1.What is shale gas? 2.What is good about shale gas? 3.Where is shale gas found? 4.What is the special technology needed for shale gas? 5.What are the challenges of exploiting shale gas? 6.What is the Petroleum Agency’s role?

 Shale gas is simply a hydrocarbon gas that we get out of a shale.  Usually we get hydrocarbon gases from a sandstone, therefore shale gas is “unconventional”.  The problem with shales is that gas doesn’t flow out of them easily.  To get gas out of shales requires special technology which has only recently been developed.

TRAPS VERSUS SHALES

 Potential gas shales are found throughout the world – this may allow countries to achieve energy independence.  Gas is a much cleaner energy source than coal - carbon emissions are 50 % lower (help combat global warming); lower in other pollutants as well.  Gas power stations can be switched on and off more easily – a useful foundation fuel for the development of renewable (but unreliable) energy: wind and solar.  SA: clean and potentially cheap electricity and jobs in rural areas!

>1,800 TCF GIIP

World shale gas exploration in

Shale gas permit areas Karoo shale gas exploration in 2010 ~250,000 square kilometres > 5 TCF

 Horizontal drilling - your well intersects as much of a horizontal shale layer as possible.  Hydraulic fracturing – pumping water down a well to fracture the shale under pressure. The fractures allow gas to flow out of the shale (as if it were a sandstone).

 Environmental ◦ Groundwater contamination ◦ Surface footprint ◦ Dust, noise pollution ◦ Water usage and disposal ◦ Mitigation is possible but expensive

However, pollution of groundwater is possible, as in all drilling operations, if standard guidelines are not adhered to (protective well casing).

Environmental challenges: Surface footprint: Is this what we fear? Can minimise this by having multiple wells from a single pad 

Can minimise this with sound-proof walls. This impact has a limited time span (2-3 months), after which a well can produce gas quietly for decades. Noise and traffic:

 Example: For 1 well in the Marcellus shale (US): 100,000 gallons to drill, another 5,500,000 gallons to frac the well = 21 million litres = 8.5 Olympic sized swimming pools = 1 month’s water use for a golf course Particularly significant for the arid Karoo

 Economic ◦ Cost of ecological mitigation  Ecologically responsible exploitation of shale gas is expensive particularly with regard to water usage and disposal ◦ Lack of infrastructure  The industry in South Africa is in its infancy and the infrastructure is undeveloped – there is a lack of pipelines, service providers, laboratories etc ◦ Price of gas  In the US, it was when the price of gas shot up, that production became economic. Gas price in SA must be set.

 The Agency has the mandate to evaluate, promote and regulate oil and gas exploitation for the benefit of all South Africans.  The objectives of the MPRDA are that all developments must be environmentally / ecologically sustainable. So ecologically unsound developments must not be allowed.  Calm and objective consideration of both sides of the issue  A measured approach based on factual evidence which will not disadvantage one side over the other

 Shale gas is hydrocarbon gas that is recovered from shale with the use of recently developed technology.  Shale gas has led to a massive re-evaluation of the world’s energy resources.  South Africa may have huge shale gas reserves in the Karoo, and is the focus of exploration by several companies.  This may help provide SA with much needed, cleaner energy, however it is likely to be logistically difficult and costly  While groundwater pollution is unlikely to occur, the successful utilisation of scarce water resources will probably be the ultimate challenge for Karoo shale gas.  The Petroleum Agency has a mandate to promote and regulate ecologically sustainable hydrocarbon for the benefit of all South Africans.

Thank You