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Free State Business 2022

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FOCUS Gas will put South

FOCUS Gas will put South Africa on the path to zero emissions Dr Phindile Masangane, the CEO of Petroleum Agency South Africa, notes that recent gas discoveries could support the country’s economic recovery and its transition to a clean energy future. Today the biggest threat to humanity is climate change, and the biggest threat to SA’s social stability is the high unemployment rate. As the global economy recovers from the devastating effects of Covid-19, demand for oil and gas has gone up significantly. If there was ever a need for proof that oil and gas still drive the global economy, recent statistics demonstrate the trend. The world’s developed economies industrialised on the back of oil and gas production and use. Now, just as Africa is on the cusp of being a significant gas producer and is making plans to use such gas for power generation, industrialisation and economic growth, the negative effects of greenhouse gas emissions on the environment have become undeniable. The urgency for action to mitigate the risk of climate change is no longer debatable. Between 1990 and 2018 the top five emitters have produced more than 50% of greenhouse gas emissions. During the same period SA has contributed 1% to global emissions. This is by no measure Renergen is currently the only onshore petroleum production rights holder in South Africa. The company’s Virginia Gas Project in the Free State is ramping up to phase two, based on one of the richest helium concentrations in the world. Credit: Renergen insignificant, and as a responsible global citizen SA must take steps to reduce its carbon footprint. The UN Framework Convention on Climate Change was established in 1992 to coordinate the global response to mitigate the threat of climate change, and specifically to get countries to commit to policies and plans that will ensure that the average global temperature rise is kept less than 1.5°C above pre-industrial levels. The International Energy Agency (IEA) proposes that to achieve this goal the world’s energy sector must reach net zero emissions by 2050. In its global energy net zero 2050 pathway the IEA acknowledges that there is no single pathway to this goal, as developed and developing countries face different socioeconomic challenges and have contributed disproportionately to greenhouse gas emissions to date. What a number of environmental interest groups seem to be ignoring in the IEA “Net Zero by 2050” report is the acknowledgment that there will be a differentiated approach to a clean energy future, taking into consideration the cost of the new clean energy technologies and the economic consequences of transitioning for each country. The IEA emphasises that each country must develop its own pathway to a net zero emission future. South Africa’s economy has been predominantly powered by coal, which is also a significant contributor to the country’s economy in terms of GDP as well as employment. Of all primary energy resources coal is the FREE STATE BUSINESS 2022 40

" " Mafikeng " " " " " " Molteno " Klerksdorp " " Welkom " Virginia " " Aliwal North " " Queenstown " " " Kroonstad " " Indwe " " Maseru " " " " Lephalale " " " Elliot " " " Maclear " Modimolle " Bela-Bela " " Bethlehem " Frankfort " " " Evander Umtata " Mokopane " " " " Witbank " " Secunda Standerton " Harrismith " Polokwane " " " Tshipise " " Makhado " " Ermelo Volksrust " " " Newcastle Estcourt " " Musina " Dannhauser " Utrecht " Pietermaritzburg " " " " Vryheid Port Shepstone " " Phalaborwa " Mbabane " Pafuri Nongoma " " " Richards Bay St. Lucia " Locality most carbon-intensive and fine particulate matter affects people’s respiratory systems. In addition to coal, South Africa imports oil, gas and petroleum products for its energy needs as the upstream petroleum industry is still at a nascent stage. The two recent world-class offshore gas discoveries in the Outeniqua basin are the biggest petroleum discoveries made in South Africa. The development of these discoveries has the potential to replace more than 2 300MW of dieselfired electricity generation, thereby reducing the carbon emissions by more than 50% while eliminating sulphur oxide and nitrogen oxide emissions. Gas is therefore an obvious bridge to a lower carbon future. The Petroleum Agency SA awaits the licensee of these gas discoveries submitting its production right and environmental authorisation applications when the exploration right expires, or earlier. The agency expects the licensee to use world-class technologies and standards to minimise the effects of the gas and gas condensate production on the environment, while maximising the in-country benefit or local content from this development to support SA’s economic recovery. These discoveries could indeed support both the country’s economic recovery and its transition to a clean energy future. Onshore exploration opportunities are represented by unconventional resources such as shale gas in the south-central Karoo, coalbed methane in the coalfields of the east and northern sectors of the country and biogenic gas in the Virginia and Evander regions. However, geological analysis is showing that there may well be significant potential for conventional oil and gas resources onshore. Conducive investment environment South Africa has a history of political stability and the new UPRD bill (Upstream Petroleum Resources Development Bill) will assist the Agency in expediting exploration through close management of acreage allocation and work programmes. These positive factors create a conducive environment for PASA to pursue its mandate of attracting investment into the upstream petroleum industry. Coal Field SOUTH Gas discovery Provincial boundary Karoo Basins Northern Cape AFRICA North West Free State Eastern Cape Bloemfontein LEPHALALE BASIN Waterberg Free State MAIN KAROO BASIN Molteno Figure 32. Distribution of coal fields in the Karoo-aged basins in South Africa (digital geological data sourced from Council for Geoscience) Gas and coal-based methane are found in many parts of South Africa’s interior. Credit: PASA, with digital geological data sourced from Council for Geoscience. The draft bill provides greater policy certainty and a stable environment for investment in the South African oil and gas sector. It provides security of tenure by combining the rights for the exploration, development and production phase under one permit. As far as the issuing of exploration rights over the last 18 months is concerned, a total of 21 exploration rights for both onshore and offshore were issued during this period, including renewals and new exploration rights. As of December 2020, there is no longer a moratorium on applications for rights onshore, other than those for shale gas in a specified area covering the central Karoo. Other onshore applications continue to be received and processed in terms of the MPRDA. The moratorium for shale gas rights and new offshore applications remains in place and is expected to be lifted with the enactment of the hydraulic fracturing regulations (for environmental management and water use) for the shale gas extraction technologies. ■ Pretoria Johannesburg Gauteng Lesotho TULI BASIN Tuli Mopane Limpopo SPRINGBOK FLATS BASIN Springbok Flats Witbank Highveld Tshipise TSHIPISE BASIN Ermelo Utrecht Klip Rivier Pafuri KwaZulu-Natal Mpumalanga Kangwane Swaziland Vryheid Nongoma Somkele Durban 34 41 FREE STATE BUSINESS 2022

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