Karoo Issues, Karoo News
The End of Karoo Fracking?
Mar
Pictures by Chris Marais
In November 2014, a Karoo-based German hydrogeologist called Dr Stefan Cramer made a bold prediction that fracking would not happen in the Karoo.
He gave several talks on his theory and wrote an article called Six Reasons Why Fracking Will Not Happen.
By mid-March this year, Cramer suddenly appeared to have been prescient in his statements.
On 16 March 2015, Shell South Africa Chairman Bonang Mohale confirmed the company was pulling its senior shale gas staff out of the country including general manager Jan-Willem Eggink.
Mohale blamed the low oil price, which was forcing the company to weather a financial storm by “adopting a low cost holding position”.
The Sunday Times lead business story speculated that Shell’s withdrawal was in reaction to the South African Government’s fumbling and delays on legislation.
Why Would Shell Give Up So Easily?
Whatever the reason, the development caught many by surprise. Social media is currently awash with speculation. Is it a trick or a tactical manoeuvre? Or as many have remarked, is this the answer to prayers?
Could it really be possible that the frackers are in retreat? Without court battles, riots and bloodshed? Without anyone flinging their naked self in front of a drilling rig? Without locked gates and loaded shotguns?
In fact on 17 March, Treasure Karoo Action Group leader Jonathan Deal warned against premature celebrations, saying this may be “a clever ploy by Shell to pressure the government into moving faster with regulations and licences”.
He added: “Shell is a seasoned campaigner and what may at first blush appear to be a withdrawal from Karoo shale gas, may just be a Trojan horse.”
Deal said the TKAG and its alliance partners “stood ready to pursue legal action should this become necessary”.
Was the Karoo Shale Deposit Exaggerated?
It does seem rather odd that Shell, one of the biggest companies in the world with a reputation for ruthlessly pursuing profits, would step back from what is allegedly a world class shale gas deposit in the Karoo.
Unless that same shale gas deposit has been over-hyped and is not in fact not world-class…
A few days before Shell’s withdrawal, Jan-Willem Eggink spoke at a meeting with Cradock locals at the golf club.
He said (as he has several times before) that it was entirely possible that the igneous intrusions into the Karoo Basin had “burnt off” most of the shale gas more than 183 million years ago.
Cramer, currently based in Graaff-Reinet, and acting as science advisor for the Southern African Faith Communities’ Environmental Initiative (SAFCEI) says Shell’s pullback did not surprise him at all.
These were his original 6 reasons why he thought fracking would not happen in the Karoo:
- Karoo Geology;
- No Water;
- No Infrastructure;
- US Shale Success Model Not Relevant;
- Problematic Legal Framework;
- Poor Investment Climate.
Interestingly, Cramer had made no mention of the plummeting oil price, then, even though it was sliding fast when he made his predictions public in November last year.
What are Shell’s True Reasons?
“I don’t believe the lower oil price played a major role in the decision against the Karoo. Shale gas production here is perhaps 10 years away and nobody in his right mind would have the guts to predict what oil and gas prices will be then.
“It rather played an indirect role, as Northern American fracking operations are becoming less profitable and the global shale gas hype is fizzling out quickly.
“I think the lack of a promising or favourable regulatory regime in South Africa is the key component, coupled with a high degree of uncertainty about the shale gas resource itself.
“Remember that many grossly exaggerated earlier predictions have had to be revised downward in shale gas basins worldwide.
“Shell and the other applicants have also taken notice of the stiff resistance from land owners, which had made it very clear that they would have any licence questioned in court, based on the shaky legal grounds under the current legislation.”
“It is perhaps a classic case of over-hyping a questionable resource.”
Does this really mean the people of the Karoo can celebrate the end of the fracking threat that has hung over the region for four years?
Beginning of the End for Karoo Shale?
Cramer made another bold prediction:
“I am convinced that this is the beginning of the end for shale gas developments in the Karoo. The Shell decision will have a major knock-on effect on the other applicants.
“Both Falcon and Bundu would have relied on oil and gas majors to work on their concessions as they don’t have the technical skills and financial muscle to go into large-scale production themselves.
“They are dependent on investor confidence. The share prices for Bundu (Challenger Energy) and Falcon Oil & Gas can’t slump much lower than where they are at present.
“Chevron (announced as Falcon’s partner in December 2012) is the only major left for the time being and is itself correcting its investment portfolio with massive write-offs in Poland and Ukraine, to name just two cases.
“Expect the next ‘cold feet’ message to come from Chevron.”
Can Karoo People Rejoice Yet?
