Business Maverick


Junior oil and gas explorers dive in at the deep end

Illustrative image (Photo:

A delay in the publication of enabling legislation is slowing exploration into SA’s hydrocarbon industry. Thus the recent issue of six onshore permits came as some surprise.

After years of inertia, the Petroleum Agency SA (Pasa) awarded oil and gas exploration licences covering an area of 30,132km2 to six junior mining companies in October 2019.

The licences entitle the companies to prospect and eventually drill exploratory wells in the Northern Cape, North West and Free State.

Pasa is hoping to capitalise on the revival of interest in oil and gas exploration in South Africa after the announcement in February 2019 that French energy giant Total and its partners had discovered a large gas field off the South African coast.

We think this [issue of permits] shows that exploration, particularly onshore, is getting the backing it deserves,” says Chris Dorrington, MD of ORM Exploration, one of the six companies to receive the licences.

We have spent the better part of the last 10 months conducting preliminary research into identified anomalous areas with technical co-operation permits and, though very early stage, the results are promising,” he says.

There has been very little hydrocarbon exploration activity onshore in South Africa when compared with offshore to date and this makes current exploratory efforts critical — and difficult.

We are operating in a black hole of data, there is literally nothing to guide us,” he says.

The company is using a combination of non-traditional methods to gather data.

Traditionally, one would invest R200-million on 3D seismic surveys of the area. While this technology works well on known hydrocarbon systems, or in a small area, it is less effective on large, uncharted areas of SA.”

Instead, ORM will combine information from geological mapping, soil sampling and vegetation stress analysis to build up a comprehensive picture of the area.

We can do a spectral analysis on US satellite data — which is easily accessible — to see patterns of vegetation distress and health. Methane seepages can affect plant health and can be a clue to the presence of hydrocarbons.”

In addition, the company has employed a software engineer to map more than 6,000 of the world’s oil and gas fields to apply machine learning to this spectral analysis.

A thorough understanding of available water resources and how to protect them is also essential.

The landowners love the land more than any future profits they may make off hydrocarbons,” says Dorrington. “Their first concern, and thus ours too, is the potential impact on water resources.”

Meanwhile, the interest in Karoo shale gas is still bubbling despite the fact that the exploration licence applications by Shell Exploration Company, Bundu Gas and Oil Exploration, and Falcon Oil and Gas, which had been pending for between eight and 10 years, have still not been issued, though some seismic and exploratory drilling has been permitted.

Exploration for shale gas in the Karoo, which would involve hydraulic fracturing, or fracking, remains contentious because concerns about environmental damage are being weighed against the potential economic benefits.

The interest in onshore exploration remains alive, but is limited at this stage to data acquisition, Pasa acting CEO Lindiwe Mekwe said in the 2019 annual report.

The delay in finalisation of the Mineral and Petroleum Resources Development Amendment (MPRDA) Bill is still impeding oil and gas companies from making final investment decisions that will result in commitment to drilling exploration wells,” she wrote.

Speaking at the Africa Oil and Power Conference held in Cape Town in early November, Minister of Mineral Resources and Energy, Gwede Mantashe confirmed that a draft Petroleum Resources Development Bill will soon be tabled in Cabinet for approval.

This legislation follows from the department’s decision to withdraw the MPRDA from Parliament and separate the regulation of petroleum resources from the Minerals and Petroleum Resources Development Act.

The minister also indicated that a Draft Gas Amendment Bill will be tabled in Cabinet soon for consideration.

At this point, the legislative delay is of not too much concern to Shakes Motsilili, CEO of Alumni Energy Investments.

There are no onshore seismic or other data studies of any significance available to date, so we are, in effect, pioneering a big data approach to hydrocarbon exploration. This will be our primary focus for the three-year duration of the new licences. And it’s important that we are able to do it at scale.”

Alumni Energy Investments is a venture capital company and locally registered Section 12J fund that has invested in the six licence recipients.

This is going to require a significant exploration programme. It’s a big step towards implementing what we hope will lead to a natural gas-to-electricity strategy in a relatively short timeframe. Such a large acreage has the potential to change the energy landscape should it lead to even a modest hydrocarbon find,” he says. BM


Please peer review 3 community comments before your comment can be posted

Daily Maverick Elections Toolbox

Download the Daily Maverick Elections Toolbox.

+ Your election day questions answered
+ What's different this election
+ Test yourself! Take the quiz