Energy: Get cracking on fracking
- Ivo Vegter
- 22 May 2012 09:03 (South Africa)
As if the many egregious errors and lies in Josh Fox’s seminal anti-fracking film, Gasland, weren’t enough, the US Environmental Protection Agency has just declared the water of the film’s star location, Dimock, Pennsylvania, safe to drink.
The agency will remain vigilant and continue to investigate a few unclear results, but four rounds of testing and thousands of documents of evidence later, no significant danger to the drinking water posed by the gas-drilling technique known as hydraulic fracturing, or fracking, could be substantiated.
Meanwhile, the UK government has been fretting that its own reserves of shale gas, now estimated at a mere 150 billion cubic feet, are not enough to bother with. But this, and the much-ballyhooed reduction in the estimated reserves in US shale gas formations, are not reasons to give up on the Karoo. On the contrary, it establishes a competitive advantage. After all, the estimated Karoo Basin reserves are three thousand times bigger than those in the UK.
Technically recoverable shale gas reserves:
|Rank||Country||Trillion cubic feet|
Source: Energy Information Administration, 2011.
The indefinite moratorium imposed by minerals resources minister Susan Shabangu on the application for exploration or production permits to exploit shale gas in the Karoo Basin remains in place, so these estimates cannot yet be confirmed.
However, energy minister Dipuo Peters has declared herself hopeful that an investigation report due to be tabled before Cabinet by July will find gas drilling to be safe enough to proceed. Business Report declared: “It’s a done deal on fracking.”
This is good news for anyone who thinks a relatively inexpensive, plentiful and clean domestic source of energy will be good for the economy. It is very good news for the depressed towns of the Karoo, where real unemployment sometimes runs to 90%, according to an April 2011 article in Farmer’s Weekly, forwarded to me by its reporter, Roelof Bezuidenhout.
“Karoo people have always joked that the only hope for their dorpe [small towns] lies in finding oil, but that the only oil here is the leak under Uncle Tommy’s car,” he wrote, noting that welfare grants might actually outstrip farming as a source of income in many towns.
There is a reason why the Karoo Shale Gas Community Forum, a public interest group that includes a range of community organisations representing churches, youth, human rights activists, workers and small farmers, has come out in support of gas drilling. It labours thanklessly, without the funds, celebrity appeal or media support of its bigger rival, the Treasure the Karoo Action Group, and has distanced itself from the knee-jerk environmentalist opposition to shale gas drilling. Local communities know that wealthy environmentalists and a few big landowners whose mineral rights have been nationalised don’t speak for small farmers, the working poor and the unemployed.
Bezuidenhout’s article “almost caused my lynching by members of the [Treasure the] Karoo Action Group,” he told me in an email. “So I just went back [to] farming, hoping they'd find gas under my kitchen.”
Peters touched on a very real threat if the groundless but vociferous opposition to fracking continues to delay matters: “Those skills (in the oil and gas sector) would be lost if we do not exploit that which we have,” she told Business Report.
In a recent debate in which I participated, the Second Annual Shale Gas Conference hosted by the Institute for International Research, Bonang Mohale, chairman of Shell South Africa, said as much to Jonathan Deal, the chairman of the Treasure the Karoo Action Group.
Deal said his group was gearing up to challenge in court any favourable findings by the ministerial investigation group. The risk of such obstructionism, Mohale pointed out, is that companies such as Shell can easily decamp to more favourable climes. There is only so much fracking equipment in the world, and only so many qualified drilling engineers. The same could happen to South Africa’s shale gas prospects as the problems encountered by the local building industry when Dubai was hogging the world’s limited supply of heavy cranes, he said.
A similar argument was true for the opposition to Walmart’s acquisition of Massmart. The company was looking for an entry into the burgeoning African market, and if South Africa was going to make it difficult for the company to invest here, there were certainly other options. “Nigeria is open for business,” a US diplomatic source told me at the time.
In shale gas, our biggest likely competitors are the US, China, Poland and Argentina, all of which have big estimated reserves and are actively promoting their domestic drilling industries.
This growing supply in the world market points to another reason, besides competing for scarce skills, why shale gas in South Africa should be developed sooner rather than later. The international price of natural gas has been falling for four years. It is at its lowest point in 10 years, at about $2 per million British Thermal Units. It peaked in 2005 and again in 2008, at over $15 and $13 respectively, but the successful exploitation of primarily US reserves has put great pressure on prices.
This is great news for energy consumers, of course, who benefit by having an inexpensive, clean alternative to coal for power stations and even oil for transport. However, the downside of the boom is that low prices have already called into question the financial viability of some of the world’s top gas drilling firms, such as Chesapeake Energy.
A further natural-gas-price decline could make some global reserves uneconomical to exploit, which could stifle investment in the sector. The first regions to suffer will be those that still need much initial investment, exploration and infrastructure development, like South Africa. It risks losing out to its competitors in the shale gas sector, much like it lost out on the global mining commodities boom because of decrepit transport infrastructure, legal uncertainty about mining rights and high labour costs.
