Hansard: Hydraulic Fracturing (Fracking) for Shale Gas debate with Mineral Resources Minister

House: National Assembly

Date of Meeting: 17 Sep 2012


No summary available.




Tuesday, 18 September 2012 Take: 293


"National Assembly Chamber Main",Unrevised Hansard,26 Sep 2012," Take 293 [National Assembly Chamber Main].doc"

"National Assembly Chamber Main",Unrevised Hansard,18 Sep 2012,"[Take-293] [National Assembly Chamber Main][NAC-Logger][nm].doc"


(Minister's Statement)

The MINISTER OF MINERAL RESOURCES: Hon Speaker, hon members and fellow South Africans, may I begin by thanking you for affording me this rare opportunity to inform this House about the subject that is so crucial to the future of our country. This subject relates to the potential occurrence of a world class shale gas deposit, which is estimated to being the fifth largest in the world.

When the potential was brought to our attention, we needed to understand the implications of developing this resource. Accordingly, in February 2011, I instituted a moratorium on the acceptance and processing of new applications involving hydraulic fracturing. It is now history that the Cabinet subsequently endorsed the moratorium on the processing of these applications. That was both responsible and cautionary.

Against this background, I would like to appraise this House on the critical important decision by the Cabinet to approve the report of the task team on shale gas. This would include the subsequent decision to lift the moratorium on the processing of applications for exploration in the Karoo, which is well known for its vast plains and tender lamb.

Cabinet decided on 21 August 2012 that only normal exploration will take place. It would be until we have put in place a proper and relevant regulatory framework and until we are satisfied that we can deal adequately with the consequence of the technique known as hydraulic fracturing. A monitoring committee will be established to ensure that these things happen.

The establishment of the appropriate regulations, control and co-ordination systems are expected to take six to 12 months. When and if hydraulic fracturing eventually happens, it will be authorised under the strict supervision of the monitoring committee. In the event of any unacceptable outcomes, the process may be halted. In this regard, there will be an ongoing research, which would be facilitated by relevant institutions to develop and enhance scientific knowledge. This includes, albeit not limited to, geo-hydrology of the prospective areas, methodologies for hydraulics fracturing in South Africa and an environmental impact.

Cabinet decided that actions to give effect to these recommendations must be properly resourced, incorporated into programmes of the relevant department and agencies, and capacity be developed.

The Karoo is indeed a delicate place and this is a delicate subject. It is a place where there are competing economics and other interests covering diverse areas such as farming, a site for the Square Kilometre Array, SKA, uranium reserves, and potential for solar panels to drive renewable energy initiatives, as well as being the store chest of South Africa's fossils.

I would like to assure hon members that the government is approaching this subject with outmost responsibility and sensitivity, guided by an imperative to balance development with both social and environmental considerations.

We are acutely conscious of the fact that people have elect public representatives to make laws to foster development, ensure that jobs are created, and to see that services such as education, health and welfare are rendered to the country in an environmentally sustainable manner.

The reconciliation of these challenges is what the public office is about. It is expected of us, as the nation's legislators, to rise to the challenges.

The government will explore all avenues in search of resource of energy, while, indeed virtually, the entire world is grappling with energy security and energy independence.

We are living in an era where globalisation is taking place at lighting speed. As John Donne has said centuries ago, and I quote: "No man is an island, complete unto himself." This has never been truer than now.

So people may understandably ask why Cabinet has endorsed the decision to suspend the issuing of shale exploration licenses, when some societies, especially those in the developing south, would most happily take advantage of the potential represented by shale gas.

It has to be recognised that this subject has divided our citizens into two; those for and those against. I am sure that even as we took the decision, which we marked in this House today, those divisions have not disappeared. The role of government is to seek the middle ground in the interest of our country. We have dealt with this matter in the best possible way.

We have established a task team to evaluate the use of hydraulic fracturing technique in the extraction of shale gas. It comprises of representatives from the following entities: The Department of Environmental Affairs and Water Affairs, the Department of Science and Technology, the Department of Energy, the Department of Mineral Resources, the Petroleum Agency SA, the Council for Geoscience, the SKA SA, the Water Research Commission and Eskom.

