BONANG Mohale is chairman of Shell South Africa.

SUMMIT TV: The government has decided to lift the ban on shale gas exploration in the Karoo, having decided that fracking is safe after all. It is a blow for environmental groups and nature lovers, but the oil majors say the Karoo is the fifth-largest shale gas basin. Is this is simple as getting your drills ready to start now the government has lifted the moratorium?

BONANG MOHALE: Yes and no. These things are never that easy — of course we welcome the decision of Cabinet to endorse the recommendation to the minister of mineral resources to lift the moratorium on shale gas fracking. We do so because we have an opportunity in South Africa to create a brand-new industry that will provide energy and economic benefits not just the people of the Karoo but also to 50-million South Africans.

In the world today there are more gas reverses than there are crude oil reserves, and there are 10-million South Africans with no access to any form of energy — this also has to be exciting news for them. This gas will be used for electricity generation so they will have the same opportunities to benefit.

STV: I understand the economic benefits and we will get to the environmental issues in a moment, but in the study you commissioned that Econometrix undertook, the numbers are huge. It says shale gas could add 700,000 jobs to the South African economy. Is that realistic or a somewhat inflated figure to advance your case?

BM: If you think this is unbelievable, it took the US five years to move from a position where it was overly dependent for their energy needs on crude from the Middle East to using this technology to create an $80bn industry and becoming a net exporter. The late Tony Twine at Econometrix came up with a simple model based on 1.1-million wells that had been successfully fractured in North America alone, and he considered an ultra-conservative model looking at two scenarios with 485-trillion cubic feet of gas.

He said, imagine if we brought only 5% of that into production, we would create 300,000 jobs, add R80bn to the economy and grow gross domestic product (GDP) 3.3%. The entire coal mining industry in 2010 grew GDP about 1.8%.

STV: Where would those jobs be created? Would that be directly in the process of extracting the shale gas, or are they jobs down the line?

BM: It’s the latter — the jobs that are created directly and downstream. Shell globally employs 100,000 people, so 300,000 just in one country would be realistic. For South Africa, where Minister of Economic Development Ebrahim Patel wants to create 5-million jobs by 2020, 300,000 is the bare minimum, and this is a good addition to that.

From the first day when we are issued exploration rights — we have embarked on a successful environmental and social heath impact assessment study for each of the 24 anticipated wells, and we have to receive approval for each well — there are people who have to grade the roads, supply food for our people that are there, and work as janitors, plumbers and electricians. There are also the geologists and hydrologists, and they will buy cars and heavy equipment, thereby stimulating economic activity. Most of the jobs are not created in the exploration phase but in the development phase once the gas flows in sufficient quantities to be economically viable.

STV: You talk about environmental impact studies but one of the greatest fears is that the fracking process will overuse and contaminate the Karoo water supply, which is very scarce, with chemicals. How does the process work and is this a realistic fear?

BM: These are genuine concerns about where we will get the water from and what are we going to do to make sure we do not contaminate the aquifers near the surface in an area that needs water so desperately. Another issue is compensation for farmers if it can be proven they’re out of pocket as a result of our activities.

After the first consultation process in 2010, one of the first commitments we made was to an open and transparent process, and second not to compete for water with the people of the Karoo. Where are we going to get water? Because we are going 2,000m-3,000m below the surface, we are hoping to get brackish water. When one drills a borehole that’s normally 500 feet and when the municipality does so that’s 1,000 feet, but we are 4km down and that water is dirty and full of bacteria. We clean that and use it, recycling up to 50% of the water. So if we have 24 wells, we do not need 24-million litres because we are recycling most of the water. It is possible to do fracking with the utmost respect for the people of the Karoo and the environment.

STV: The action group Treasure the Karoo says it considers this an ill-informed decision and will going to court if necessary.

BM: We chose to be a democracy and once you make that choice you have to live with that — remember, former president Nelson Mandela was also hauled before a court and the government has said it is quite prepared to engage even through the court process. Among the concerns of the Treasure the Karoo group is that we are doing this too quickly, but this is 60-year-old technology that’s been successfully deployed on four continents.

Every day we see people being incinerated in their shacks simply because they’re using candles and illuminating paraffin when we could do everything in our power to make sure they use cleaner energy. The case is compelling — it’s abundant, there’s 250 years’ worth, it produces up to 50% less carbon dioxide compared with coal-fired power stations, and it’s affordable, sometimes up to one-10th the cost of coal.

STV: You make a compelling argument. What now? You’re prepared to invest $200m in the exploration process — do you have to wait for the licences?

BM: Yes, this gives the minister of mineral resources the opportunity to apply her mind to the endorsement by the Cabinet. Her department will then make a pronouncement and then the process of assessing and evaluating our application can be completed.

We then need to complete the environmental and social health impact studies. Once that’s done, we can start with six wells within the first three years — and if we do not hit a sweet spot we would do no more than 24.

This is a marathon. Remember, we started this process in 2009 and because we know that it’s fundamentally right we will stop at nothing to make sure we improve the quality of the lives of the majority of the people, being 50-million South Africans.