South Africa's Shale Gas Policy to Be Clarified for Fractious Groups

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Written by Richard Finlayson, Senior International Editor for Industrial Info Resources (Johannesburg, South Africa)--The South African government has put on hold the applications for rights to explore for shale gas in the Karoo region, pending the formulation of a clear policy on the issue. The Department of Mineral Resources has said that no new applications will be accepted and existing applications will not be finalized until a feasibility study has been conducted. The department will lead a multi-disciplinary team, drawn from expert sources and including the departments of Trade and Industry, and Science and Technology, to do in-depth research on the implications of the proposed hydraulic fracturing (fracking) project. The department may send an expert team to study foreign fracking projects.

South African industry and the public have been well informed about the technology and chemicals involved in the underground fracking of gas-bearing shale in the past few months. Royal Dutch Shell plc (NYSE:RDS.A) (The Hague, Netherlands) applied for exploration rights in 2010 and has recently held public meetings and has advertised in the national newspapers on fracking. The environmental lobby also has been active, expressing concerns over groundwater pollution and the potential of the fracking project to scar one of the country's wilderness heritage regions. Both sides have used fracking projects in North America as pro and con examples relevant to the Karoo project.

Pasa, the petroleum agency of South Africa, has in the past voiced opinions in favor of the granting of exploration licenses to applicants following its mandate to promote exploration in an environmentally sustainable manner. Now Pasa, which makes recommendations to the department after checking applications for licenses for exploration and mining, must hold back until the study has been made. The government has stressed that considerations on a clean environment and all the ecological elements of the project will not be compromised.

The environmental groups, farmers and land owners are relieved that the suspension covers already-existing applications; they believe it would have made no sense for some exploration activities to progress while the research and resulting policy formulation was in progress.

For background on the Karoo project, see February 4, 2011, article - South Africa's 'Game Changer' Karoo Shale Gas Prospects Face Environmental Interrogation, and March 31, 2011, article - South African Clash Over Gas and Radio Telescope Projects.

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