1. VENUE: COMMITTEE ROOM 3 DATE: 27 MAY 2015 TIME: 09:00-13:00
PRESENTATION TO THE PORTFOLIO COMMITTEE MINERAL RESOURCES ON SHALE GAS REGULATORY FRAMEWORK
VENUE: COMMITTEE ROOM 3
DATE: 27 MAY 2015
TIME: 09:00-13:00

2. Background Regulatory Framework Future of Shale gas Concluding remarks
PRESENTATION OUTLINE
Background
Regulatory Framework
Future of Shale gas
Concluding remarks

3. BACKGROUND
In February 2011 the DMR imposed a moratorium on the processing of new applications for reconnaissance permits, technical corporation permits, exploration rights and production rights.
An interdepartmental team was convened to investigate and submit a report on the potential environmental risks associated with hydraulic fracturing as well as the negative and positive social and economic impacts of shale gas.

4. BACKGROUND CONT…
Cabinet approved the report on the “Investigation of Hydraulic Fracturing”, with the following key recommendations:
The establishment of an inter-departmental committee to augment the current regulatory framework to mitigate any negative environmental impacts associated with Hydraulic Fracturing; and
A need for collaboration between the Departments of Mineral Resources and Science and Technology to explore mechanism for the co-existence of the Astronomy Research Projects and development of shale gas in the Karoo.

5. BACKGROUND CONT...
The inter-departmental committee developed Regulations for Petroleum Exploration and Production to address the following:
augment gaps identified in the current regulatory framework governing exploration and production of petroleum resources, particularly in relation to Hydraulic Fracturing ;and
prescribe good international petroleum industry practices and standards that will enhance safe exploration and production of petroleum.

6. REGULATORY FRAMEWORK
Upstream oil and gas activities governed by the following primary legislation:
Mineral and Petroleum Resources Development Act,2002(Ac No.28 of 2002);
National Water Act,1998 (Act No.36 of 1998);
National Environmental Act,1998(Act No.107 of 1998);
Astronomy Geographic Advantage Act,2007(Act No.21 of 2007);
National Environmental Management Waste Act,2008(Act No.59 of 2008);
National Radio Active Waste Disposal Act,2008(Act No.53 of 2008)

7. REGULATORY FRAMEWORK Cont..
The MPRDA is the main legislation governing petroleum resource applications.
The regulations are developed in terms of section 107 of the MPRDA
The regulations are not exhaustive on their own and must be read where applicable and relevant with other applicable legislation (NWA, NEMA etc).

8. FUTURE OF SHALE GAS 2011 SA resource estimates: 485 Tcf
2013 SA resources estimates: 390 Tcf (Source USA EIA)
Subsequent estimates of the resource by PASA and CGS suggest deterministic best estimate Technical Recoverable Gas resource of 36 TcF (Whitehill formation only), which is 30 times the basis of bankable feasibility of Mosgas.
To date, five applications have been received for exploration of shale gas using the hydraulic fracturing method.
Regulations for Petroleum Exploration and Production are being gazetted to enable processing of these applications.

9. FUTURE OF SHALE GAS Cont…
The Regulations explicitly protect the astronomy project and make sufficient provision for mitigation of impacts on the environment and water resources.
R108m budget allocation as announced during the finance budget vote has enabled both PASA and CGS to undertake research, including the baseline modeling and observed changes during deep drilling in the Karoo.
DST has also initiated a research project through CGS to investigate the Karoo geology and establish the shale gas potential, the Karin project.

10. FUTURE OF SHALE GAS Cont…
The project team is comprised of various scientist, doctors and professors.
DEA has also initiated a project in collaboration with CGS, CSI and SANBI to develop a strategic environmental assessment of the Karoo region.
CGS is also working project with SANEDI aimed at researching the availability of alternative water resources in the Karoo. The project has been provided a timeframe of 2 years and has already commenced.

11. FUTURE OF SHALE GAS Cont…
The MPRDA Bill has made provision for unprecedented policy shift through regulatory provisions for State participation in the exploration and production of petroleum resources.
If proven feasible, shale gas development has the potential to:
contribute to the development of black industrialists, decent employment opportunities, poverty elimination as well as skills development.
Ensure security of cost effective energy supply and reduce the country’s carbon foot print.

12. FUTURE OF SHALE GAS Cont…
The immediate need to expand our national capacity to generate electricity.
Even a moderate shale gas resource potential will have positive effects on the energy landscape by contributing to diversification of the energy mix and security of supply.
PetroSA’s gas to liquid project commissioned on 1Tcf has provided approximately 5% of the national demand for liquid fuels.
These are consistent with the development objectives of the National Development Plan.

13. Concluding remarks
Shale gas development has the potential for significant contributions for socio-economic development and tol trigger creation of side stream industries which will provide further employment opportunities.
Complexity and variation of modelling will require a different level of industrialisation, which is more dependent on infrastructure.
The regulatory framework is being finalised to trigger the development of shale gas in South Africa – the gazetting of Regulations precedes finalisation of applications for exploration.
The augmentation of the regulatory frameworks sufficiently provides for protection of the environment, water resources and the national astronomy programme

14. THANK YOU