20 minute read
Oil and gas
A maritime cluster will help to create focus in the energy sector.
The Mossgas facility at Mossel Bay could be revived if feedstock in the form of gas is delivered from new discoveries. Credit: PASA
The Western Cape Maritime Cluster has been established by private companies and is supported by the government of the Netherlands and the Western Cape Department of Economic Development and Tourism.
The group is planning to strengthen the industry by focussing on an integrated approach. Regional steering committees for Saldanha Bay on the west coast and Mossel Bay on the east coast have been set up. There are nine focus areas for the cluster, including energy (offshore), logistics and shipping, marine services and metal and machine-working (shipbuilding, marine equipment).
The Saldanha Bay Industrial Development Zone Licensing Company (SBIDZ-LC) has announced the start of phase one of the development of the main infrastructure of the IDZ. Located within the southern hemisphere’s deepest and biggest natural port, the company will spend R3.5-billion on developing 356ha of space to enable the port to offer a wider variety of services. A floating dock, ship-lift facilities and marine service jetties will be among the new services created.
Ultimately, the seven-part development plan will see the SBIDZ become a South African Freeport, a Special Economic Zone and customs-controlled area within a port, dedicated to the oil, gas and marine sector. The three main exploration and production customer groups being targeted are: Drilling companies: Office space, warehousing, logistical facilities and support services. Petroleum companies: Office and warehousing space for an operational base close to active fields. Oilfield service companies: 24-hour operational nodes along the coast, in the form of office spaces and warehousing bases. In sites such as Offshore Supply Bases [OSSBs] and/or quaysides for supply and re-fuelling purpose.
The SBIDZ-LC has established the Saldanha Bay Innovation Campus which aims to promote collaboration between academic institutions, industry, government and the local community specific to marine and energy research, development and innovation. It also intends supporting entrepreneurs and new ventures through incubation and acceleration programmes.
In 2019 Total and its partners created a stir with the announcement that gas condensate had been found at a site called Brulpadda off the coast of Mossel Bay. In 2020, the nearby Luiperd prospect in Block 11B/12B delivered more exciting news.
The block, in the Outeniqua Basin 175km off the southern coast, covers an area of about 19 000km². The exploration
SECTOR INSIGHT R3.5-billion is to be spent on the first phase of the Saldanha Bay Industrial Development Zone.
was done by the semi-submersible rig Deepsea Stavanger, which journeyed twice from Norway to lead the exploration projects.
The two finds raise the odds of Total investing in what it calls a “world-class” offshore gas site. The drilling campaign employed 195 South Africans with specialist skills but the potential spinoff is enormous for the Western Cape and South Africa, if the find leads to drilling and commercialisation.
If Total goes ahead, the PetroSA GTL refinery at Mossel Bay (Mossgas) could be revived and the idea of creating a gas market in South Africa would get a massive boost. Commissioned in 1992 as the world’s first gas-to-liquids (GTL) refinery, Mossgas was due to close in 2020, because, as President Ramaphosa announced, it had practically run out of feedstock. PetroSA is South Africa’s national oil company.
Petroleum Agency SA (PASA), which encourages exploration and regulates the oil and gas industry, has noted the significance of international oil companies committing to exploration off South Africa’s coast. Increased confidence by such companies can only lead to growth in the industry, and with the massive gas finds in the Rovuma Basin off Mozambique in 2020, there are sure to be more companies interested in South Africa’s potential. In addition to adjudicating on coastal fields, the agency has awarded coalbedmethane-gas exploration rights in KwaZulu-Natal and natural gas exploration permits in the Free State.
Natural gas lies also lies offshore to the west of South Africa in the Atlantic Ocean (Ibhubesi). Block 2A of the Ibhubesi gas field northwest of Saldanha is estimated to have reserves of 850-billion cubic feet of gas.
The Western Cape’s status as an oil and gas hub has been enhanced with the opening of an open-access liquefied petroleum gas (LPG) import and storage terminal at Saldanha Bay.
Oil
Cape Town’s oil refinery changed hands in 2018 when Off The Shelf Investments (OTS) completed a $973-million purchase of Chevron’s downstream assets in South Africa. Chevron has been rebranded as Astron, but the Caltex service-station brand has been retained. OTS is the Black Economic Empowerment (BEE) partner of mining giant Glencore, who financed the deal.
