Honourable Speaker,
Honourable Members,
Fellow South Africans,
May I begin by thanking you for affording me this rare opportunity to inform this House about a subject so crucial to the future of our country. This subject relates to the potential occurrence of a world class shale gas deposit estimated to be the fifth largest in the world. As the potential was brought to our attention, we needed to understand implications of developing this resource.
I accordingly instituted, in February 2011, a moratorium on the acceptance and processing of new applications involving hydraulic fracturing. It is now history that Cabinet subsequently endorsed the moratorium on the processing of these applications. That was both responsible and cautionary.
Against this background, I should like to appraise this House about the critically important decision of Cabinet to approve the report of the Task Team on Shale Gas, and the subsequent decision to lift the moratorium on the processing of applications for exploration in the Karoo, well known for its vast plains and tender lamb.
- Cabinet decided (on 21 August) that only normal exploration will take place until we have put in place a proper and relevant regulatory framework and until we are satisfied that we can deal adequately with the consequences 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, controls and co-ordination systems is expected to take six to twelve months. Hydraulic fracturing - when and if it eventually happens - 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 on-going research, facilitated by relevant institutions, to develop and enhance scientific knowledge. This includes, albeit not limited to, geo-hydrology of the prospective areas, methodologies for hydraulic fracturing in South Africa and environmental impacts.
- Cabinet decided that actions to give effect to these recommendations must be properly resourced, incorporated into the programmes of the relevant departments and agencies; and capacity developed.
The Karoo is indeed a delicate place. And this is a delicate subject. It is a place where there are competing economic and other interests covering a diverse area such as farming; the site for SKA; uranium reserves; 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 Honourable Members that the Government is approaching this subject with the utmost 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 elect public representatives to make laws to foster development, ensure that jobs are created, and 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 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 the search for sources of energy, while, indeed, virtually the entire world is grappling with energy security and energy independence.
We are living in an era of globalisation, taking place at lightning speed. As John Donne said centuries ago: “No man is an island complete unto himself”. This has never been more true than now.
So people may understandably ask why Cabinet endorsed a decision to suspend the issuing of shale exploration licences 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, even as we took the decision - which we mark in this statement today, those divisions have not disappeared. The role of government is to seek middle ground in the interests of our country.
We have dealt with this matter in the best possible way. We established a Task Team to evaluate the use of hydraulic fracturing technique in the extraction of shale gas comprising representatives from the departments of Environmental Affairs and Water Affairs, Science and Technology, Energy, Mineral Resources, the Petroleum Agency of South Africa (PASA), Council for Geoscience, SKA South Africa, Water Research Commission and ESKOM.
The Task Team in turn appointed a working group of experts which brought on board technical advisors and academics from the University of the Free State and University of the Western Cape which served as a reference group.
This team was tasked with evaluating the potential environmental risks posed by the use of hydraulic fracturing as a method of extracting shale gas as well as the negative and positive 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 mature regulatory frameworks in this field, namely Pennsylvania and Texas. They also visited the Environmental Protection Agency and the Railroad Commission of Texas, both US regulatory organisations 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 have the benefit of actual exploration, we needed to respond to and study the concerns that are being raised by various interest groups.
In my meeting with political parties represented in this House last week, I briefed them about the report of the task team and its findings.
We all know what happened in 2008 when we experienced load shedding. We know all about being exposed to Eskom’s power alert every night as we all are told to save electricity because demand outstrips our supply.
We all know about the binding constraints to growth, a central feature being the paucity of energy. The country’s integrated resource plan (IRP) 2010 has an initial provision for 2400 megawatts from gas, which sources have not been identified. This offers us the possibility to close that gap.
As government, we have taken a position to reduce the country’s over-dependence on coal thereby addressing the challenges posed by climate change and greenhouse gas emissions – a strategy outlined in our long term mitigation scenarios and the commitments made by President Zuma in Copenhagen as well as those we made at the successful Durban Cop 17 gathering
We are therefore pleased that Cabinet has endorsed the decision to lift the moratorium so that we can embark on a process to verify the resource whose technical recoverability has been estimated to be 485 trillion cubic feet of gas. Significant exploration still has to be undertaken in the form of amongst others, geophysical surveys and drilling.
Honourable Members, it is worth re-stating that the hydraulic fracturing technique has been used in the traditional oil and gas industry for more than 50 years and, in the last 20 years, together with the practice of directional drilling, has made the exploitation of shale gas resources more environmentally, technically and economically feasible.
The importance of this potential resource cannot be over-emphasised given the fact that Mossgas, now Petro-SA gas-to-liquids facilities in Mossel Bay, was established only with the resource of 1 trillion cubic feet of gas. It is now a fact that this important strategic asset in the hands of the democratic state has brought life in this coastal city by employing almost 1 600 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 possibilities that lie ahead. Even with a conservative estimate of 30 Trillion cubic feet (tcf), using the indicative pricing of US$4 per thousand 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 resources beneath the soil. This is expressed in various protests that occasionally take place in areas rich in resources where people expect localisation to take place.
The communities are clamouring to see the real benefits 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.
My organisation, the ANC, has been raising this issue of localisation for decades. It is expressed sharply in the Freedom Charter and in 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 Cabinet, we will embark on public consultation with all interested and affected parties in addition to the regulatory public consultation that usually accompanies the EIA processes.
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 co-exists with this important scientific project.
Hon members, you are all aware that the MPRDA has vested 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 - and this should not be allowed to degenerate into a few politically connected people benefiting from this.
I call on all political parties represented in this House to support the position that we have taken on this potentially divisive matter. We have to use our collective might to deal with this subject in a manner that ensures that we take steps to re-industrialise our country, and diversify our energy mix as outlined in the IRP. We will act urgently, but responsibly, whilst protecting the environment including our water resources.
If we do so we will banish into history the dire warning of VS Naupal – that perennial Afro-pessimist, who once wrote “the world is what it is and those who are nothing will forever remain nothing”. Our history in South Africa over nearly two decades has shown that we care. Those who seem to be nothing are, indeed, everything.
History places us in a position to re-write its course and prove 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 is now available on the Departmental website by end of this week.
May God bless all South Africans as we embark on this journey.
I thank you
