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SA shale gas exploration to start soon

Shale gas exploration in South Africa could start as early as the first quarter next year if licences have been granted, with Cabinet having announced that exploration licences will be granted before the elections of 2014.

In the lead up to the granting of the licences, the Minister of Mineral Resources gazetted the Proposed Technical Regulations for Petroleum Exploration and Exploitation, comments on which were due by the 14th November 2013, and the Minister of Water Affairs gazetted the Proposed Declaration of the Exploration for and the Production of Onshore Unconventional Oil or Gas Resources or any Activities Related Thereto Including but not Limited to Hydraulic Fracturing as a Controlled Activity, comments on which were due by the 15th November 2013.

Once the comments have been taken into account, the final regulations will allow for the granting of exploration licences.

In a presentation to Deloitte South Africa on the potential of shale gas development in South Africa, the Upstream Stakeholder Manager for Shell SA Upstream BV, Niall Kramer, noted that the shortest period between the start of Shell’s proposed exploration and initial shale gas production is likely to be not less than five years, with ten years being the more likely period between the start of exploration and the initiation of production, should the shale gas resource prove to be viable.

While there are expected to be some local benefits from exploration activity in the Karoo, much of the socio-economic development potential will come in the subsequent shale gas production phase, since there will be a marked uptick in economic activity on the basis of security of supply, he says.

Shell argues that global energy demand will increase by 60% between 2010 and 2050 and that, although hydrocarbons will continue to play an important role in energy production, natural gas will become increasingly important in the future.

Several companies have put in applications for shale gas exploration in the Karoo, and many are optimistic that significant finds will be made.

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To find out more about the potential for shale gas development in South Africa, contact the Upstream Stakeholder Manager for Shell SA Upstream BV, Niall Kramer.

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