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Shale gas exploration further delayed by Appeals Court judgment

Ivo Vegter is a columnist and the author of Extreme Environment, a book on environmental exaggeration and how it harms emerging economies. He writes on this and many other matters, from the perspective of individual liberty and free markets.

Activists and landowners opposing the exploration for shale gas in the Karoo because it involves hydraulic fracturing won their appeal to have the petroleum regulations of 2015 set aside. It won’t halt the process, however. It was a purely procedural matter and in no way reflected on the environmental risks of shale gas drilling.

Six years ago, in 2013, I warned against the obstructionism of shale gas activists, saying South Africa can ill afford litigation delays. Issuing exploration licences for shale gas in the Karoo had already been in process for several years at the time, and objections by activists against the use of hydraulic fracturing (commonly known as “fracking”) were crumbling as fast as they could raise them.

I wrote a lot about shale gas between 2011 and 2013 and participated in many public debates with anti-fracking activists. For a one-article summary, this column from March 2012 debunks some common environmental scare stories that permeated the media at the time. In short, most of the fears involving groundwater pollution, surface impact, air pollution, earthquakes or drinking water contamination were either false or wildly exaggerated. The risks were not catastrophic; they would not “destroy the Karoo”. They were modest and manageable given competent regulation.

Since then, there have been three environment ministers and three ministers of mineral resources. Every year or two the government declared that it would go ahead with issuing exploration licences, but they failed to materialise.

In 2018 the present Minister of Mineral Resources, Gwede Mantashe, promised 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, would be fast-tracked. In November, Niall Kramer, CEO of the South African Oil and Gas Alliance, described the decade-long delay as “policy constipation”, but expressed hope that it would now be over.

I got one prediction wrong, however. I said the activists’ legal challenges would fail because none of their substantive claims about the supposed environmental dangers of hydraulic fracturing held up under scrutiny. For years they did fail. On 4 July 2019, however, they finally succeeded, not for substantive reasons, but by going after the government on purely procedural grounds.

In a major setback for the government and the several oil and gas companies that applied for exploration permits, the Supreme Court of Appeal ruled in favour of the Treasure the Karoo Action Group (TKAG), AfriForum and a group of landowners and farming organisations. The judgment set aside the Regulations for Petroleum Exploration and Production, gazetted in 2015 by the then-minister of mineral resources Ngoako Ramathlodi on the grounds that it included environmental regulations that the minister had no power to make.

The judgment was delivered purely on procedural grounds. Besides a high-level description of the potential environmental risks, it makes no determination on the magnitude of the risks, the justifiability of these risks in a wider social and environmental context, or whether the petroleum regulations were sufficient to mitigate these risks.

There is considerable irony in the fact that the environmental provisions contained in the petroleum regulations were everything a bona fide environmental watchdog could want. They were very detailed and covered every eventuality, from the initial environmental impact report to the final well decommissioning and closure. They included provisions for water resource management, mitigating impacts on astronomy, well design and testing, fluid and waste management, emissions, dust and noise.

The court combined two cases. The first, known as the Stern case, was an appeal by the minister of mineral resources against a Grahamstown High Court judgment which held that the minister was not empowered to make the petroleum regulations and that their making was procedurally unfair. This appeal was dismissed. The second was an appeal by the TKAG, the primary anti-fracking lobby group, and AfriForum, an Afrikaner rights organisation which funded the litigation, against an earlier Gauteng High Court ruling that declined to set aside the petroleum regulations on grounds of legality. This appeal, against the minister of mineral resources and the environment minister, was upheld.

The crux of the matter is that while the petroleum regulations were being drafted in 2013, an amendment was made to the Mineral and Petroleum Resources Development Act. This amendment removed the section that granted the minister of mineral resources the authority to make environmental regulations, under which the petroleum regulations were made. It inserted a new clause that makes the minister of mineral resources responsible only for implementing environmental provisions in terms of the National Environmental Management Act. That act makes the environment minister responsible for “setting the regulatory framework and norms and standards”.

On this basis, the judge found that the minister of mineral resources did not have the authority to issue the environmental provisions contained in the petroleum regulations, and because it would be impractical to excise and set aside only those provisions, the petroleum regulations were to be set aside in their entirety.

If you’re going to come to an agreement about environmental management, as the ministers responsible for the environment, mineral resources and water affairs did in 2013, and if that agreement leads to legislative amendments, then new regulations must be written in terms of the amended legislation. However good the provisions of the petroleum regulations, that they were written under the old legislation is a major blunder, which will cost the country more wasted years and more millions of potential oil and gas investment.

Both AfriForum and the TKAG falsely linked the ruling to their environmental fears about hydraulic fracturing.

AfriForum’s website trumpeted the victory in a press release that has been widely reprinted in the media, unmarred by any attempt at actual reporting. In it, an AfriForum spokesperson says that “this is a major victory to ensure that our environment is preserved”, adding:

We must ensure that future generations have a place in which to live sustainably. We cannot afford to take short-sighted decisions.”

It says that the judgment was proof that the government had to consult with organisations such as his and the TKAG instead of continuing to make wrong decisions.

It did no such thing. It only proved that the government should take cognisance of the law when making regulations. It did not say that those regulations were in any way deficient, nor did it prohibit future decisions about shale gas exploration.

The TKAG website doesn’t appear to have been updated since 2016, but CEO Jonathan Deal is quoted in the AfriForum press release saying that the ruling justified the reservations that AfriForum and TKAG had about the regulations and fracking technology, adding:

South Africa simply does not have enough resources to handle this industry – water is a resource that one simply cannot waste.”

It did not justify any of the reservations the group had about fracking. It only addressed procedural matters.

Taking its cue from the AfriForum press release, the media mostly used the word “halt” to describe what happened to shale gas exploration in the Karoo in the wake of the judgment. That is too strong a word. “Delay” would be more accurate.

It now falls to Mantashe and new Environment Minister Barbara Creecy to go back to the drawing board to promulgate petroleum exploration and production regulations that pass legal muster. It shouldn’t be that hard. It merely requires them to separate the environmental regulations from the petroleum regulations, to promulgate the former under the authority of the environment minister, and the latter under the authority of the minister of mineral resources.

Let’s hope they do so speedily and competently before the entire oil and gas industry gives up on South Africa and we lose the economic opportunity forever.

Strategically, of course, that is exactly what the anti-fracking activists want. Expect another legal challenge, even if it’s futile, once the new regulations are issued. Van uitstel kom afstel, as AfriForum would say. Postponement leads to cancellation.

Policy constipation” turned out to be a great phrase, and there’s no end in sight for this sorry show. DM


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