The first exploration for shale gas in South Africa will begin in the next financial year, the government said in Cape Town on Tuesday, following years of procrastination.
“One area of real opportunity for South Africa is the exploration of shale gas,” the government statement said. “Exploration activities are scheduled to commence in the next financial year. This will lead to excellent prospects for beneficiation and add value to our mineral wealth.”
Delays in awarding exploration licenses and lower oil prices led to firms such as Royal Dutch Shell pulling back a year ago on planned shale gas projects in the onshore Karoo Basin.
Following the release of the written statement Rural Development and Land Reform Minister Gugile Nkwinti clarified that matters were not completely decided yet. He said the matters were still under discussion. “Let us leave it at that until we get a conclusion on the matter and we can deal definitively with. There is a lot of discussion going on.”
The minister said a team of government officials had visited the Karoo and towns such as Graaff Reinet and Cradock to engage with communities. A definitive report was awaited, he said.
Shale gas regulations were published in the second quarter of 2015-16.
The southern Main Karoo Basin is considered to be the most prospective area for shale gas in South Africa, due to the presence of deeply buried, thermally mature black shales. To date, exploration right applications have been received from Shell International, Falcon Oil and Gas in partnership with Chevron, and Bundu Gas.
Natural gas and oil shows across the Main Karoo Basin indicate an active petroleum system with multi-play potential. The widespread occurrence of pyrobitumen (pseudo-coal) in the southern part of the basin indicates an originally oil-prone source rock.
In 1968, exploration well CR1/68 in the southern Main Basin yielded a gas flow rate of 1.83 mmscf/day for 23 hours from the fractured Fort Brown shale. The Fort Brown was thought to be self-sourcing (i.e. a gas shale), but may also have been charged by the underlying Whitehill Formation.
The volume of gas in place in the Main Karoo Basin is highly uncertain, but possible scenarios suggest that technically recoverable volumes may range from 30 Tcf to 500 Tcf. A key uncertainty is the gas content of the various Karoo shale formations – this may be limited where diagenesis is particularly high.
The Permian Whitehill Formation is considered to be the most promising shale gas target in the Karoo, due to its high organic carbon content (TOC = 5 % average), high thermal maturity (Ro = 1-4 %), high quartz content (50 %), thickness (30 m average) and regional continuity (200 000 km2). However, a major exploration risk factor is the existence of dolerite intrusions, which occur in much of the Karoo Basin.
Karoo shale gas is considered to be only a prospective resource at present, and will remain undiscovered until a hydraulically fractured test well produces enough gas to be of commercial interest. The economic value of Karoo shale, in turn, will only be known once a statistically significant number of well flow rates have been measured. The long term market for gas in South Africa is likely to be strong as the country’s energy needs continue to grow. However, a significant investment in infrastructure will be required before South Africa becomes a major shale gas producer.