Official hints at approval for Karoo shale gas

CAPE TOWN — The Petroleum Agency of SA was obliged to ensure the development of the country’s mineral and petroleum resources in terms of SA’s constitution and legislation, provided this took place in an economically sustainable manner, CEO Mthozami Xiphu said yesterday.

His comments suggested that there would be no legal reason for the agency to refuse the highly contested applications to mine shale gas in the Karoo if the applicants met the stipulated conditions — even if this involved the controversial technique of hydraulic fracturing (fracking).

The agency is responsible for evaluating applications and making recommendations to Mineral Resources MinisterSusan Shabangu.

It is dealing with about seven applications, including those by Royal Dutch Shell andSasol.

The assessment of Falcon Oil’s application for a right to explore for shale gas was far advanced, with the agency just about ready to submit a recommendation to the minister, its technical compliance manager, Steve Mills, told a joint meeting of Parliament’s mining and energy committees.

While Mr Xiphu stressed that the agency did not hold a position on the issue, he said it had a responsibility to ensure "the correct balance" was struck between the two extremes of development and environmental management. It was not an either-or situation.

"The agency does not view the development-environment discourse as one necessitating choosing between the two extremes. We are guided by section 2 (h) of the Minerals and Petroleum Resources Development Act, which, read with section 24 of the constitution of the country, enjoins us to ensure that the nation’s mineral and petroleum resources are developed in an orderly and economically sustainable manner while promoting justifiable social and economic development.

"It is our responsibility to ensure that the correct balance is struck between the two. It is not an either-or situation, it is now a development versus environmental management situation."

Mr Xiphu told the committees the agency’s criteria for assessing an application were technical capacity, financial resources, the submission of a financial guarantee equivalent to the expected environmental damage, and the ability to preserve the integrity of the environment and to rehabilitate where degradation results.

Environmental and water laws would have to be complied with, with applicants detailing where they would get water from, how it would be transported and how waste water would be treated.

"Techniques used are viewed not as independent variables but in the context of the assessment criteria," Mr Xiphu said.

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