The task team, in turn, appointed a working group of expects, which brought on board technical advisors and academics from the University of the Free State and the University of the Western Cape, which serve as a reference group. This team was tasked with the evaluation of potential environmental risks posed by the use of hydraulic fracturing as a method of extracting shale gas, including the negative and possible social and economic impacts of shale gas exploitation, as identified in the Karoo Basin.

The task team also embarked on an international study tour of jurisdictions with a matured regulatory framework in this field, namely, Pennsylvania and Texas. It has also visited the Environmental Protection Agency and the Railroad Commission of Texas, both of which are the United States' regulatory organisations that are directly involved with shale gas exploitation.

This was done to ensure that we thoroughly investigate this matter before crucial decisions are taken. It was an important assignment because even before we had the benefit of actual exploration, we needed to study and respond to the concerns that were being raised by various interest groups.

Last week, we have briefed a meeting that had political parties represented in this House about the report of the task team and its findings.

We all know about what happened in 2008, when we experienced load shedding. We all know about being exposed to Eskom's power alerts every night, as we all are told to save electricity because demand outstrips our supplies. We all also know about the binding constraints to growth and a central feature being the paucity of energy. The country's Integrated Resource Plan of 2010 has an initial provision for 2400 megawatts of gas, which its sources have not been identified. This offers us the possibility to close the gap.

As government, we have taken a position to reduce the country's overdependence on coal, thereby addressing the challenges posed by climate change on coal and greenhouse gas emissions - a strategy outlined in our long-term mitigation scenarios, and the commitments that were made by President Zuma in Copenhagen, as well as those we made at the successful gathering of the 17th Conferences of Parties, Cop 17, that was held in Durban.

We are, therefore, pleased that the Cabinet has endorsed the decision to lift the moratorium so that we can embark on a process to verify the resource, which its technical recoverability has been estimated to being an amount of 485 trillion cubic feet of gas. A significant exploration has to be undertaken in the form of, amongst others, geophysical surveys and drillings.

It is worth stating that the hydraulic fracturing technique has been in use in the traditional oil and gas industry for more than 50 years. In the last 20 years, together with the practise of directional drilling, it has made the exploitation of shale gas resource more environmentally, technically and economically feasible.

The importance of this potential resource cannot be overemphasised, given the fact that Mossgas, now PetroSA, which is a gas-to-liquid facility in Mosselbay, was established only with the resource of one trillion cubic feet of gas. It is now a fact that this important strategy asset, in the hands of a democratic state, has brought life in this coastal city by employing, amongst others, 1600 people with a huge multiplier effect on the broader economy.

As government, we say to our critics that they should study the full impact of this resource, particularly given the impact of the possibility that lies ahead; even with a conservative estimate of 30 trillion cubic feet using the indicative price of US$4 per 1000 cubic feet of gas at an exchange rate of R8 per dollar. The gross value of this resource to us would be in the region of almost R1 trillion. This is over and above the balance of payment implications for our country.

Of importance are the economic benefits that our people expect from the resource beneath the soil. This is expressed in the various protests that occasionally take place in areas that are rich in resources where people expect localisation to take place.

The communities are clamouring to see the real benefit in terms of jobs and opportunities. If the resource is proven to be economically viable, and building on the lessons learnt, we will ensure that workers, communities and the country at large benefit. In the same vein, this will also benefit the broader economy, including the critical area of localisation.

The ANC has been raising the issue of localisation for decades. It is expressed sharply in the Freedom Charter and other policy documents of the movement.

As a democratic state, we will do everything possible to ensure that we listen to the views of the public, as mandated by the Cabinet. We will embark on public consultations with all interested and affected parties, in addition to the regulatory public consultations that usually accompany the environmental impact assessment process.

We are also mindful that South Africa has been awarded the right to host the SKA. Working together with the Ministry of Science and Technology, we will ensure that any exploitation of this resource coexists with this important science project.

