• Fortifying the value chain

    Petroleum Agency SA consistently researches and traverses South Africa’s oil, gas and energy industry in order to promote and regulate these resources

    Petroleum Agency SA (PASA) is responsible for promoting and regulating oil and gas exploration in South Africa, archiving all data related to oil and gas exploration, and developing the local upstream industry for the benefit of all South Africans.

    One of the agency’s roles is to counsel government on issues related to oil and gas. The agency has recently played a leadership role in the task team process investigating shale gas exploration and the controversial technique of hydraulic fracturing.

    In carrying out its mandate, PASA attends technical geological conferences and hosts data room visits with players in the oil, gas and energy sectors to attract foreign investment to South Africa. PASA supports exploration and exploitation of onshore and offshore oil and gas resources and regulates exploration and production activities.

    Any organisation wanting to exploit resources has to approach and obtain a permit from PASA. Only investment can further grow the South African economy and create jobs, which would in turn assist in alleviating the problems around unemployment and contribute to the aims of the National Development Plan 2030.

    South Africa is on the brink of major developments in the upstream industry and the next few years will be key in determining its future energy profile and how oil and gas can contribute to the greater energy mix. The demand for energy has surpassed supply, therefore alternative energy sources are being looked at to deal with the ever-growing demand. PASA, together with the Council for Geoscience (CGS) and the Department of Mineral Resources (DMR) is conducting extensive studies into South Africa’s potential shale gas resources. Major research is under way and the studies being conducted centre around the Beaufort West area in the Karoo. The work focuses on the reserves, the technology that is required to get the gas out of the ground and the value chain.

    It is PASA’s hope that indigenous oil and gas may soon play a significant role in the country’s energy supply

    Natural gas lies offshore to the west of South Africa in the Atlantic Ocean (Ibhubesi) and off the southern coast in the Indian Ocean (Bredasdorp Basin). Both these fields have great potential. The period before the recent drop in oil price saw unprecedented interest and a record level of activity in petroleum exploration in South Africa, and exploration interest remains high. With this said, most of the oil that feeds the country’s four crude-oil refineries is imported, but a great deal of South Africa’s fuel is generated by a natural gas conversion plant on the coast and a coal-to-fuel facility near the country’s industrial heartland. In addition to South Africa’s crude-oil refineries, natural gas conversion plant, coal-to-fuel and gas-to-liquid crude oil refineries, Sasol produces fuel from coal at its Secunda facility, and PetroSA has the country’s only gas-to-liquid facility in Mossel Bay.

    With regard to current offshore oil and gas exploration activity, in the Orange Basin, PetroSA has been joined by Cairn India, and they are looking at both oil and gas potential. Sunbird Energy and partners have a production licence for the development of the Ibhubesi gas field and intend to pursue the option of independent power production. Africa Energy recently acquired the acreage inshore of the Ibhubesi gas field, where they will be pursuing the oil discovery in the A-J graben.

    Other operations in Western Cape waters include exploration of the deepwater and ultra-deepwater of the southern Orange Basin by PetroSA together with Anadarko, and exploration by Sungu Sungu Petroleum.

    There is continued interest in the ultra-deepwater of the northern sector, and it is the agency’s opinion that there is great potential for both oil and gas reserves in this basin.

    The south coast has seen ongoing exploration in Block 9 from PetroSA, where they have concentrated on finding further assets close to existing infrastructure and on the development of the F-O gas field.

    Other activity off the south coast includes exploration of the deepwater by partners Total and Canadian Natural Resources and exploration of the northern Pletmos, Algoa and Gamtoos basins by Sungu Sungu and New Age. Total has also been granted an exploration right to the south.

    Off South Africa’s east coast, Impact Oil and Gas partnered with ExxonMobil. ExxonMobil has also taken up further acreage, while Eni, successful in finding enormous gas deposits to the north in Mozambique, has joined Sasol in their exploration efforts of South Africa’s east coast.

    The agency attends technical geological conferences and hosts data room visits with oil, gas and energy industry players to attract foreign investment to South Africa

    Onshore, the primary interest is in natural gas resources. These are of the unconventional types, which include biogenic gas, coal bed methane and shale gas.

    The first onshore natural gas production right around Virginia in the Free State province was acquired by Tetra 4 (formerly Molopo South Africa Exploration and Production), and is now a subsidiary of Renergen. Tetra 4 has a gas sales agreement with Megabus for compressed natural gas for use in vehicles. This small project marks the first economic production of gas onshore.

    Naturally, coal bed methane (CBM) exploration is concentrated in the coal-bearing basins located in the north eastern parts of the country. Operators have already carried out successful drilling in terms of their work programmes. The most advanced CBM projects in South Africa are located in the Waterberg coalfields near Lephalale in the Limpopo province and Amersfoort coalfields near Ermelo and Volksrust in the Mpumalanga province respectively. The preservation for gas associated with the coal in these regions is well understood and our operators continue with appraisal to better understand the commercialisation potential of the gas resources.

    Many will be aware of the environmental impact assessment estimate of 370 Tcf of gas as a shale gas resource figure for the Karoo. Our own estimate of the resource is around half that figure, yet still, represents a critical resource.

    At the time of writing, the Minister has yet to lift the moratorium through a notice in the Government Gazette, and it is this announcement that will guide and inform the process in future.

    The above summary presents some of the very exciting developments under way, and also a little of what we expect in South Africa’s upstream industry over the next few years. It is our hope that indigenous oil and gas may soon play a significant role in the country’s energy supply.

    Tygerpoort Building,
    7 Mispel Street, Bellville, 7530,
    Cape Town, South Africa
    Tel: + 27 (0)21 938 3500
    Fax: + 27 (0)21 938 3520
    plu@petroleumagencysa.com
    www.petroleumagencysa.com