Energy Crunch May Force South Africa to Exploit Shale Gas

Despite having world’s fifth largest shale gas reserves, South Africa has not been able to exploit the energy source due to environmental issues.

However, growing dependence on energy imports could push the government to take steps to promote shale exploration in the country, potentially resulting in another opportunity for Halliburton, the leading provider of oilfield services in the shale gas industry in the U.S, a report published by Trefis said.

A slowdown in natural gas drilling in the U.S. is pushing Halliburton and its competitors to seek new opportunities in international markets.

According to the EIA, South Africa could hold as much as 486 trillion cubic feet of recoverable shale resources. Companies are particularly interested in the reserves in the Karoo region of the country, which is said to hold significant potential. However, environmentalists are opposed to the move because of the possible impact of exploration in the region.

The process of fracking has generated a heated debate in the U.S. and Europe over the repercussions of the process on underground water resources. Opposition from environmentalists has pushed the government to impose a moratorium on shale exploration in the region.

The Department of Mineral Resources is set to present a report to the cabinet over the issue, the report said.

South Africa’s growing dependence on energy imports could play a crucial role in the outcome of the debate on fracking. The country imports 60% of its oil and gas needs and is also facing power shortages as growth in supply is failing to keep up with demand. Pressure to increase domestic energy output could force the government to look at possible ways to begin shale exploration while balancing environmental concerns.