BusinessDay
by Moyagabo Maake, September 23 2012, 11:30
THE full report of the government's task team investigation into the pros and cons of hydraulic fracturing (fracking) in the Karoo shows an enthusiasm for the use of shale gas in the power generation and gas-to-liquids industries.
The report - released following the Department of Mineral Resources' lifting of a moratorium on exploration in the arid region, believed to hold large reserves of the natural gas - said the resource would enable the replacement of power generation from other sources, particularly coal, with the more environmentally-friendly gas. It could also create thousands of jobs in the gas-to-liquids sector.
The Petroleum Agency of SA carried out an assessment that concluded that a minimum of 30trillion cubic feet of the gas may be technically recoverable, compared with the US Energy Information Administration's estimate of 485trillion cubic feet with a 500trillion cubic feet maximum.
Based on the minimum recoverable resource, the task team deduced that the development of shale gas may see the construction of 30 more gas-to-liquids plants in the country, thereby creating around 48000 jobs in the plants themselves and "several thousand more" long-term jobs in the drilling and maintenance industries.
The plants would reduce dependence on imported crude oil, but the carbon emissions from the production process would offset any gains arising from increased fuel efficiency in vehicles.
Gas-fired power stations could be used to tap into shale gas fields, helped along by the proximity to the power line corridor stretching from Welkom in the Free State, through De Aar and Beaufort West in the Northern Cape, to Cape Town.
"[This] would suggest that power generation may be a highly propitious venture," said the report.
"Other high-intensity energy users may be persuaded to convert from electricity to gas if the discovered reserves present the probability of long-term supply on terms sufficiently attractive to justify the cost of conversion."
The report said the time required to plan and commission a major coal-fired power station is significantly longer than that for a gas-fired plant, an advantage for gas-fired plants in addition to operational flexibility and ability to address peaks in demand.
A fact sheet for the COP17 conference on Eskom's plant mix shows the state-owned utility has four gas-fired stations, but these are only used during peak periods and emergencies owing to their high operating costs.
The task team said Karoo residents could expect less than 30 boreholes in the initial exploration period of three years, with each site requiring about two hectares of land.
This will be occupied for two to three months if drilling is unsuccessful and will be rehabilitated after abandonment.
The location of the boreholes hasyet to be decided.
The report did not provide insight into disposal of waste water from the fracking process, save to say that further research is needed and that experience in the US suggests that waste water treatment facilities may have to be purpose-built. On dust control, the report said there will not be much as the large piles of rock seen in the mining industry will not be present in fracking operations.
The socio-economic impact of exploration on the Karoo itself will be limited, as any facilities built on discovery of the gas will need to be in areas where water is widely available. This may result in the piping of the gas to these areas, thus robbing the economically depressed Karoo of employment opportunities in the immediate vicinity.
Direct jobs from shale gas exploration and production will probably require specialised skills, which would need to be imported as they are not available in SA. As a result, the task team saw it as crucial to plan on enhancing skills in the local upstream petroleum sector.
The inevitable influx of people to drilling and production areas may initially have a positive effect on the region.
"However, in the long term, and taking into account the current demographics of the region, the local community [particularly the less advantaged component] may find themselves priced out of the accommodation market," said the team.
"This has already been experienced in fast-growing mining towns such as Rustenburg and Lephalale where there has been a trend of escalating property prices."
Coal vs gas and nuclear generation
COAL-FIRED POWER STATION
Carbon emission: Eskom's Kusile - 900g/kWh, and Medupi - 870g/kWh
Job creation: President Jacob Zuma said Medupi and Kusile would create 35500 direct construction and operation jobs and 4500 indirect jobs.
NUCLEAR POWER STATION
Carbon emission: depends on reactor design. Light-water reactor is the most popular. Working with the European pressurised reactor (EPR), a light-water reactor puts out 7-12g/kWh
Job creation: design and construction of single EPR would support up to 8350 jobs (2700 direct). Operation phase would support 1650 (500 direct) jobs.
GAS-FIRED POWER STATION
Carbon emissions: 385g/kWh
Job creation: the task team said this could "potentially number in the thousands"
Sources: Eskom; the Presidency; International Panel on Fissile Materials; Institute for Public Policy Research report for EDF Energy; 2008 White Paper on Nuclear Power, UK Department for Business, Enterprise & Regulatory Reform
* This article was first published in Sunday Times: Business Times
