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South Africa looks to shale gas future

Shell one of the early examiners of gas potential in a country plagued by an electricity crisis.
By Daniel J. Graeber Follow @dan_graeber Contact the Author   |   March 8, 2016 at 8:47 AM
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PRETORIA, South Africa, March 8 (UPI) -- The South African government said Tuesday it was expecting to reap the rewards of shale natural gas, with exploration slated as early as 2017.

Royal Dutch Shell is among the early entrants into the South African shale sector, reviewing the prospects for gas in the country's Karoo basin.

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South African Minister of Rural Development and Land Reform Gugile Nkwinti told government officials in Pretoria shale gas exploration presents a real opportunity for economic growth in the country.

"Exploration activities are scheduled to commence in the next financial year," he said in a statement. "This will lead to excellent prospects for beneficiation and add value to our mineral wealth."

The International Monetary Fund last year warned an electricity crisis in the country was growing more severe as the economy experienced only muted recovery. The downturn in crude oil prices meant trade terms were improving for South Africa, but electricity constraints and uncertainty meant the prospects for growth were pessimistic.

"The development of the energy sector is key to easing the constraints to growth," the minister said in his address.

With the country relying on coal for about 90 percent of its electricity generation, Shell said natural gas may offer a safe and less carbon-intensive solution to its woes.

Shell has applied for exploration licenses in the country, though South African regulators only recently moved forward with shale gas regulations. The Dutch company said it commissioned a study that found a conservative estimate of 50 trillion cubic feet of potential shale gas, against an estimate from the U.S. Energy Information Administration of 485 trillion cubic feet.

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