Natural Gas Gives South Africa a Hand

In addition, East London and Mossell Bay could take small, coastal LNG. Already, an assessment is under way for possible siting of liquefied natural gas (LNG) import capacity in Saldanha, Coega and Richards Bay, according to an Engineering News report. Meanwhile, industry specialists are confident that South Africa is likely to opt for an integrated LNG-to-power solution for its first 3.1GW gas-fired IPP.

Domestic Shale Gas Exploration

Next to imports of LNG, and a longer-term prospect, is exploration and development of an estimated 390 trillion cubic feet (Tcf) of recoverable domestic shale gas reserves primarily in the Karoo desert. The Karoo is ideally situated for potential gas power stations that would have direct power grid access to South Africa's major cities.

However, the Karoo's geological character is more complex than North America's. For example, the dolerite intrusions make horizontal drilling – which is critical to the fracking process – quite difficult, as they present barriers and junctures. Nor does it help that there is vociferous local opposition to fracking in this arid and environmentally-pristine region.

Nevertheless, it is anticipated that the long-delayed Mineral and Petroleum Resources Development Act, incorporating more favorable terms and conditions for exploration and development companies, will be in place in 2017. With political support for fracking, and no barriers from local government, industry insiders expect the first fracking attempt to take place during 2018. It will be keenly watched for its cost, complexity and outcome.

Equally long-term and expensive are proposals for construction of a $6 billion, 1,600-mile main pipeline starting from the Rovuma Basin gas field in northern Mozambique and ending in South Africa. However, many in South Africa doubt that this scheme will get off the ground given the cost competitiveness and immediacy of imported US LNG supplies, according to a recent Financial Mail report.

Meanwhile, the exploration and development of South Africa's estimated 9 Tcf offshore gas fields is a medium term prospect. But in spite of some extensive exploration activity, the exploration cycle is really only just beginning and it will be well into the next decade before any offshore commercial-size discoveries can be developed.

Outlook

Imports of LNG appear to be the fastest, cheapest and most flexible option in support of South Africa's mandated gas-to-power program because the world is currently awash with supply and U.S. exports can only increase as a further four LNG export plants (Corpus Christi, Cove Point, Freeport and Cameron) come on-stream, seeking new markets.

As for domestic shale gas production any time soon, Larkin noted "that there is not the international will for any frontier shale development and the investment will simply not be forthcoming as the global hydrocarbons industry is retrenching." Likewise, the option of a long-distance gas pipeline from northern Mozambique seems unrealistic at the present time; its commercial viability also awaits the development of a regional market for gas in Malawi and Zimbabwe.


12

View Full Article

WHAT DO YOU THINK?


Generated by readers, the comments included herein do not reflect the views and opinions of Rigzone. All comments are subject to editorial review. Off-topic, inappropriate or insulting comments will be removed.

Rudolf Huber  |  June 18, 2016
Theoretically, South Africa would be a perfect case for LNG but I have rarely seen a country with a more hostile regulatory and political environment for such projects. Who has the guts? They really need it.


Most Popular Articles