“I think the people of the Karoo opposing fracking can rejoice, as it will be very difficult to re-start the process once more favourable regulatory regimes are in place.
“Oil and gas majors don’t move in and out of such projects without very careful consideration. Shell has burnt quite some money in the shale business and would be reluctant to re-enter, unless the rules of engagement have changed considerably.
“Every year that passes makes renewable energies more likely and more economical, as the pressure for climate change considerations mount and the prices come down,” said Cramer.
So are the frackers really fracked? Or will they be back when the oil price rises and if the SA Government bends to make thing more favourable for them?
Derek Light Says Pullback No Surprise
Cramer is not the only one to have been making predictions.
Lawyer Derek Light, who represents hundreds of landowners who oppose fracking and shale gas exploration said this on 16 March 2015:
“The fact that Shell are reconsidering their position does not come as a surprise to us. It is as we predicted.
“With the decline in gas price, ever-increasing costs of fracking and the additional cost of fracking which will come with better regulation, the viability of targeting the reserves in the Karoo become questionable.
“It is Government’s duty to regulate these activities properly and we have (together with other interest groups) demanded better legislation since January 2009.
“The finalisation of the legal framework is not yet complete and we shall continue to resist the applications and to persuade Government to do the right thing.”
And even though Deal is cautious about this pullback being a clever corporate tactic to force the SA Government’s hand, he also added:
“However, I believe that the overriding pressure is to be found in the growing ‘pariah status’ of the technology. Globally, the well-laid and handsomely financed plans of the oil and gas lobby are failing, as the real truth of the unsustainability and risky nature of shale mining emerges.”
Dark Clouds and Red Fracking Herrings
As many have predicted, there is a dark cloud along with the silver lining.
Cramer explains: “SAFCEI has always maintained that the Karoo shale gas development might be a red herring, hiding that fact that coal-bed methane (CBM) is proposed for the Limpopo and Mpumalanga coal fields in a big way.
“We have also said that shale gas development detracts from truly sustainable energy solutions for the Karoo and for the country.
“What we should see now is a major push into renewable energy production from the Karoo, removing some of the obstacles that are currently holding back this industry.
“South Africa can become a global renewable energy leader.”
- For more on the difficulties of shale gas economics in the context of the Karoo, click here for an interview with Saliem Fakir of WWF South Africa, who recently published a report on the subject.
- Julienne du Toit and Chris Marais are Karoo specialists and book authors. See their print books and Karoo ebooks for more of their writing and photography.
Whatever the case it is still sad to see that the intrinsic worth of the Karoo is set at naught when it is pecuniary profit that calls the shots. I daresay the same will hold true for Limpopo. If financial viability is all we really care about the Karoo will remain under permanent threat.
Ja Julie and Chris, excellent article as always.
Observed from a great distance shale gas is a better economic proposition than coal-bed methane (coal seam gas). While CBM is cheaper to produce, even tho’ requiring far more wells, since the coal seam is shallower & usually CBM does not require hydraulic fracturing, merely cross-drilling & de-watering, shale is far more productive. We see the effects of this difference in Wyoming, where CBM wells were abandoned in droves once shale gas became readily available.
As to Shell in the Karoo, like Chevron in Poland, a major views askance an ‘opportunity’ where it does not know how much it will be paying to the host government in the event of successful prospecting. Add this uncertainty to the lack of hard drilling knowledge & the major might well choose to look elsewhere.
What a loss of opportunity for SA.
More a loss of cashing in by Big Business I should think! And a huge victory to the beautiful but water-deprived Karoo and its people.
So very grateful for the “fracking dom” to come to a final end, leaving us with a Future for humanity and the creatures that feed us.
Water is Life.
This fracking would not only affect the Karoo, and its peoples’ health. Apart from water deprivation, it could eventually contaminate all the water flowing underground to the rest of SA. And therefore have a much bigger impact on humanity than we could possibly foresee.
Indeed, a wonderful, blessed victory! .
Hallelujah!!!
What a loss to South AFRICA.
Shell , Chevron and the like don’t care if they poison our part of the world with this, at best dodgy tech.
Take the nuclear deal into consideration…………..what was it…………. 1 point something trillion. If the South African Govt was to give subsidy to all the known households in the country (I read there are about 9 000 000 houses) that would equate to close to R100 000.00 a household. More than enough to take those households almost permanently off the grid, the excess energy would then feed the areas that don’t have power because of cloud cover or rainfall. That is sustainable . Gas is short term rape for profit and f*** you. we got our bucks and we have poisoned your world.