The refinery in Milnerton produces petrol, diesel, jet fuel and liquefied gas for the Western Cape and for export to other African countries. The Western Cape spends R76billion annually on crude oil imports and exports refined petroleum to the value of R13.2-billion.
Large quantities of oil are transported around the Cape of Good Hope every year: 32.2% of West Africa’s oil and 23.7% of oil emanating from the Middle East. Problems in the container ship market have caused some stress in the local sector but the long-term prospects for shipping and oil and gas are still strong enough for national government to pursue Operation Phakisa (which includes a strong maritime economy push) and for Transnet National Ports Authority to spend heavily on upgrading the nation’s ports.
The Bergun terminal, comprising 12 tanks located on the Eastern Mole of the Port of Cape Town, has added to the port’s fuel storage capacity and is connected by pipeline to the Astron refinery.
The Council for Geoscience (CGS) is doing an intensive study of South Africa’s potential shale gas resources in the Karoo area around Beaufort West and the report is expected to be released in 2022. The major economic sectors using gas are the metals sector and the chemical, pulp and paper sector. Brick and glass manufacturers are also big consumers. ■
ONLINE RESOURCES
Petroleum Agency South Africa: www.petroleumagencysa.com Saldanha Bay Industrial Development Zone: www.sbidz.co.za South African Oil and Gas Alliance: www.saoga.org.za Western Cape Maritime Cluster: wcmc.org.za
Massive offshore gas finds could put South Africa on the path to net zero
Gas has the ability to boost the national economy and to help the country make a just transition towards cleaner energy, argues PASA CEO Dr Phindile Masangane.
Today the biggest threat to humanity is climate change and the biggest threat to South Africa’s social stability is the high unemployment rate, which has primarily been caused by economic stagnation.
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 effect of greenhouse gas emissions on the environment has 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 South Africa has contributed 1% to global emissions. This is by no measure insignificant, and as a responsible global citizen South Africa 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 most carbon-intensive, and South Africa therefore has a relatively high carbonintensive economy, contributing about 1% of annual global greenhouse gas emissions.
Discoveries in Outeniqua basin 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 gas discoveries in the Outeniqua basin off the south coast of the country are the biggest petroleum discoveries made in South Africa.
The development of these discoveries has the potential to replace more than 2 300MW of diesel-fired electricity generation in Gourikwa, Dedisa and Ankerlig, thereby reducing the carbon emissions from these plants by more than 50% while eliminating sulphur oxide and nitrogen oxide emissions, which are also harmful to the environment. Gas is therefore an obvious bridge to a lower carbon future in South Africa.
Importantly, these gas discoveries could restore the gas-to-liquid refinery in Mossel Bay to full production and profitability, saving about 1 200 direct jobs. A complete shutdown and abandonment of this refinery would not only lead to job losses at the refinery, but the effects would reverberate throughout the town of Mossel Bay and the Southern Cape region, since the refinery contributes about R2-billion a year, or 26% of the Mossel Bay economy, and 6% to the Southern Cape economy when producing at full capacity.
The Petroleum Agency South Africa 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 South Africa’s economic recovery.
These discoveries could indeed support both the country’s economic recovery and its transition to a clean energy future. ■ The Stavanger oil rig has passed Cape Point several times on its way to making discoveries off Mossel Bay. Credit: Anton Swanepoel
VALUE STATEMENT Petroleum Agency SA aspires to be a world class organisation, committed to: • Professional excellence • Integrity • Direct, open, consultative communication • Transparency • Respect • Teamwork • Active regard for our natural environment • Corporate social responsibility in an empowering, vibrant workplace where diversity is valued.
MISSION To promote, facilitate and regulate exploration and sustainable development of oil and gas contributing to energy security in South Africa.
VISION A diverse upstream industry contributing to energy security through sustainable growth in exploration and development of oil and gas.
