31 Aug 2012 00:05 - Lynley Donnelly

Not even the most ardent critics are holding out any hope that the moratorium on hydraulic fracturing, or fracking, in the Karoo will be extended.

An announcement is imminent. Minister of Mineral Resources Susan Shabangu has said that the report by a task team investigating the controversial process will be made public. This is expected next week following a Cabinet lekgotla.

The lifting of the moratorium is likely to see the beginning of an intensive exploratory phase to determine the extent of South Africa's shale-gas resources. But it is also likely to lead to increased pressure to ensure that the highest environmental standards are applied.

Both critics and supporters of fracking agree that it could take more than a decade to bring fracked gas on stream and develop the infrastructure to support a large gas sector.

Shell South Africa's upstream manager, Jan Willem Eggink, anticipates the lifting of the moratorium, which will allow the company to determine the size of the reserves and whether they are commercially viable. Shell is one of several companies that applied for exploration rights before the moratorium was put in place.

Eggink said Shell would not be issued with a licence to frack immediately and it did not mean rigs would spring up suddenly all over the Karoo. After the regulator, the Petroleum Agency of South Africa, has issued a licence, an environmental impact assessment will have to be finalised, which could take up to two years. Only then could exploration begin.

Environmental concerns about water contamination and air pollution persist. Earlier this year, United States media reported on findings of the country's National Oceanic and Atmospheric Administration ­indicating high levels of ­methane associated with fracking. The gas is more harmful than carbon ­dioxide (CO2) and escapes during drilling, which counters the belief that fracked gas comes with low emissions.

Eggink is aware of the concerns about fugitive emissions, particularly methane, as well as reports of groundwater contamination.

Good operators

"There are a lot of things that Shell can do to prevent this," he said. Methane can become trapped in the drilling mud, which then escapes to the surface, where it is released. But it can be captured and burned to transform the gas into CO2. Although this was not ideal, it would be much better than releasing methane into the atmosphere, Eggink said. Ideally, as much as possible would be captured and marketed.

The risk of chemicals contaminating water was close to zero, he said, given the depth at which Shell would be drilling. Wells in the Karoo willgo down two or three kilometres, far deeper than the wells in which water contamination may occur.

But Eggink is adamant that "good" operators have plans in place to prevent these kinds of problems.

He said Shell had shared its operating principles with the petroleum agency, which he hoped it would use as a basis for minimum standards for the industry. How to drill wells and manage water properly were chief among them.

"We are concerned about operators not operating at high standards. In the end, an incident in the industry will hurt us," he said.

It is also important that a regulatory regime and capable regulator are in place to police the industry.

But, Eggink said, a full suite of regulations was not necessary immediately – they could be developed over time.

Fracking activities

The exploration phase can take up to nine years before development begins and it will be more than a decade before gas is brought to market.

Eggink said the provisions of the Mineral and Petroleum Resources Development Act were sufficient to govern fracking activities.

"What the government has to look at is whether the legislation they have for exploration and production operations is tight enough for the kind of operations we propose.

"They have to obviously focus on the environmental aspects of the operations that we will carry out and the environmental risks associated with it."

These elements are also likely to fall under the ambit of other legislation, such as the National Environ­mental Management Act.

Eggink said that there was much to do to establish local infrastructure, although there is sufficient time to do it and building the supporting surface gas industry will create many jobs.

"There is a limited surface industry available, but this forces South Africa to establish these jobs. However, it will take time to get all these competencies built," he said.

Although it will take time to develop shale gas, liquid natural gas imports should be brought into the energy mix. This could see the introduction of the necessary infrastructure in a modular fashion, "seeding the market with gas", Eggink said.

Fighting the green fight

Treasure the Karoo Action Group chairperson Jonathan Deal holds out little hope that the moratorium will remain in place. "We would be unrealistic to expect anything other than the lifting of the ban," he said.

"But while we still have breath left in us we will do everything possible to ensure that fracking does not go ahead under the current circumstances."

The anti-fracking group has written to Cabinet requesting it to vote against opening South Africa up to the industry.

The use of chemicals, sand and vast amounts of water to fracture the rocks and release the gas are deemed a threat to scarce groundwater in the arid Karoo, according to critics. It threatens the sensitive regional environment, including its air quality, and the livelihoods of farmers, farmworkers and tourism-focused towns in the region.

Its proponents argue that, apart from greater energy security and creating employment, it could be a less carbon-intensive way to generate power and would be quicker and cheaper than commissioning large coal or nuclear power plants.

But Gerrit van Tonder, a professor at the University of the Free State's Institute for Groundwater Studies, recently raised further issues about groundwater contamination that were widely publicised in the media.

He said the upward migration of deep water could be hastened by fracked wells, which could become the chief pathway for the water. Given that some fracking fluid remained underground after the process is complete, this could lead to the contamination of groundwater.

Although his views were criticised in the media because they were based on a research paper that has not yet been published or peer reviewed, he said this week that he was convinced his concerns were well founded.

Another problem will be the build-up of pressure in abandoned wells and the deterioration of the cement and steel casings that line fracking wells.

Van Tonder said a far better understanding of the process and its potential impact was needed before fracking went ahead.

Economic opportunity

Business consultancy Econometrix stated in a report in January that according to two successful scenarios, hundreds of thousands of jobs could be created by the shale-gas industry in the Karoo.

A find of 20-trillion cubic feet of gas could create about 290 000 jobs and add about R80-billion to the economy. A find of 50-trillion cubic feet could create 700000 jobs and contribute R200-billion.

But the Worldwide Fund for Nature's Saliem Fakir has criticised the study and said that, until economically viable reserve estimates were proved, the numbers were simply conjecture.

He said shale gas would not come on stream quickly enough to fill the gap in South Africa's energy needs. He also said exports were likely to strengthen the rand, which could hurt the country's other exports.

The petroleum agency did not respond to requests for comment and the department of mineral resources would not comment until the task team's report is released.