Has anyone informed Zuma of those figures, what 1 trillion rand can do in terms of solar energy installations in SA, not to mention the local jobs that would be created in the process, or is it pay back time to Russia and China etc for past favours? What an ill advised decision. Nuclear will provide very few jobs and all that money will leave our country and we will sit with the danger of nuclear disasters for decades to come, especially if Eskom are in charge of the nuclear power stations – heaven help us! Can someone not talk sense into to the ANC!!! I think this proposed nuclear deal is purely political as usual. Sounds like the arms deal all over again!!!! It’s our hard earned taxes they are throwing away again and we have no say in the matter.
We’ve just received this very interesting press release from the Southern Cape Land Committee (which represents farmworkers and emerging farmers) and groundWork:
“The Southern Cape Land Committee and groundWork (Friends of the Earth, South Africa) welcomes the announcement that Shell will not “aggressively” continue to pursue their application for an exploratory license to frack for methane gas.
This is in line with international trends in the fracking industry which is increasingly realizing that the failure to generate sufficient profits makes fracking unviable and dangerous.
Parallel to this is the various struggles of local resistance globally, that is gaining momentum and highlighting to the world real concern that society has about the negative environmental impact of fracking.
From the outset Shell’s aggressive and arrogant attitude was apparent in the inflated promises of jobs and investment, in the disregard for local people’s opinions and in the obvious hope that legislation would favour investors above all else.
SCLC is hopeful that the other companies who are applying for licenses, Bundu and Falcon, will follow this example.
The imperative now is to pursue renewable energy options which are environmentally and socially sustainable and will protect the fragile and unique natural resources of the Karoo while opening opportunities for local people to benefit from access to energy that supports their needs, rather than that of corporations.
Local people whose lives are impacted upon by poverty and unemployment have been driving an anti-fracking campaign awareness in townships and on farms in the Karoo calling for transformative development which will provide sustainable employment and skills while protecting the natural resources, in particular water.
SCLC and groundWork is committed to supporting local people in organizing and strengthening voice towards agrarian transformation, towards a Karoo where there are equal opportunities and towards a Karoo where our children will enjoy a quality of life.
Fracking was and never will be the development plan for the Karoo. It is an extractive plan for corporate profit.
We stand in solidarity with all member of society in South Africa and globally who are resisting fracking.
http://www.sclc.co.za
http://www.groundwork.org.za“
There are none so blind as those who do not wish to see …
Promising jobs is not arrogance; whenever “renewable energy options which are environmentally and socially sustainable and will protect the fragile and unique natural resources “, I’ll be among the first to support them. Meantime, alleviating poverty is a good aim & anything promising should be investigated.
It is arrogant and misleading when inflated figures are quoted. In reality most of those jobs would have gone to foreigners anyway, and the gas reserves would doubtless have been well below the figures quoted by Shell, as has been the case in the USA. So we would have ended up with a damaged environment, polluted aquifers and as a result fewer jobs due to farmers having no water.
Instead of our government going off half-cocked with this crazy and very dangerous nuclear solution, rather invest that money in the development of a local solar industry, this will create jobs, provide us with the power that Eskom has now proved it is totally incapable of doing, and will preserve the environment.
Absolutely agree about the bad decisions being taken by this government. If Costa Rica can survive on sustainable energy for the last two months odd, it proves that with political guts we could go the same route and spend money and resources more wisely. This corruption based attitude we are witnessing needs to be stopped in its tracks.
You’re pretty arrogant & misleading yourself – you have no proof of inflated figures or of what the reserves would be. While initially jobs do go to those who can do them, usually foreigners, indigenisation takes place within a relatively short period of time, if only because expats are expensive.
There would be no damaged environment or polluted aquifers – these again are unsubstantiated claims of yours.
Shale gas production could well be highly beneficial for the Karoo, your prejudices aside.
I think u are the arrogant and prejudiced one here. There are numerous videos showing the immense damage and pollution to aquifers caused by unscrupulous fracking and illegal dumping of fracking waste water. I really wish these were just MY “unsubstantiated ” claims. None so blind as those who will not see…hey!!! Perhaps if they do ever proceed with fracking in SA you will volunteer to live in the vicinity of the fracking sites and drink the polluted water, and breathe in the fresh Methane tainted country air.
Agree with the gent who says gas probably cooked off by dolerite. Three cheers anyway.
Great article, thanks.
Sadly, these Shell people do not get it.
How do we scupper them, forever?
Sadly, it’s government who give these petro’s the permits.
Anyone see what Total got up to, in Mosselbay?
Cheers,
M Benjamin Jones.
Gobbless 🇿🇦