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Sasol Says It Won’t Make Karoo Shale-Gas Commitment Before 2020
Sasol Ltd., studying shale gas in South Africa’s Karoo region together with Chesapeake Energy Corp. and Statoil ASA, said it won’t commit to large-scale production before 2020 and probably “closer to 2030.”
A shale gas plant would cost “multiple billion dollars” if it proved viable, Liesl Marriott, manager of unconventional resources at Johannesburg-based Sasol, said at a conference in the city today. Gas from the plant could be used to produce electricity and motor fuels, she said.
Sasol uses proprietary Fischer-Tropsch technology to convert coal and gas into fuels including gasoline, diesel and jet fuel in South Africa and Qatar. Recent shale gas extraction technological developments and related global gas prices “present a significant opportunity for the expansion of our gas-to-liquids,” Sasol said in June.
Exxon Mobil Corp., Mitsubishi Corp., Reliance Industries Ltd. and Sumitomo Corp. are expanding into shale gas as conventional energy reserves decline. Shale gas is natural gas produced from shale, a type of sedimentary rock. In the U.S., shale gas accounts for a tenth of gas supplies from nothing about ten years ago, Marriott said.
Sasol and its partners were permitted this year to undertake a 12-month “desktop study,” which doesn’t allow drilling, over an area of about 88,000 square kilometers (55,000 square miles). Sasol may apply for an exploration license depending on the results, according to Marriott. Exploration could then take between three and eight years, she said.
Water availability and access to land will be among the main challenges, Marriott said. The large Karoo region between Johannesburg and Cape Town is largely dry, sparsely populated scrubland. Royal Dutch Shell Plc also acquired an early stage right to study shale gas reserves in the Karoo region.
Shale-gas reserves have been discovered in the U.S. during the past five years, according to Chesapeake. Reserves in the country are now estimated to contain more than two quadrillion cubic feet of natural gas, more than doubling the country’s previous estimates of natural gas reserves, according to the company’s website.
To contact the reporters on this story: Carli Lourens in Johannesburg at clourens@bloomberg.net
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