Opportunity Issue 108

which a pilot compressed natural gas (CNG) plant was constructed
in 2016. The second phase, referred to above, encompasses LNG
and helium. Production of helium is expected to grow from 350kg
per day to five tons in the second phase.
LNG for the domestic market and helium for export from this
project will create an entirely new stream of energy options
for South Africa. The first sector to respond to the potential of
this gas find was the logistics sector. Bulk Hauliers International
Transport (BHIT) signed an agreement to take LNG to fuel 50 of its
trucks, which should lead to lower operating and maintenance
costs. Renergen has signed an agreement with TotalEnergies for
distribution and sales and other manufacturers have since come
on board. The economic spinoff of the work done by PASA is clear
to see in these developments. Tetra4 has a loan from the Industrial
Development Corporation to build a 107km pipeline network from
Virginia and the Overseas Private Investment Corporation (OPIC),
an agency of the US government, will lend Renergen $40-million
(more than R600-million) over 12 years, further evidence of the
positive economic benefits of this brand new subsector.
The International Energy Association (IEA) has published
a report, “Africa Energy Outlook 2022”, which deals with the
balancing of Africa’s developmental needs and the urgent
imperative to move away from fossil fuels. The report concludes
that a balance can be achieved. A key factor in allowing Africa to
continue to industrialise will be an uptick in the discovery and use
of gas. If all the gas so far discovered in and off Africa was used, the
continent’s share of global emissions would rise by 0.5% to 3.5%.
Petroleum Agency South Africa has welcomed the report.
PASA has consistently argued that South Africa’s road to net
zero emissions will be via gas. As PASA noted in the context of
major discoveries of oil condensate off the southern coast, the
development of these discoveries has the potential to replace
more than 2 300MW of diesel-fired electricity generation
in Gourikwa, Dedisa and Ankerlig, thereby reducing the
carbon emissions from these plants by more than 50% while
eliminating sulphur oxide and nitrogen oxide emissions, which
are also harmful to the environment. The Agency concluded
that gas is an obvious bridge to a lower-carbon future in
South Africa. There are other onshore areas showing promise.
The Department of Forestry, Fisheries and the Environment
(DFFE) in 2022 issued draft regulations to govern the process
of hydraulic fracking because the underground resources of the
Karoo are again in the spotlight. Various environmental studies
are being done, including groundwater and geological studies.
The geo-environmental baseline study for gas in Beaufort West
undertaken by the Council for Geoscience has been completed
and showed significant resources of shale gas. The study did not
encompass any economic modelling.
Great potential
PASA will be responsible for the granting of any licences once
the draft regulations are finalised. The Agency’s Resource
Evaluation Manager, David van der Spuy, says that onshore
gas holds great potential and makes a distinction between the
biogenic gas discovery
that Renergen are
working on and other
potential sources. He
says, “There are other
types of unconventional
gas onshore, such as
coal-bed methane and shale
gas.” In the south-central Karoo,
basin-analysis studies show potential
for conventional deposits of both dry
gas and wet gas. Three natural gas exploration
permits have been awarded to Tosaco Energy for the sandstonerich
area between Amersfoort and Balfour in the western
part of Mpumalanga by Petroleum Agency South Africa. Two
methane-gas exploration rights have been granted to Highland
Exploration in the Evander area.
In 2022 a successful bid was made to drill for gas at the site of
the Majuba Power Station. Kinetiko Energy aims to supply Majuba’s
20MW gas generator with fuel. Majuba is one of Eskom’s many
coal-fired power stations which are facing closure in the province
of Mpumalanga and one of several that might be switched to gas.
Kinetiko has a further two sites where it will do exploratory
drilling: one near Sasol’s Secunda synthetic fuel plant and one
to the south of that. PASA will continue to promote, facilitate
and regulate exploration and development of South Africa’s
oil and gas resources, ensuring that sustainable development
is promoted in a responsible way. A key objective is to move
increasingly to development and production phases, beyond
just exploration.
The offshore TotalEnergies project and the onshore Renergen
project encapsulate the kind of work that PASA wants to move
towards, in search of economic benefit for South Africa.
Onshore exploration prospects are opening up new possibilities in
the Free State and the Karoo. Credit: PASA