You are well aware that the Mineral and Petroleum Resources Development Act of 2002 has rested the country's mineral resources in the hands of the state. Given the strategic nature of this potentially huge resource, the state will have to take a direct interest in this issue, on behalf of all South Africans. This should not be allowed to degenerate to a few politically connected people that would benefit from it.

I call upon all political parties that are represented in this House, to support the position that we have taken on this potentially divisive matter. We have to use our collective minds to deal with this subject in a manner that ensures that we take steps to reindustrialise our country, and diversify our energy mix, as outlined in the Integrated Resource Plan. We will act urgently, but responsibly, whilst protecting the environment, including our water resources.

If we do so, we will banish into the history the dire warning of V S Naipaul, a perennial Afro-pessimist, who once wrote as follows: The world is what it is... and those who are nothing will forever remain nothing.

Over nearly two decades, our history in South Africa has shown that we care. Those who seemed to be nothing are indeed everything.

History places us in a position to rewrite its course and proof our critics wrong. We have made a good start in South Africa. We can use this shale gas challenge to unite our country and forge a common vision of a truly successful nation.

I would like to inform this House and the South African public that the detailed report will be available on our departmental website at the end of this week.

May I conclude by saying that: May God bless all of us, in South Africa, as we embark on this journey. I thank you. [Applause.]




Tuesday, 18 September 2012 Take: 294

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"National Assembly Chamber Main",Unrevised Hansard,18 Sep 2012,"[Take-294] [National Assembly Chamber Main][NAC-Logger][nm].doc"


Starts 15:10:47.97

Mr J R B LORIMER: Madam Deputy Speaker, make no mistake, this government has a crisis of credibility over fracking. Many South Africans believe that the government will allow drilling only so that the ruling party or its cronies can get rich. They fear that the government will be making decisions about whether or not to allow fracking based on what is good for their bank balances and not on what is good for the country. But there is something the government can do to render that line of thinking without foundation.

There is a way to restore credibility: Firstly, make sure that no politicians, former politicians or companies are given any licences or permission to exploit gas reserves; [Applause.] and secondly, use gas as a way of changing the way South Africa goes about empowerment. When companies involved are asked to comply with the BEE requirements of the mining charter, stipulate that the only empowerment that will count will be empowerment schemes that benefit workers for the companies involved and local communities where the gas drilling is taking place. Madam Minister, that's real localisation.

If this is done, not only will the government be seen as credible, but you will do something good for the country. You will empower South Africans by giving them a stake in the industry. We can't continue to give more money to the already rich. If you want to know who they are, read the Sunday Times rich list and you will see those who are on the ANC's national executive committee, NEC. Whether this government changes empowerment in the way suggested will determine whether or not it truly wants to empower South Africans.

The credibility crisis has to some extent been addressed by the government's careful approach, the moratorium followed by what appears to be cautious and what we hope to be properly monitored exploration. Nothing is for free and hydraulic fracturing brings with it environmental risks. The process needs water and water is scarce in the Karoo; it produces water similar to acid mine drainage which could pollute aquifers and surface water; it will bring road traffic which will take a toll on roads and could cause dust; it uses chemicals which could pollute water supplies, but all of these are controllable if proper regulation is put in place and if the process is carefully evaluated, monitored and controlled.

Unfortunately, this government does not have a good record of controlling and monitoring mining. Many mining operations have been allowed to proceed while causing unacceptable damage to the environment. This must change. But one thing is for sure, things will never be the same again. The world of energy is undergoing a revolution. Five years ago, the world was thought to have gas reserves of 50 to 60 years. Now that estimate is 200 years and climbing because of new discoveries and new technology.

Gas, either from shale or from offshore deposits of our own or our neighbours' coastlines will be part of our energy mix in future. This could be an economic game changer for South Africa. It could bring us jobs, clean energy and it is cheap. But that must not come at the cost of an environment that is destroyed and livelihoods that are ruined. It is in this government's hands whether we win or lose from shale gas. The DA will be watching every step and driving responsible oversight regulation and enforcement. [Applause.]




