Many South African politicians, economists and energy specialists celebrate the news that a promising show of natural gas is found in deep waters south of Mossel Bay.
He was found in an offshore exploration area called Brulpadda (bull african), which is licensed to global energy giant Total. The discovery that is taking place in the face of rising fuel prices and electricity consumption in times of crisis raises hopes that this may change. The Africa conversation Nontobeko Mtshali spoke to Robert Scholes and Rod Crompton on the importance of the find.
Is it an energy "game changer"?
It is still unclear how big the find is. In a press release, Total said that "could be about a billion barrels of global resources, gas and condensate light oil." Considering that, in total, South Africa's total refinery capacity is 700,000 barrels of oil per day.
The gas is at a relatively large vertical distance (57 meters), but it is unclear how rich the gaseous area is. We will not know until more holes are drilled and three-dimensional seismic studies are completed.
The gas can be converted into liquid fuels. There are only a few gas-to-liquids refineries in the world. PetroSA, the national oil company in South Africa, built one in Mossel Bay in 1989, which still works. This is the smallest refinery in the country.
The find of Brulpadda contains condensates – a kind of light crude oil – which can only handle the PetroSA Mossel Bay oil refinery.
This means that the biggest benefit will probably be for this refinery. It has a capacity of about 40,000 barrels a day, and the discovery of Bruhlpad – given its proximity – can significantly prolong its life.
How does this change the national energy strategy?
Government Energy Policy and its Gas Master Plan agree that South Africa could usefully increase the amount of natural gas in the mix. She wants to diversify away from coal and imports of crude oil.
Other reasons for increasing gas use are a little counter-intuitive if you think South Africa has to move away from fossil fuels such as gas and oil and from renewable energy, reduce climate change and save money.
The problem is that solar power and wind energy – the main forms of renewable energy available to South Africa – are simultaneously disrupted: the energy they supply changes with the sun and weather.
The country is currently filling the gaps between volatile supply and consumer demand, which also changes during the day and year, including very expensive diesel-powered electricity generators. Switching to natural gas could make this work cheaper, more efficient and with lower emissions, including greenhouse gases.
Thus, the increase in used gas increases part of the renewable energy sources that can be included in South Africa's energy mix, while still meeting a certain goal of electricity security and emissions.
Will this gas be used in South Africa or will it be exported to the world market?
It is too early for South Africa to count its chickens. It takes years to develop a gas field to the point where gas is produced. Many things can change in this period. It is located at great depth, both beneath the sea surface and under the seabed. It will be a challenge to develop in an area known for its strong winds and heavy seas. The probability, however, is that the smallest gas fields on the South Black Sea coast will be mainly used in South Africa.
Compressing natural gas for long-haul export by sea is an expensive business. It needs large infrastructure that South Africa does not currently have. The country also does not yet have a well developed gas infrastructure, so delivery may initially be more than South Africa.
But since there is a closed market nearby, a total non-profit international company that will charge a market price for its gas will almost certainly try to sell it locally instead of taking on the cost of transporting it elsewhere. The most likely first candidates will be PetroSA to produce gas for liquids and the Gourikwa (diesel) power plant near Mossel Bay.
The amendment to the Law on the Development of Minerals and Petroleum Resources, which will soon be sent to the South African Parliament after years of disputes, aims to protect national interests in this respect.
Robert Scholes is Systemic Ecologist at the Institute for Global Change (GCI), University of Witwatersrandt and Rod Crompton is Adjunct Professor, African Energy Management Center, Wits Business School, University of Witwatersrandt.
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