Unconventional growth

Nov. 6, 2017
Unconventional resource growth has predominantly been a North American phenomenon, but with China and Argentina now producing oil and gas from shale, the unconventional market has taken on the "international" moniker.

Tayvis Dunnahoe

Exploration Editor

Unconventional resource growth has predominantly been a North American phenomenon, but with China and Argentina now producing oil and gas from shale, the unconventional market has taken on the "international" moniker. Europe, Australia, and Africa each have potential to join Asia and South America in the continued development of unconventional reserves.

Many regions have announced in recent years an abundance of shale resources in the hopes of increasing, or initiating new in some cases, domestic resources.

Technical expertise and specialized equipment have typically added restraint to unconventional development outside of North America, but environmental and safety concerns have also been transported to regions with shale potential.

South Africa

The Karoo basin in South Africa could contain as much as 370 tcf of technically recoverable shale gas in the Permian-age Ecca Group that underlies much of the basin, but it may be some time before the region develops this unconventional resource. In 2015, The US Energy Information Administration has assessed the Lower Ecca Group with its Technically Recoverable Shale Oil & Shale Gas Resources Report, particularly the organic-rich, thermally mature black shale unit in the Whitehill formation.

The larger Ecca Group encompasses up to a 10,000-ft interval in the southern portion of the basin, which is divided into Upper Ecca (Fort Brown and Waterford formations) and the Lower Ecca (Prince Albert, Whitehall, and Collingham formations). EIA excluded the upper formation from its 2015 assessment due to reports of total organic carbon being below the 2% standard.

South Africa is a net-natural gas importer, primarily from neighboring Mozambique and Namibia. The South African government has given priority to exploration for domestic sources of oil and gas, however, this trend has had several false starts.

The South African government placed a temporary moratorium on hydraulic fracturing in 2011 and lifted the ban the following year (OGJ Online, Sept. 11, 2012). By October 2013, South Africa's cabinet proposed new regulations to govern shale gas exploration.

This move was stymied in June 2015 when an application was filed by the farm lobbyist Agri Eastern Cape to review and quash South Africa's shale gas regulations. According to Reuters, South Africa's high court ordered on Oct. 19 the revocation of the fracking regulations, citing South Africa's Department of Mineral Resource lack of authority in setting regulations.

Despite the setback, the ministry expects to grant fracing licenses by 2019 pending further environmental and safety evaluations.

Resource potential

Nine wells were drilled in South Africa's Karoo basin during the late 1960s and early 1970s, most of which encountered gas shows. One well drilled in 1968 flowed at the rate of 1.84 MMcfd of gas from fractures without stimulation, according to a Soekor Inc. geological well completion report.

Since 2012, Falcon Oil & Gas Ltd. has sought to explore shale potential in the Karoo basin (OGJ Online, Dec. 12, 2012), but the political climate has held the industry in limbo. Royal Dutch Shell PLC, Bundu Gas & Oil, Australia-based Sunset Energy Ltd., and South Africa's Anglo Coal are each situated to delineate South Africa's untested shale potential.

The semi-arid Karoo, campaigners have said, could be impacted by an increase in hydraulic fracturing activity. Environmentalists are concerned that water use and the potential for chemical spills could affect the region's ecology, which is famous for its rugged scenery and extensive wildlife.

The environmental debate is not uncommon, but exploration and development are not mutually exclusive to preservation. Nevertheless, a discovery of oil and gas in a new region-or one once thought to be depleted as in parts of South Texas-brings wealth and a host of surface concerns that must be managed for a successful play.

Time will tell if South Africa finds a path to domestic production, but the sometimes-lengthy dialog between exploration and development companies and the governments and constituents of a region is a necessary component of resource development.