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Mr N J J van R KOORNHOF: Madam Deputy Speaker, the lifting of the moratorium on shale gas exploration at this stage is a short-sighted decision and not in the best interest of the environment. Critics of the practice fear groundwater will be contaminated and local research has proven that groundwater contamination is a real threat.

We all know that some day the planet will reach peak fossil fuels. Not if, but when? What we know is that after the completion of fracking, the drilled holes will be sealed off, with no guarantees that it will not start to leak in the years to come and contaminate the water and the environment. If we allow fracking, if we believe that there will be no contamination of toxic waste after sealing holes, why do we not dispose of nuclear waste from Koeberg in these holes, if the sealing is so effective? This will never happen, but what is the difference?

Government has ignored the fact that fracking technology is banned in more than 155 jurisdictions around the world, where tens of millions of people who live have chosen to forego the economic benefits of fracking in favour of the environment where they raise their children, grow their crops and abstract their drinking water.

According to Barry Mackall of Eskom Solar, renewable energy should start to become cheaper than fossil fuels in 2015. Shell has acknowledged that it will take up to nine years to explore, and even longer for shale gas to become an energy source. We might be overtaken by time. There are real alternatives for fracking. Have we done enough studies on offshore gas, a resource that does not need fracking and can be available in three years?

Cope expresses concern about the way that the government has handled this, the secrecy around the technical task team that was appointed and the lack of consultation. We shall not support the process in its current format and we need more research to be done as well as proper consultation. [Applause.]




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Mr E J LUCAS: Madam Deputy Speaker, thank you Minister for the statement on shale gas. We take note that the Cabinet has also approved the report of the task team on shale gas. We also welcome the fact that there will be ongoing research. The IFP would like to be assured that the environmental issue will be an important part of this research. It is also clear that there will be development in the areas and job creation which is badly needed and will certainly follow.

Energy is an important part of South Africa's future, the price of crude oil and electricity has increased drastically. We all acknowledge that gas is important to our energy requirement; it is also a cleaner form of energy. This will certainly reduce the dependence on coal. The IFP has invited experts to our caucus to give us information on shale gas. I must say that it was very encouraging. It will also be important for the Portfolio Committee on Mining to be kept informed.

Minister, we will be following the process closely in order to make an informed decision at the end of the day. We also appreciate the fact that only normal exploration will take place until we are satisfied that we can deal with the consequences of hydraulic fracturing. Thank you. [Applause.]




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Adv A de W ALBERTS: Adjunkvoorsitter, Suid-Afrika staar vele uitdagings in die gesig. Dit is inderdaad so dat skaliegas-ontginning 'n enorme ekonomiese dividend kan lewer, maar teen watter ekologiese en morele prys, vra ons. Suid-Afrika is 'n waterskaarsland. Selfs sonder die impak van hidrouliese splyting sal die land op die laaste teen 2025 'n waterskaarste in die gesig staar. Ons sal dus al hoe meer aangewese wees op ondergrondse water.


It is therefore quite disconcerting that there is empirical proof from studies done in Dimrock, Pennsylvania and Pavillion, Wyoming - that fracking contaminates groundwater aquifers. Furthermore, in America it has been shown repeatedly that the volumes of water demanded by the fracking industry create an artificial drought for the agricultural industry.

Now, with regard to the ANC's inability to provide even basic services, how can one trust it to oversee such a fragile exercise? Further noting that the ANC already has numerous entities connected to it ready to jump at the economic opportunity fracking brings makes one wonder if this option is truly designed to benefit all South Africans or only certain connected cadres.


Dus, totdat die ANC kan wys dat hy hidrouliese splyting kan bestuur met 'n 100% waarborg dat geen ekologiese skade sal plaasvind nie en dat die ANC en sy vriende nie alleen hieruit gaan voordeel trek nie, sal die VF Plus nie hidrouliese splyting in die Karoo steun nie.