One by one, the arguments against shale gas drilling are falling apart under scrutiny. Several previous columns of mine have demonstrated that most of the claimed risks are either grossly exaggerated or outright false. Anecdotal evidence of accidents resulting in pollution do exist, but they are few and far between, and the industry continually gets better at preventing them. The risks are small and manageable.
The economic benefits of shale gas drilling are debatable, but unquestionably positive. A study was conducted for Shell by the late Tony Twine of Econometrix. It was based on the Keynesian multiplier effect of investment on an economy and proved highly optimistic. One may have grave doubts about this means of economic forecasting (and I do), but if even a small fraction of the anticipated benefits are realised, the benefits would outweigh the risks.
Frankly, as much as Karoo residents stand to gain, the most significant benefit to South Africa is not job creation, corporate profit, tax and royalty revenue, infrastructure or skills development. The biggest gain would be domestic access to a large supply of inexpensive, clean fuel for generating electricity in gas-turbine power stations, which have many benefits over both nuclear and coal-fired alternatives. It’s not like South Africa doesn’t need some cheap electricity.
To realise any of these benefits, however, South Africa needs to get cracking on fracking. The window of opportunity won’t remain open forever. DM
- Let me mansplain statistics to you
- Free the hippies! Don’t ban their drugs!
- Which principle: precaution or progress?
- How to kill a baby, naturally!
- Miserere mei, the Ebocalypse is here!
- Advanced technology or magic?
- Tourism: Still doing okay? Let’s fix that!
- Green-left messiah desperately seeking spin-doctor
- The gun genie and its bottle
- On energy, environment, and regulatory independence
- South Africa’s schools of witchcraft and wizardry
- Grab shale gas opportunity, but avoid opportunism
- It’s about who you don’t vote for
- Free markets as a moderate position
- Voting: there’s still time to change your mind
- Green tech is cool, but not because it’s green
- How Mmusi Maimane swindled a vote out of me
- The case to elect Malema to Parliament
- The intellectual gnome, Chomsky
- If Malema isn’t Pol Pot, is he still dangerous?
- Do Malema's followers understand ‘agrarian reform’?
- Look ma, I'm defending Shell's record in Nigeria!
- Any weather is evidence for global warming
- U-turn prof finds his fracking fears are avoidable
- Ramphele et al: The world according to angry feminists
- On HIV/Aids and scary-big numbers
- Cherry-picking ‘grey literature’ on rhino horn
- 350,000 reasons to kill a black rhino
- Eight myths about libertarians
- New Year’s resolutions for other people
- All I want for Christmas is a fire pool
- In defence of Donald Trump
- My old South African flag
- Fearful Fukushima fiction fatigue
- Do we tolerate private sector corruption?
- In defence of a lion killer
- Save the rare wine and endangered craft beer
- Forever blowing bubbles: shale gas economics
- Promotion and Protection of Investment Bill: When “certainty” means “wait and see”
- This land is my land: a revolution
- The launch of SA's Libertarian Party: herding cats in time for 2014
- The African case against the ICC
- The fossil fuel subsidy myth
- Think of the little fishies!
- The hilariously misunderstood libertarian
- The sickly history of sweeteners
- Pants on fire, but they’re not mine
- The obstructionism of shale gas activists
- How mind-numbing numbers whip up fear
- Why pick on Khanyi Dhlomo?
- Half-measures will fail the rhino
- Malema’s righteous anger... and naïve confusion
- Lottery licence to go to one lucky winner
- Vaccinations: when the state stabs the people
- Do reusable shopping bags kill people?
- The long walk to serfdom
- The Karoo desperately needs development
- The trials of Samson Shuttleworth
- The girl who kicked the hornet’s nest
- Raping the discourse about rape
- Who is the reasonable man?
- Fracking: Debating a big deal
- Who needs the Queen’s English?
- Electric cars: Taking from the poor to give to the rich
- Business Licensing Bill: An indefensible defence
- Red-tape tourism
- The Big Business Bribery Bill
- On Thatcher and society, Vavi and the market
- Extinction: Let’s make up numbers and panic!
- Feeding the world is getting easier
- Stop talking shit: Build your own toilet
- Climate change is pseudo-science
- Anti-competitive competition law
- The Department of Less Government
- An open letter to President Zuma
- In defence of Kim Kardashian
- The world’s weirdest wildlife sanctuary
- Boycott calls are simple-minded
- In defence of vegans
- The population explosion implodes
- Environmental backpedalling picks up pace
- How Mangaung can help and hinder entrepreneurs
- The elusive libertarian enclave
- The Gathering: Ivo Vegter
- The hidden overemployment crisis
- The case for constructive environmentalism
- Privatise the Western Cape's shacks
- Tenders: Not open to employees or their families
- Hurricanes fuel climate sensationalism
- Next: Gross-out warnings on food
- No new deal: The failure of Zumanomics
- Benoni has a bright idea
- Was I wrong about acid rain?
- Public food gardens: Where dumb ideas thrive
- Rethinking the costly food label madness
- Give hunting a chance
- Fracking gets green light, but here's the risk
- Socialists, bless 'em, visit Cape Town
- Buy a 1Time ticket now
- Give the ANC credit where credit is due
- The myth of the competent apartheid government
- It's a disaster that 'peak oil' is not a disaster
- No Gravy: a label for sustainable business
- This lightbulb's going to blow
- Smokers? Get 'em up against the wall!
