South African firm ready to start exploratory fracking in the Karoo

South Africa probably has some of the largest shale gas reserves in the world. But exactly how much is there? And is it economical to produce?

Bundu Gas and Oil and the “sweet spot” it’ll explore

One of the companies trying to answer those questions is the small Australian listed oil and gas explorer Challenger Energy. Through its South African subsidiary, Bundu Gas and Oil, it has applied for a gas exploration permit over the Karoo Basin “sweet spot” wedged between giants Shell and Chevron.

“We’re in a very good location,” says Challenger Energy MD Robert Willes. “Bundu was first to apply for exploration rights and, as the first mover, they were able to select the acreage they wanted to explore.”

Bundu Gas and Oil applied to explore about 400 000 hectares (one hectare is about the size of a rugby field) surrounding a well that was drilled by state-owned explorer Soekor in 1968. “That well surfaced gas back in 1968 without any hydraulic fracturing,” says Willes. “They pierced the Earth and gas just came out! They probably didn’t expect it, but they experienced such a strong gas kick that they had to activate the blowout preventers causing gas to flow to the surface for 24 hours! You don’t normally see this; it’s an extraordinarily encouraging sign!”

Electricity for Africa (and then some)

Gas is invisible. It permeates shale; there is no reservoir that you can measure. How then can we determine how much of the resource there is?

“There are five wells in the Karoo that were drilled back in the 60s,” says Willes. “All of those wells have gas shows in them. We therefore know there are hydrocarbons there without a doubt.”

The US Energy Information Administration estimates that the Karoo Basin has about 390-trillion cubic feet (tcf) of recoverable gas, making it the eighth most abundant reserve in the world. “To put that in perspective; 5-trillion cubic feet of gas can run Medupi for 20 years,” explains Willes.

The machinery is in motion

The petroleum regulator has, after a long delay, started processing exploration rights which it will start awarding in few months.

“Once we have our licence,” says Willes, “we’ll reprocess that old well with modern algorithms. Then we’ll drill a couple of core holes and one vertical well and we’ll fracture stimulate it across several shell horizons. This process can take up to 18 months so we need a lot of capital, probably hundreds of millions of rand. The equipment and expertise has to be brought into South Africa from overseas.”

Power for Africa by the early 2020s

Willes estimates that the test-phase for production is at least about three years off. “At that point we’ll probably put some small-scale power generation in place. It won’t be huge, but it’ll be an important demonstration that shale gas can generate power.

“Not too long after that, if we can prove resources sufficient to support power development, I think we’ll see significant electricity generation as the first phase of this, significantly adding to the grid by the early 2020s."

Listen to the Soundcloud clip for more detail.

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