English: [15:19:22]

The onus is on you to prove us wrong, but history is against you.




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Mrs C DUDLEY: Deputy Speaker, the ACDP is concerned about the decision to go ahead with exploration for shale gas, utilising the controversial system of hydraulic fracturing in the water scarce region of the Karoo was not open to sufficient public scrutiny and comment. Mining issues are particularly sensitive right now and South Africans are in no mood to be ignored by government.

We know there is an expectation that if gas is found there will be huge benefits for South Africa as a whole and the ACDP recognises that potential benefits in terms of job creation, cheaper energy and increased government revenue exist. But those who strongly oppose fracking say that water resources, the environment and agricultural productivity will be compromised.

The ACDP is not convinced that these risks have been fully investigated and considered seriously enough. We would also like to know more about the realities in – not just countries - but communities where fracking is presently taking place. Thank you.




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Mr I S MFUNDISI: Madam Deputy Speaker, hon members, noting what the hon Minister has said, the UCDP approaches this matter with great circumspection. South Africa has a problem of subterranean water already and it is common knowledge that shale gas extraction requires significant amounts of water. It is reported that to carry out fracturing operations on a six well pad takes between 54 and 174 million litres of water and that impacts on climate change and exacerbates the problem.

The noise caused by the traffic at the construction of each well will require between 4 300 to 6 500 trucks. This will have an impact on roads and traffic in the locality of the shale gas. During fracking millions of litres of water, sand and numerous chemicals -most of which are toxic - are pumped into boreholes at high pressure to release natural gas trapped in layers of underground rock.

In the USA, where fracking has been used extensively, there are hundreds of documented cases of this process resulting in catastrophic pollution of drinking water; air pollution; health concerns for humans and animals. The envisaged area for fracking is already extremely water-stressed and cannot afford any water to be either wasted or contaminated by fracking processes. We are concerned, to what extent as the Minister indicated, does the Square Kilometre Array, SKA, which is host jointly with Australia, will be affected.

Perhaps, government can take advice from an expert, Esme Senekal, who said:

This is the last piece of holy nature in this country. No money is worth this. You can't replace pristine nature with money.

If only government could, please also take note of this, in terms of all what has been said. I thank you.

Mr M F GONA / JN (Eng)/ Mia (Afr)///tfm/// END OF TAKE



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Mr M F GONA: Hon Deputy Speaker, we would like to thank the Minister for the statement made on this very important subject matter. [Interjections.] The ANC supports the Cabinet decision to lift the moratorium on the exploration for the existence and the extent of shale gas resources in the Karoo Basin. We are basing our support on three principles: firstly, that the country is pursuing a clear policy on energy mix that includes fossil fuels, gas renewables and other clean energy technologies; secondly and very importantly, that the people of the Karoo Basin are trapped in abject poverty and high levels of unemployment, which we will discuss later in this input; and, thirdly, that the concerns of the water table and possible contamination of drinking water, as well as degradation of the environment by the process of fracturing are adequately addressed through the stringent conditions imposed at the lifting of the moratorium by the Cabinet, as alluded to by the hon Minister.

To further substantiate our view, we will quote both from the historic and future plans such as the National Development Plan that-

... the South African economy is well endowed with mineral resources, with large global shares in platinum group metals, gold, diamonds, manganese, coal, iron ore and uranium. Yet, over the past decade, the mining sector has failed to match the global growth trend in mineral exports due to poor infrastructure and regulatory and policy frameworks that hamper investment. South Africa can benefit greatly from Asia's growing demand for commodities. To do so means improving water transport and energy infrastructure and providing greater policy and regulatory certainty to investors. This will enable the mining sector to deploy the skills, resources, know-how and capital that are available and for government to raise much more tax revenue than it does at present.

