Sasol, through Sasol Petroleum International Pty Limited (SPI) the wholly owned upstream oil and gas subsidiary of Sasol Limited, announced the successful award of a joint application with Statoil ASA and Chesapeake Energy Corporation for an onshore petroleum Technical Cooperation Permit (TCP) in South Africa.
The TCP covers an area of approximately 88,000km2, primarily located in the Free State and also covering areas in the Eastern Cape and KwaZulu-Natal.
The permit awards the applicants the exclusive right to study the prospectivity for shale gas in the Karoo Basin for a period of up to 12 months, but does not include any surface activity or drilling. The joint venture partners plan to evaluate existing and available geological information within the area to determine the potential for shale gas. The study work will include the sampling and analysis of existing geological cores that were drilled by Soekor in the 1970's and 1980's during their search for shale oil. The same shale formations are now being assessed for potential gas production. This concept follows recent global developments in shale gas, where technology advancement in drilling and extraction technologies have allowed for economic development of significant shale gas resources.
If the geological evaluation proves successful, the partners will consider committing to a more extensive exploration programme in the Karoo Basin.
Shale gas is clean natural gas produced from shale, a type of sedimentary rock, mainly consisting of clay and some organic matter. Shale gas has become an increasingly important source of natural gas in the United States over the past decade, and interest has spread to potential gas shales in Canada and Europe and now also in South Africa. The Karoo Basin in South Africa has unproved shale gas potential and significant exploration efforts are required to assess and quantify this prospective resource.
"A discovery of large recoverable shale gas reserves in the Karoo Basin will be a game changer in the broader South African energy market context and will likely constitute a major step to further develop gas transmission and distribution infrastructure in the country", said Ebbie Haan, Managing Director of SPI.
Large gas discoveries in the Karoo Basin could also help alleviate South Africa's power and fuels shortage and assist in creating employment and wealth for the country. In addition, the increase of natural gas in South Africa's energy portfolio will significantly aid in the reduction of greenhouse gas emissions on a per unit basis compared to more conventional resources such as coal.
But we are at the beginning of a journey that requires technical risk reduction, environmental stewardship, stakeholder alignment and in case of success, significant future capital investment.