South Africa is moving more rapidly than most countries with its plans to develop its potentially huge shale gas resources. But that gas is only accessible by hydraulic fracturing or “fracking” and that means finding large volumes of water, which some new reports say is a risky business challenge.
According to a Sept. 2 market research report by Allied Market research, Global Shale Gas Market – Industry Analysis, Trends, Share, Opportunities and Forecast, 2013 – 2020, the global shale gas market is forecast to reach $104.1 billion by 2020. Shale gas reserves in Africa are estimated at over 1.3 trillion cubic feet — with over 400 trillion cubic feet estimated to be in South Africa’s Karoo Basin, according to the report.
In fact, South Africa is the only sub-Sahara African nation moving forward with hydraulic fracturing to capture their shale gas.
But a Sept. 9 World Resources International report, Global Shale Development: Water Availability & and Business Risk, indicates that the lack of access to the needed freshwater to harvest that shale gas in South Africa’s Karoo region is likely to impact the development.
“There’s a concern that the location of the shale formation coincides with areas of very low surface flows – so there’s very little surface water available,” Paul Reig at World Resources International’s Markets and Enterprise Program and the report’s lead author told AFKInsider. “It also coincides with the fact that it’s a fairly remote location with currently very little industrial activity and therefore it’s one of the lesser developed area’s from a water infrastructure perspective.”
An earlier June 2014 Accenture Consulting report on international development of unconventional resources examined nine potential regions around the globe against eight critical criteria required for their development and investment prospects.
That report finds that in South Africa, the “Karoo Basin has been slow to develop due to concerns about hydraulic fracturing, water use and lack of infrastructure,” noting that “of the nine basins reviewed here, it presents the most challenges to development.” The report also cites “poor road infrastructure, no distribution network, and a limited oil and gas workforce.”
“Thirsty Land”
In South Africa, natural gas companies have targeted the shale gas that lies beneath the Karoo Basin. Derived from a Khoikhoi word meaning “thirsty land,” the name Karoo is appropriate for this semi-arid and ecologically sensitive region stretching some 800 miles between Johannesburg and Cape Town.
“Approximately 75 percent of the Karoo play is located in arid areas with high or extremely high baseline water stress. The Karoo play is over an aquifer that is already under stress, and that is being withdrawn at rates that far exceed its natural recharge rates,” according to the World Resources International report.
Karoo was originally believed to be covering 485 trillion cubic feet of shale gas, according to the U.S. Energy Information Administration. But EIA lowered its estimate to 390 Tcf in the most recent report “because the prospective area for the three shale formations in the Karoo basin was reduced by 15 percent.”
Separate resource estimates by the Petroleum Agency of South Africa put estimates much lower between 40 and 72 trillion cubic feet.
But no one knows exactly how much of that gas is commercially extractable.
According to the Petroleum Agency of South Africa, the amount of natural gas in the main Karoo Basin “is highly uncertain, but possible scenarios suggest that technically recoverable volumes may range from 30 trillion cubic feet to 500 trillion cubic feet.”
