Gas could cause boom

A report commissioned by Rhino Oil and Gas has suggested that the discovery of natural gas could potentially result in an economic boom for South Africa.

The study, by KPMG for Rhino Oil and Gas follows the environmental impact report meetings Rhino held across the KZN Midlands last week to alert the public to changes in their exploration applications.

Their application has received sharp criticism from the Midlands community, who believe alternatives to oil and gas extraction should be found, such as renewable energy.

Residents also said that should the extraction process be permitted, the impact on the environment would be “disastrous”.

At a meeting at the Howick West Hall last week, Matthew Hemming of SLR Consultanting (environmental impact consultants) said an economic comparative assessment for gas and renewable energy would be conducted following questions as to why renewable energy was not being considered.

In an article Fin24’s Matthew Le Cordeur said the KPMG report, released on Wednesday, “explicitly warns” that it does not take into account any risks involved in the process of fracking or the process of drilling for on-shore shale gas.

The report directly states that “whilst there will always be risks involved with oil and gas exploration and production activities, an analysis of these potential risks fall outside the focus of this report”.

Rhino spokesperson Mike Gehrig said the study reported how onshore natural gas development in South Africa was “likely to improve the region’s budget deficit” as well as lead the country to economic growth and increased employment.

The study found that for every R1 million of future sales generated through oil and gas extraction, another R1,3 million could be added to the economy.

He said “for every R1 million of sales generated by the local gas industry, four jobs could be created”.

Rhino Resources president Patrick Mulligan said in a statement that while South Africa’s natural gas industry was in a “relatively early stage of development”, the region — particularly its onshore Karoo basin — held “valuable resources for potential growth and production”.

The study reported that South Africa produces 32% of the natural gas it uses and imports 68%.

The study suggested that if gas extraction occurred in the Karoo, then it could stop importing gas.

The economic benefit of this over time would be R10,238 billion, adding 29 443 jobs and R2,658 billion in taxes, according to the study.

The report warned that “given the nature of exploration activity, drilling does not guarantee economically viable gas recovery, which is evaluated as part of the drilling process”.

Bobby Peek, director of groundWork, a Pietermaritzburg-based environmental rights organisation, said following the study that four transnational and local companies had applied for oil and gas exploration rights within blocks covering hundreds of thousands square kilometres across the Eastern Cape, KwaZulu-Natal, the Free State, North West and Mpumalanga.

“The companies are looking for gas that can be extracted by unconventional methods including but not limited to hydraulic fracturing (fracking) of shale or coal (coal bed methane and coal seam gasification),” said Peek.

“These methods, if allowed, will result in the depletion and pollution of ground and surface water with potentially widescale and devastating consequences.”

He said the blocks included sensitive upper catchments of several of the country’s most important river systems such as Thukela, Mgeni and others.

He said these rivers are a “critical water source” for millions of people.

Peek added that the promise of jobs for local people who do not have the requisite skills was “unlikely”.

In early 2015, Rhino Oil and Gas lodged an application for an exploration right to explore for petroleum products (including oil, gas, coal bed methane and helium among others) with the Petroleum Agency of South Africa (Pasa).

The initial application covered around 1 500 000 ha of land, over 10 000 properties. The application listed Rhino’s potential activities as various non-invasive and remote exploration techniques, drilling up to 10 core boreholes and 125 km of seismic survey acquisition. Rhino recently reduced the exploration area by excluding all “known” protected areas and excluded land that was “unlikely to be prospective for oil or gas”.

This reduced the proposed exploration area to 850 000 ha covering around 6 700 properties.

The report stated that Rhino would also exclude ground-based core hole drilling and seismic surveys from proposed “early-phase exploration” work. Surveys of the land would be done through an “aerial full tensor gradiometry gravity survey”. This would involve an aircraft measuring the gravitational pull in the areas it flies over. If the aerial survey application is approved, Rhino could conduct remote exploration and develop a more detailed understanding of the potential oil and gas resources in the area.

Should Rhino propose to conduct ground-based exploration, another application would have to be made to Pasa.