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Renewable Energy III

Shale Gas: A Game Changer but at What Cost?

by Radhika Bhuyan

 

The South Africa government has a daunting task – on one hand it needs to ensure that future energy supply is secured while on the other, with limited information it needs to make towering investment decisions and devise energy plans for the next few decades. Often it has been that many energy projects are commissioned long after it was first needed or energy demand plans need to be revised as economic conditions have changed. Some estimates of energy demand were justifiable when South Africa was growing at a GDP growth rate averaging 6% per year, and was expected to do so for the next 20 years. Currently, growth rate lingers at around 2% per year, partly fuelled by the global economic downturn, depressed export markets, falling employment. This downslide has a characteristically permanent feature to it, for even if consumer demand elevates, it will be much less than that which was previously planned for by 2030.

Of the many contentious energy options facing energy strategists in South Africa, shale gas drilling is looming with uncertainty, as the economic viability and the true cost and breadth of the environmental impact are unknown. The American boom in shale gas drilling has raised hopes for other countries, with proponents arguing that that they would be able to rely on “cleaner” fuel to meet future energy needs, kindle a “manufacturing renaissance”, and refuel industries and create jobs.

However America’s boom, which is rippling across the world, emerged under conditions that are very different from those of other countries. It was triggered by a combination of factors – a favourable geology, water availability, private land and mineral rights ownership; “open access” pipelines; and critical innovations in shale gas exploration such as 3-dimensional seismic imaging mapping; horizontal drilling and fracturing technology. The boom is attributed to efforts during the oil crisis of the 1970s as well, when the US government pumped large funds into risky unconventional natural gas R&D projects, and incentivised drillers. From being an importer of gas, its natural gas supply increased from 1% to 30% between 2001 and 2010. It accounts for 16% of the world’s natural gas production, and it has been predicted by the International Energy Agency (IEA) that America’s gas production will outstrip Saudi Arabia and Russia by 2020, and reach 50% by then.

Europe has been trying to break-away from Russia’s unstable gas supply dominance for a long time. It currently imports 34% from Russia, recently surpassed by Norway; while Central and Eastern Europe still imports 69% of its natural gas from Russia. Despite its fractious relations with Russia and which has been threating to generate ever-increasing costs for Europe, it has not been all hunky-dory for EU shale gas companies as it has for American companies.

Shale gas companies in other countries face stringent environmental regulations, difficult geography and tectonics of shale gas deposits, tight pipeline regulations; and a shortage of water. France and Bulgaria have banned fracking; Poland has large shale gas deposits but is currently in a regulatory mess; China has a difficult terrain, limited infrastructure, water and modern safety and drilling standards. Having phased out nuclear and with a dwindling fossil fuel reserves, Germany will deliberate on a new legislation later this year amidst water contamination concerns and protests.

A recent issue is around the estimated amount of methane released into the atmosphere during shale gas drilling and its effects on the environment. Methane is said to have carbon footprints between 20% and 100% higher than coal, and is atleast 25% more potent than carbon dioxide. The IEA says that even the “greenest implementation” of shale gas would raise global temperatures by 3.5 degrees, while the industry counter-argues that flaring or capturing methane emissions will significantly mitigate climate change effects.

There is worry however that evidence provided by the industry on the exact nature, and impact, of shale gas drillings will never be accurate. Often, evidence of shale gas environmental impact studies has been provided by the industry or shale gas companies. Independent and third party assessments would require shale gas companies to disclose intellectual property or information around the formulations of fracturing fluids, such as chemical compositions and percentages of hydraulic fracturing fluids, and so there is often reluctance on the part of shale gas companies. South Africa proposed regulations that would require disclosure of chemicals used and meet standards set by the American Petroleum Institute (API). This comes a year after lifting a moratorium on the fracking technique.

Early this month, local regulations around shale gas drilling in the Karoo were brought under the purview of various stakeholders’ through a “public-consultation process”. Its regulations are said to be based on “global best practice” in international shale gas jurisdictions. However, shale gas jurisdictions of other countries are still under intense review and controversy.

In the EU, different planning laws, population density, limited infrastructure, and water scarcity, are causing growing controversy. The EU is currently preparing a stronger directive with the intention of accounting for all possible environmental risks, including setting the basic ground rules for companies and investors. It is unquestionable that the cost of the environmental impact could be much bigger than has been accounted for.

So, how the ‘true’ cost of the environmental impact will be assessed in South Africa will play a key role in mapping its future energy supply. It will take several years to determine if the amount of shale gas in the Karoo (which means 'thirsty land' in Khoisan) is commercialisable; it will take another few years before production starts, and a few more years before shale gas can make a significant contribution to the national energy mix. It has been said that many wells would only produce for about five years, but which will leave behind permanent environmental problems in the land thirsty and bio-diverse land, also home to many rare plant and animal species.

The government must be realistic in addressing shale gas drilling challenges, and no longer simply focus on the benefits, as there will undoubtedly be very significant impacts on air quality, water consumption and contamination, and local communities around drilling sites. And these future damages will never been accounted for in present day accounting.

Shale gas has been a game changer for the US, but at what future cost? The true cost of the environmental damage will remain unknown for a long time to come. And what are the chances that shale gas will be a game changer for South Africa? Our wish to be part of a clean and sustainable energy future will be lost in a global drive towards this cheap energy source, but at a great environmental loss.

 

First published in Engineering News | November 15-21 2013

 

 

Radhika Bhuyan is Senior Researcher at the Mapungubwe Institute of Strategic Reflection (MISTRA), South Africa

 

 

 

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