[NGW Magazine] South African Offshore Gas Project gets Environmental OK

Developer Sunbird plans to start detailed engineering design work on an upstream project in South Africa later this year; state utility giant Eskom is a target customer.

Environmental authorisation has been granted for the development of a new natural gas project off the west coast of South Africa, stepping up the country’s move to a gas economy.

The go-ahead is for Sunbird Energy’s ‘Ibhubesi Gas Project’ in Production Right Block 2A; the company’s chairman and CEO Kerwin Rana told NGW that the environmental authorisation now clears the way for the project to move forward.

“The next steps for us would be to continue ongoing work on gas offtake agreements in addition to the work being done on supplying Eskom’s Ankerlig power station with gas. Detailed front-end engineering and design (pre-Feed) work will commence before the end of 2017”, he said. The Ibhubesi Gas Project is targeting a range of potential customers from power generation, to industrial, to transportation.

Eskom's 1.3-GW Ankerlig peaking power plant is now diesel-powered. However Sunbird signed a term sheet in 2015 with Eskom relating to future deliveries of Ibhubesi gas to the plant. At that time, work to convert the power plant was scheduled for 2018.

Rana said that given a recent change in market conditions, the pre-Feed work will be essential to answering questions about the project’s final cost and production volumes: “Originally, approximately 30bn ft³ [0.85bn m³]/year was planned to be produced, but those volumes are now under revision.” He suggested that this project has a significant role to play in unlocking South Africa’s west coast gas potential.

“Gas, as a clean and efficient energy source, fits in perfectly in a mid-merit load profile and could, in addition, effectively displace the use of diesel for peaking power generation. There is also the potential for small to mid-scale LNG production from the Ibhubesi gas field which could be an extremely competitive source of domestic fuel in the Western and Northern Cape.

“The Best Estimate volume of 7.8 trillion ft³ gas, as independently certified, confirms the significant prospectively of Block 2A, considering that Mossgas was built on a Best Estimate of 1 trillion ft³ gas,” said Rana, referring to the Mossgas’s fields that supplied a gas-to-liquids project for 24 years.

The CEO of the upstream industry lobby group South African Oil and Gas Alliance (SAOGA) Niall Kramer said that while this project may not be large it is a sign of early movement: “And it’s a South African company showing faith in South Africa. I think that’s an important signal. To put this into context – South Africa has never had an upstream gas economy. These are our first tentative moves. And welcome ones. My vision here is we can be like the North Sea. But with great weather!”

SLR Consulting, which supported the application for the environmental authorisation, said Sunbird is the operator and 76% interest holder in Production Right Block 2A, with South African state PetroSA holding a 24% interest.

SLR said the production right for the development of the Ibhubesi Gas Field was obtained in terms of the 2002 Mineral and Petroleum Resource Development Act (MPRDA) in 2009 and approval in terms of the 1998 National Environmental Management Act (Nema) in 2008.

Sunbird has re-evaluated the original development proposal and is considering various additional project components from that of the approved Ibhubesi Gas Field project. It will therefore be necessary to obtain further approval in terms of both the MPRDA and the Nema.  The key additions to the project description as previously approved include:

-          installation of either a floating production, storage and offloading vessel or a semi-submersible production platform;

-          a new 400-km offshore pipeline from the production facility to a shore crossing site located between Grotto Bay and Duynefontein and one on the Saldanha peninsula;

-          an onshore pipeline between the shore crossing site and the Ankerlig power station near Atlantis and proposed end users in Saldanha; and

-          an onshore gas receiving facility.

The environmental authorisation provides for:

-          a production platform in Licence Block 2A off the west coast of South Africa;

-          an offshore production pipeline of some 400 km from the production platform to a southern shore-crossing site at Grotto Bay and a northern shore-crossing site at St Helena Bay East on the Saldanha Peninsula;

-          an onshore pipeline between the Grotto Bay shore-crossing site and the Ankerlig power station and the St Helena Bay East shore-crossing site and the R45 road; and

-          an onshore gas receiving facility adjacent to Ankerlig.