The Chairman of Shell South Africa, Bonang Mohale, has confirmed the oil giant has pulled its top shale-gas man Jan-Willem Eggink and his team out of South Africa. Eggink was originally sent by Shell to South Africa from Libya to monitor shale gas opportunities in South Africa.
Speaking to 702's John Robbie, Mohale said the pulling of Eggink and his team is due to the low oil price - and not that Shell is giving up on fracking in South Africa. He also said that the oil price was $104 per barrel last year in June and now it is below $50. For these reasons Royal Dutch Shell needed to hold back on its aggressive growth and expansion in more than 90 countries.
Although the low oil price is good for the customers, it really introduces an extremely difficult time for all the oil majors particularly international oil companies.
Fracking in South Africa
Hydraulic fracturing also known “fracking” is the process of drilling and injecting millions gallons of fluid into the ground at a high pressure in order to fracture shale rocks to the release natural gas inside.
The South African government has been criticised by oil companies for the delay in issuing exploration licences. Shell was hoping to get two licences, one in the Karoo and the other in Orange Basin (off the West Coast). And, according to Mohale, they’ve been waiting for the licence for six years now.
Land owners in the Karoo and the Treasure Karoo Action Group have argued that fracking, or hydraulic fracturing, would cause huge environmental damage. According to a paper released by ISSAFRICA.org, widespread fracking could lead to significant water contamination, destruction of natural habitats, increases in earthquakes and no long-term reduction in carbon emissions.
Max du Preez wrote in Pretoria News, fracking in the Karoo is probably going to be more risky than any existing fracking activities elsewhere. The depths of the gas-bearing shale rock layers range between 4000m and 6000m, much deeper than in the US.
The South African government, through recent legislation, wants an automatic 20 percent stake in fracking enterprises from oil and gas companies.
Listen to the audio for more detail.
Watch the videos below for more facts about fracking and what it mean to an ordinary South African.
It's a debate that's rung across the world; fracking. In South Africa farmers are convinced it's going to destroy their livelihoods. Published on 19 Oct 2014 by CNBCAfrica:
Shale gas exploration plays a major role in energy production in countries across the world and could have the same impact in South Africa. Published on 4 Mar 2015 by SABC Digital News:
CNN explains fracking (published on 8 March 2012):
_Jeff Barbee's documentary "The High Cost of Cheap Gas" (p_ublished on 13 Mar 2014 by 50/50 Community):
We have absolute faith and confidence in the Karoo being the 5th or 8th largest gas reserve in the world.