Shell could spend $200m on Karoo gas exploration
International petroleum group Shell could spend up to 200 million US dollars (about 1.4 billion rand) in the exploration phase of its plans to extract shale gas in the Karoo.
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Shell South Africa chairman Bunong Mohale told BusinessLIVE this after leaving a public participation meeting with interested persons about the controversial issue on Friday.
“Ordinarily Shell spends up to US15 million US dollars (about 105 million rand) per well. The costs are very variable as it depends on how deep the well is, how much water has to be used and other things,” Mohale said.
Shell has applied for a license to explore for shale gas in the ecologically sensitive Karoo region.
The exploration involves a controversial process called “hydraulic fracturing”, or,“fracking” in which water and sand are pumped into a well in order to get the gas that is contained in soft rock to flow freely.
While the prospect of exploiting such a resource may go some way in securing the country’s energy supplies, critics of the plan charge it could lead to pollution of the underground water system and might impact land use for years.
An unnamed Shell official accompanying Mohale indicated that Shell will drill 24 wells in its exploration phase.
Mohale said that Shell expects the Petroleum Agency of South Africa to give it either a 'yes' or 'no' in August as this would meet the 120 day period granted to prepare itself in terms of the law.
This preparation includes holding public meetings such as the one on Friday evening and completing an environmental management plan.
During Friday’s meeting Mohale, other Shell South Africa officials and consultants from Golda, the agency advising the corporation, faced a cordial but antagonistic audience.
Members of the public included farmers, activists and others with some kind of interest in the Karoo.
One of the audience members was well-known environmentalist and lawyer Lewis Pugh who pointed to Shell’s record in the Nigerian Delta.
“Shell has spilt nine million barrels of oil in the Niger Delta, which is twice as much as BP has split in the Gulf of Mexico,” Pugh said to resounding applause.
Pugh made the point that the life of the wells would be at best nine years, but the pollution it would cause would last much longer.
Questions from the audience ranged from why Shell would not say anything yet about the chemicals it would pour into the wells or the naturally occurring chemicals, damage that would be caused and what if the local communities asked Shell to stop its activities.
Mohale committed Shell to being a “good corporate citizen" and said that it would stop its activities if asked by the local communities.
Members of the audience complained that while Shell appeared to be meeting the letter of the law in terms of holding public consultations, they complained that the documentation was complex and that it was not getting to the communities that were going to be directly affected.
Applications have been received by the Petroleum Agency of South Africa for explore some 220 000 square kilometers of the Karoo. Shell has asked to explore about 90 000 square kilometers mainly located in the western part of the basin.
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