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Council for Geoscience CEO Mosa Mabuza believes that shale gas could Finding new ways ofhave a huge impact on the national fiscus and that the marine economy holds great potential. reducing and reusing carbon
What is the status of the exploration for gas in the Karoo? The geo-environmental baseline study for gas in Beaufort Council for Geoscience CEO, Mosa Mabuza, is excited about new research on
West has been completed and the report is being written. We carbon capture and is intent on expanding his organisation’s relevance to the South African economy. had a plan to drill up to 3 500m but we reached technical limits at 2 978m. We intercepted a huge white hill formation which is the shale horizon that contains shale gas. Shale is a geological formation and in that there is gas. Methane is present and other forms of gas as well. We have taken a lot of samples and they are being analysed. It is important to note that ours was an environmental baseline How will the Council for Geoscience (CGS) carbon capture and the storage project in Mpumalanga expand South Africa’s energy mix and decrease the country’s carbon footprint? study, not an economic model. You can’t do an economic model from We abbreviated the project to CCUS: Carbon Capture for the two Cs, U one hole but you can extract information. It will give you an idea of for utilisation, storage as the last stage. Once the carbon is captured it has what is there, so this will be taken to cabinet in the course of 2022. numerous applications. Not only would you be able to reduce the carbon content that is emitted into our climate, but you can also apply it in fertiliser What is the background to this study? manufacturing and in a number of other applications. Mosa Mabuza, CEO In the 1960s Soekor (the government-owned exploration We see it as a scientific intervention that gets us as a country to breathe company) drilled a number of boreholes but they were looking for oil, not gas. They took samples for storage to the Council for Geoscience and we have kept them very well. We were visited by life into the climate mitigation measures, in terms of the international climate protocol that we have committed to. If the science is proven, an energy geologist from the US just before 2010 who had a look not only will South Africa meet but it will go far beyond the minimum at these rocks and he was very excited. The president announced commitments that we have made as a country. BIOGRAPHY at the State of the Nation address in 2010 that shale gas may be a But we’ve got to let the science take place, we’ve got to let the pilot game-changer for South Africa. We received applications from the big gas companies but society revolted. “Don’t frack in my backyard.” At the time I was in the Department of Mineral Resources responsible for policy formulation. We started engaging with these communities and the then minister placed a moratorium on processing of those After qualifying as a geologist from Wits University, Mosa held various positions at De Beers and Anglo American and worked in jurisdictions as varied as West Africa and project prove that indeed, it is a sensible scientific intervention, that the economics make sense, that science and the intentions are met. Only once we have proven all of those three attributes, would we be confident enough to say that, indeed, we can continue. We think that, if it is proven, then coal can continue to play a critical role in our energy mix. Mosa Mabuza, CEO Canada. From his appointment as applications and instituted a team of technocrats including CGS, PASA, CSIR, the Department of Science and Technology the Director of Mineral Economics Is this pilot at one site or is it multiple sites? at the time and departments responsible for water, energy and in the former Department of MinerThe first one is on one site. We have chosen a pilot very close to the major environmental affairs. Our brief was to engage with communities.als and Energy, he was promoted to emission sites in Mpumalanga where there is a higher concentration of BIOGRAPHY I led that process, and we engaged with community members Deputy Director-General of Mineral power stations, as well as the Sasol plant. If we get that right we can across many areas in the Karoo. The biggest concern then was Policies and (Investment) Promotion have our contribution to carbon pollution reduced by between 60% in 2012. He has been CEO of CGS since 2017. and 80%. After qualifying as a geologist from Wits University, Mosa held various positions that the decision was being taken without a scientific base. I said, “Good shot.” We went back to the minister and said we think that at De Beers and Anglo American and What are the other priorities of the CGS in Mpumalanga? WESTERN CAPE BUSINESS 2022 30worked in jurisdictions as varied as The CGS mandate is that we are the custodians of geoscientific information West Africa and Canada. From his and knowledge in the country so we have quite a number of programmes in appointment as the Director of Mineral Mpumalanga. One of them which is really very exciting and is at an advanced Economics in the former Department stage of development is the passive treatment of polluted water. This is getting
you will gain trust if you remove the politics and invest in the science to do the research.
People were concerned about water safety, a legitimate concern. The second concern was environmental pollution: what measures are you going to put in place to secure the environment? We could not provide answers at that time. While we were busy developing regulations based on other jurisdictions that were extracting shale gas as a benchmark, we did not have anything that was specific to South Africa, so the CGS was tasked to do this environmental baseline study.
We needed to characterise shallow groundwater and establish what it would take to protect the water in those aquifers in the event that we were to proceed with shale gas extraction. We now have an answer to that question.
The second question was, do we have gas? We have got gas. How much is still to be determined.
Do you have an idea of the volume? If you look at our balance of payments, I think the largest chunk of it is the importation of crude oil. If we have the amount of shale gas that we think we have, this may have a huge impact on our national fiscus.
