by Sikonathi Mantshantsha, 19 September 2013, 07:51

Eskom CEO Brian Dames. Picture: ROBBIE TSHABALALA

SA AIMS to use more gas in its energy mix and hopes that exploration will yield commercially viable reserves.

The bravest and most contentious aspect of SA’s energy plan is the allowance made for the use of hydraulic fracturing (fracking) for gas exploration.

Though the method has been reviled in several countries by environmentalists, SA says it will regulate it closely and monitor water use.

And as SA finalises regulation on fracking, Eskom says it is considering converting the natural gas to electricity.

Should commercially viable shale gas reserves be found in the Karoo, Eskom will build a plant to exploit the natural feedstock. This could help SA join the league of countries such as the US which shale gas has helped catapult into energy self-sufficiency in the past decade, says CEO Brian Dames. “Fracking can be done, and as Eskom we firmly believe it must be done,” he says. Eskom “will certainly” build a gas-fired power station if there is enough feedstock.

“This would settle many power problems,” says Dames, referring to SA’s current reliance on crude oil imports for 70% of its vehicle fuel needs, as well as its reliance on “dirty” coal for 95% of electricity generation. Government wants a more diversified base of fuels, including gas, by 2030.

Commercially viable shale gas reserves can be easily converted to electricity, satisfying the power demands of SA and the rest of Southern Africa, says Dames. “Shale gas will significantly change the energy mix, not only for SA, but for the whole region.”

For this to happen, SA urgently needs a national gas strategy that prioritises different gas supply options and maps the location and sequence of gas infrastructure investments, says Anton Eberhard, a professor at the University of Cape Town Graduate School of Business. He is also a member of the national planning commission, which drew up the National Development Plan (NDP).

The NDP provides the necessary support for Eskom to build gas-fired power stations,

“The country needs an alternative plan should nuclear energy prove too expensive, sufficient financing be unavailable or timelines be too tight,” says the NDP. The policy blueprint says that “all possible alternatives need to be explored,” including the use of gas.

In August the environmental affairs department gazetted regulations on the use of water for fracking, the first formal step in allowing the process, which is water-intensive.

Trade & industry minister Rob Davies has said that SA would fast-track fracking regulations so that it can soon decide whether or not to permit investors to search for the gas.

Royal Dutch Shell has applied for permission to explore for gas through fracking in the Karoo. Citing a study by consultancy Econometrix, Shell says fracking may create up to 700000 jobs in 20 years.

Sasol has said that it would build a gas-to- liquid facility in the Karoo should sufficient reserves be confirmed.

Sasol is investing US$21bn over the next decade in Louisiana on the Gulf of Mexico, converting shale gas into 96000 barrels a day of vehicle fuel. In Mozambique it is building a 140MW gas-fired electricity power station at a cost of $492m, in partnership with that country’s government.

Another 140MW of gas-fired power at its Secunda complex helps the company meet 69% of its SA electricity requirements, said CEO David Constable last week. The gas is piped down from Mozambique.

Eberhard suggests Eskom build smaller and cheaper generation plants first.

“A more prudent strategy would be to invest in incremental and smaller generation technologies that have lower capital costs per installed megawatt,” he says. Those are plants that can be financed easily, be built quickly, and can be adapted to cater for uncertain electricity demand growth, says Eberhard. “Gas is such an option.”

Government, using the example of the US, says shale gas can help industrialise the country, and create jobs while solving its energy problems. Abundant US shale gas, together with its extensive pipeline infrastructure, have helped keep energy prices at record lows, and attracted a flurry of energy investments into the country.

SA doesn’t have to wait to find its own commercial shale gas reserves. “We can import liquefied natural gas or invest in pipelines from neighbouring countries, or fast-track exploration of off shore, or shale or coal-bed gas,” says Eberhard.

The NDP concedes, however, that the development of shale gas resources — “if available” — will still take some time. It encourages the development of West Coast gas resources in the meantime and says that investments should be made in liquefied natural gas import infrastructure “as insurance for the future”.