Karoo shale would create fewer jobs than farming or tourism, official report shows

Development of commercially viable shale gas in the Karoo would generate far fewer new energy jobs than the 100,000 people currently engaged in farming, or the 5,000-10,000 in tourism in the region, Wits University professor Bob Scholes said on Friday.

Scholes was addressing a breakfast hosted by the Department of Trade and Industry and the South African Oil and Gas Alliance on the strategic environmental assessment (SEA) for shale gas development in SA, which was completed a week ago.

The report was commissioned by Parliament to respond to all 18 major areas of concern raised by stakeholders, from water scarcity in the area to economic spin-offs.

Scholes said this type of full assessment was not always appropriate but it was worth spending R10m-12m on it because of the broad effects of shale gas development in the Karoo.

Shale gas, and its extraction method called fracking, has generated a highly emotional and polarised debate and the purpose of the SEA was to present the various options and consequences of those options to support decision-making.

He emphasised that the decisions on whether to go ahead with shale gas exploitation did not lie only with government but also the private sector, which would provide the capital and technical expertise.

He said the report was unlikely to prompt a "yes" or "no" decision.

There were many steps along the path, and at various points the government had other choices to make. For example, shale gas could be developed in some areas and not others, or developed within certain restrictions.

Shale gas would not be a "game changer" for SA, unless the oil price was about twice the current level, he said.

Other benefits would result, like foreign exchange earnings and energy security, but those were not game changers.

The number of indirect jobs a shale gas industry would create in downstream industries was hard to assess. Obviously there would be an effect, he said, but farming and tourism also created indirect jobs.

Scholes said the study’s three scenarios were firstly a 10-year exploration phase, which, if successful, could lead to development. If at least 5-trillion cubic feet of commercially viable gas were found, it could be enough to justify proceeding to the next phase. If 20-trillion cubic feet were found, it would lead to a "big gas" scenario, which would include a petrochemical industry.

Scholes said water scarcity was such a big factor in the Karoo that any shale gas development would require finding another source of fluid.

This might come from saline deep water resources, or from water brought in from outside.

The Karoo was also an area of high biodiversity and important palaeontology, but an integrated environmental assessment plan would present ways to preserve these treasures.

The climate-change advantage of shale gas exploitation was quite small, he said, as it would take a long time to replace coal, and only a small methane leakage would cancel out shale gas’s advantages over coal mining.

Although the Karoo was presented as a healthy environment, in fact as a result of poverty its residents were less healthy than in other parts of the country. Shale gas exploitation would probably improve health because it would increase residents’ access to facilities.

In response to the fears that fracking would increase seismic activity, he said it has been shown to increase the magnitude of earth tremors but was very unlikely to create an earthquake. The Karoo is a seismically stable area.

One of the other widespread objections to shale gas was that it would destroy the "sense of place" in the Karoo. Scholes said this was very difficult, though not impossible, to assess. It was a values-based argument and the researchers did not have the necessary tools.

Scholes said existing seismic surveys of shale gas were quite sparse and insufficient to show where the resource might be.

Investment decisions would be made only after three-dimensional seismic studies and stratographic drilling, which was expensive.

That would be followed by a test well, which was "eye-wateringly expensive".