Mossgas was opened on a motivation of one trillion cubic feet. The original projections in the Karoo were that we have 490tcf, a figure in which I don’t have much confidence. But even if we had 20tcf, can you imagine what impact that would have?
What new projects is CGS involved in? There was a huge excitement around 2013/14 with announcements being made around Operation Phakisa and the Blue Economy. This opened our eyes to a whole frontier economy right under our noses which we have not exploited optimally. There is some fishing, we have our ports and there was some excitement around petroleum exploration recently, but we have not even begun to look at the marine prospects.
There is limited geological information so we have put together a very aggressive plan to map offshore. We have struck a partnership with the navy so that we can have a collaboration to leverage their vessels to fast-track the mapping. While they are moving around doing their work our gadgets will be mounted on their boats. That will help us to accelerate the mapping and help us to catch up.
And you have your own vessel? We have recently launched one, but it is a small one that is only to do work near-shore in the interim. We have named it RV Nkosi after a world-class mineral separation technician who worked for CGS and who passed away in 2019. Research Vessel (R/V) Nkosi.
Our team has been collecting data and this year’s weather has been much better than last year. I am comfortable with how it is going.
Drilling for information near Beaufort West. A geoenvironmental baseline study for gas in the Karoo has been completed and the report is being compiled.
Are there other projects relevant to the Western Cape? We are looking at numerous things, including geotourism. There is outstanding geoscience here. Our
The borehole cores of the Karoo Supergroup in the Karoo Deep Drilling site in Beaufort West.
teams are making major discoveries of fossils and there are fantastic stories to tell. We will take those stories to the authorities in the Western Cape so that they can think about how to make it part of the tourism package.
We are also looking at the mineral potential in the Western Cape.
Can the council play a role in climate change mitigation? One of the things that almost made my heart stop was when Cape Town was heading for “Day Zero” of water supply. That would have been a national disaster. With these things you have to work on them well in advance, outside of the political cloud. We scientists don’t like that space.
How does geoscience and Day Zero come together? We are looking at characterising the aquifers quietly and understanding them and their potential. Then we can take information to the water authorities and the infrastructure authorities. To municipal and provincial authorities we can say, this is how you can complement your infrastructure to make it better. decisions for authorities, we can only come to you and say Minister, MEC, Your Worship, we have done this work and here is what it says and these are the options that you have. You can’t just sit on your hands while the community is in danger.
What is land susceptibility mapping? If we do a study of a stretch of land today, not when it rains, we can give a report to authorities telling them either not to develop in a particular place, or if they do, then to make sure to reinforce the infrastructure in that area. We are also doing work on tsunami early-warning detection in support of the Koeberg power station.
We want to characterise any faults and understand them properly. There is a huge fault structure that goes over Table Mountain. It can lie dormant for 100 years, which is a short time in geological terms, and a fault stretches a long way. If something happens at a distance it might reactivate the fault and when it does then our study comes into play. The affected municipality will know the risks upfront.
How many staff does CGS have in its Bellville office? We have a staff of 35.
To give people the information they need to make policy? To make developmental decisions. Our job is to use the science as a basis for informed policy and human development choices. However, we don’t make The Council for Geoscience runs a variety of programmes such as testing for air quality and asbestos residue in soils.
What are their main fields of work? They work in a wide variety of disciplines, including geoscience mapping (onshore and offshore), palaeontology, geophysics, remote sensing, economic geology, marine geoscience and engineering geology.
What potential for mineral discoveries are being made in the province? We see potential in industrial minerals, some precious and critical minerals and various energy-linked minerals. These are still being characterised and evaluated. The Western Cape was the site of the launch of the RV Nkosi in 2021. The Council for Geoscience’s vessel is named after a renowned mineralseparation technician who passed away in 2019. The project to map the oceans is in support of the national Blue Economy programme.
How does the brief of the CGS fit into national priorities? The Council for Geoscience undertakes activities of national strategic importance that support government programmes such as the NDP 2030 (Economy and Employment, Economic Infrastructure, Inclusive Rural Economy focus areas), the New Growth Path and the Integrated Resource Plan, which seek to eradicate poverty, to promote the creation of employment, energy security, diversification of the economy, including the promotion of the green economy and to promote growth by identifying six priority sectors focussed on infrastructure and rebuilding the productive sectors of the economy, including mining. ■