- Inflating the obesity scare
- Bring a Shotgun to School Day
- GMOs: Hacking genes to feed the world
- The hidden dangers of charity
- Fracking: the unread paper debated
- Fracking: The “U-turn” paper nobody has read
- Eco-cronyism is as dangerous as any other
- SKA: Be grateful Karoo residents didn't object
- Energy: Get cracking on fracking
- Fair trade, unfair trade-off
- Casual labour is only bad for Vavi's unions
- 'Externalities', the catch-all justification for regulation
- 'Externalities', the catch-all justification for regulation
- How do we fix our dismal education?
- Barter: the rebirth of sound money
- Rights are not entitlements
- Debunking 'limits to growth' inanities
- Tax: Why align with "most other countries"?
- Newspaper sensationalism doesn't help rhinos
- Rolling Stone reprises Gasland's fracking fantasies
- Cosatu's manipulative march move
- Why do 16 million people not constitute an economy?
- The age of smear politics
- Does fracking cause earthquakes?
- The Chinese model is morbidly obese
- Green tech: doubling down on a losing bet
- Rape, pornography, and hell's grannies
- Petrol taxes won't hurt the poor
- Jailtime mooted for bad weather warnings
- Let's ban bans, and start with CITES
- In defence of overpaid sport stars
- On the death of Kim Jong-Il
- COP17: Let's ban fire
- Cancer gets you when nothing else can
- COP17: The 'party on' agenda
- COP17: The Blue Line of Death
- New seven natural inanities
- Occupiers' anger is all that makes sense
- The Luddites and Technocrats live on
- Malema marches for economic slavery
- Profitable purveyors of pudendal prettiness
- Sense? Us?
- If they want rhino horn, let's sell them some
- "Stimulate" economy by ending telco abuses
- Executive pay makes nobody poorer
- Malema's real persecution
- Mogoeng: Lock up your daughters
- Don't mandate insurance, deregulate healthcare
- I sympathise with Malema's persecution complex
- Short selling: panicked pols ban proof of failure
- Don't blame those who saw it coming
- What's obscene about profit?
- In defence of Bombela
- Dear president Zuma, you are not above the law
- The economics of love
- Treasure the Karoo? Ban the SKA!
- Malema is right, you know
- Gautrain's PPP: political patronage profiteering
- Kumi Naidoo is no hero
- LeadSA fails to lead when it matters
- No logo means carte blanche
- The drug war: dopey but dangerous
- A response to fracking critics
- Don't vote. It's your right.
- Welcome Walmart
- If you're happy and you know it clap your hands
- Buy local, support poverty
- Ubuntu, the free-market way
- Karoo fracking scandal exposed!
- I'm ashamed for my profession
- The bill of bunkum
- Being gay: a brand new concept!
- Who's afraid of the nuclear wolf?
- The nationalisation canard
- Ogilvy should grow a spine
- The new robber barons
- A classy revolution: Why we cared
- Bombastic Bombela balks
- Liberty is more than mere democracy
- Gautrain has a law unto itself
- The irony of 'services for all'
- How to hire a hitman in SA
- Arrive alive and neurotic
- The oppression of taxis
- Protection of Information Bill and why WikiLeaks is so dangerous
- Fifa, Russia and Qatar deserve each other
- One day, we'll all hate WikiLeaks
- The cycling mafia strikes again
- What Julius got for Christmas
- Let's return the beads
- Away with fascist seat belt laws
- Tintin Mbeki in the Sudan
- How the ANC can make everyone happy
- Currency: the race to the bottom.
- Hurrah for national healthcare!
- Give Zimbabweans citizenship
- Carte Blanche has no carte blanche
- That finger-licking, lip-smacking taste
- Bomb the barbaric lot already
- Green tax: another raid is coming
- Do strikers deserve anything?
- The media will lose this battle
- Global warmism needs a fisking
- A glass half-full
- Go ahead, have a baby
- Stop the handouts - end xenophobia
- The right to fire
- FIFA's heart of darkness
- Have some self-respect
- I ordered an orange skirt
- Secretly, Match blames South Africa
- The stupendous Gautrain: a rare marvel!
- The Fifa conquistadors are coming!
- What's wrong with everyone?
- Leave poor BP alone
- The destructive power of government
- The bonsai economy
- The darkness of Africa
- Who is ripping off whom?
- Anatomy of a whitewash
- While FIFA takes over, we fight
- The pointless pretence of Earth Hour
- Ten reasons to reject climate alarmism
- Really, boycott the FIFA farce
- The climate dominoes fall
- Lessons in ethics from Dick Cheney
- Screw the consumer
- In defence of bankers
- Break the banking cartel
- Julius Malema, the walking contradiction
- Boycott FIFA
- Climate clarity
- In defence of Boney M
- Pray Copenhagen fails
- Capitalism is not unkind
- Climate fraud kills people
- Pop goes the hot air balloon
- Peace, love and schadenfreude
- The irony of the left
- Too late to cool it?
- Going cold turkey