The above quote highlights the importance of energy in the economic development of the country. South Africa is currently heavily reliant on coal for its energy sources. In acknowledgement of this fact, government undertook to explore other energy sources so as to achieve the high energy mix. The 1998 White Paper on the Energy Policy of the Republic of South Africa committed the government to ensuring the optimal and environmentally sustainable exploration and development of the country's natural oil and gas resources for the benefit of all. The successful exploitation of these natural resources would contribute to the growth of the economy and relieve pressure on the balance of payments as South Africa is currently importing a larger percentage of crude oil and natural gas.

The government would perform regulatory and promotional functions in respect of oil and gas exploration and production through entities which have clearly defined roles. The Petroleum Agency of South Africa, Pasa, was established for this purpose. In May 2011, government placed a moratorium on applications for rights to explore for shale gas in the Karoo until it had formulated a policy, as the Minister had alluded to here. Hydraulic fracturing, which others referred to with a derogatory term, "fracking," is a process that was outlined here by the Minister.

The shale gas reserves in the Karoo are estimated to be around 485 trillion cubic feet which would make it the fifth largest shale gas field in the world. It is estimated that shale gas opportunity in the southern Karoo could add a substantive amount to the gross domestic product, GDP, annually and create much needed sustainable jobs, especially in that depressed an area such as the Karoo Basin. For example, Mossgas in Mossel Bay was established on the basis of only 30 trillion cubic feet shale gas resources and created about 1 600 jobs. It could also ensure South Africa's energy security, according to an Econometrix report. The study by Econometrix also found that successful exploration of shale gas in the Karoo Basin would lead to increased government revenues. The study found that large scale development of shale gas could ease the energy deficit, making it cheaper for South Africa to grow in the future and reduce imports of gas and electricity. Consumers would also benefit from more reliable and affordable energy.

Shale gas is a natural gas that is present in shale formations deep underground and has wide-ranging industrial and commercial uses as well as being suitable for electricity generation. Shale gas can be converted into liquid fuel, be used as transport fuel with minimal adjustments to existing engines, and it may be used to provide energy necessary in manufacturing fertiliser products.

The successful exploration of shale gas in the Karoo will come as a relief to the district which has the highest number of people living in poverty. You must listen to this, hon member from the FF Plus. In the Western Cape, the Central Karoo alone is at a poverty level of 32,5%, followed by the West Coast at 30,4% and Overberg at 29,6%. The rate of unemployment in the Central Karoo is staggering, hon Koornhof from Cope, at 30,8%. Moreover, the number of indigent households is at 5 903, and it is growing. These are the factors that we must take into account when we take policy decisions. Regarding the Human Development Index, that which quantifies the extent of human development of a community, of all districts in the Western Cape, Central Karoo, once more, is the lowest, standing at 0,60. This poses a huge challenge to the district to create more employment opportunities to improve the standard of living in the area. Life expectancy is shown to be low due to high mortality stemming from the disease of poverty.

However, we agree that there are environmental concerns associated with hydraulic fracturing. These environmental concerns can be mitigated through efficient regulations. The Working Group of the Task Team on Shale Gas and Hydraulic Fracturing made very clear recommendations, as the Minister articulated here, to the Minister of Mineral Resources.

In view of the above, a balance has to be reached between environmental concerns and economic benefits that can be derived from the exploitation of shale gas reserves. This balance can be achieved through an efficient regulatory framework that addresses environmental concerns, while addressing the challenges of poverty and unemployment. We stand at the beginning of a new era, one in which we have the opportunity to reduce our carbon emissions and reliance on fossil fuels and to meet both our national and international commitments but also honour what we undertook at Cop 17 in December 2011. Therefore the ANC reaffirms its support for the lifting of this moratorium and the responsible decisions that have been taken.

Hon Lorimer, on the question of credibility, when we look at the exploitation of this reserve and the whole question of cronies, we must just understand that for the fact that people belong to a particular organisation, in this instance, the ruling party called the ANC does not exclude them from business opportunities that do arise. [Interjections.] They have equal standing and the same opportunity as all other citizens in South Africa. I am sure, if we can conduct an audit, I don't know how much we can uncover on this side of my hand, in terms of business connections and business ventures that you are undertaking. [Interjections.] Thank you very much.

Debate concluded.



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