ready to test-drill for Karoo gas
“SHELL SA is prepared to invest about R2bn to drill six holes in the Karoo, once it receives the necessary permits, to test if there is economically viable shale gas, Shell SA chairman Bonang Mohale said on Wednesday.
Based on studies conducted in the 1960s, it is believed SA could have considerable quantities of shale gas. In the US, shale gas development has helped to pull the economy out of recession.
In SA, public concern over the environmental consequences has paralysed the process. Restricted exploration work can take place but hydraulic fracturing (fracking) will not be allowed until final regulations are in place.
Shell GM of upstream activities Jan Willem Eggink told a media discussion it would cost about $200m to drill the six exploration wells in the Karoo to which Shell had committed.
The Karoo could contain between 40-trillion and 380-trillion cubic feet of gas, but whether this was viable depended on issues such as depth, how tightly embedded it was in the shale, and how expensive it would be to extract it, he said. No one would know until holes were drilled, and it was important to manage expectations. In a new exploration field, the chances of success ranged from 20% to 50%.
The time between launching a drilling programme and the first commercial production of gas would be 10-15 years, he said.
Mr Mohale said Shell had commissioned a more detailed study than that carried out by Econometrix a few years ago to show the economic benefits of shale gas exploitation.
Mr Eggink said the public’s main concerns around shale gas were its effects on water and land. An exploration well would need about 10-million litres of water, which would be recovered and used in the next well.
A development well needed 20-million to 30-million litres of water, but within 10 years, when development wells were likely to be sunk.
Treasure the Karoo Action Group (TKAG) director of operations Jeanie le Roux said last week: “”TKAG, as a mandated representative of thousands of South Africans, is still not satisfied with the level of scientific (and economic) analysis of fracking, nor of the ability of the government to control mining and enforce mining laws in general, especially with regards to shale gas, although we believe that there have been slight improvements compared to what the situation was like four years ago.””
Shell liquefied natural gas (LNG) business development manager John Shoobridge said importing LNG would be a relatively short-term solution to meeting some of SA’s energy needs and developing a gas market and infrastructure.”