Oil and gas in SA

With South Africa currently importing the bulk of its oil needs, the prospect of becoming self-sufficient in terms of this much sought after resource for at least four years is a most welcome development which should boost the country’s economy immensely

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French oil firm, Total, in February this year announced the discovery of a large “gas condensate” 175 kilometres off the south coast of South Africa at its “Brulpadda” prospects in the Outeniqua basin. The well is estimated to contain between 500 million to over a billion barrels of oil and extends to a depth of more than 3.6 kilometres.

The gas condensate—effectively a liquid form of natural gas - is a more prized fossil fuel than crude oil, and energy specialist Stephen Larkin of Africa New Energies believes that if the government plays its cards right, the find could cut the country’s budget deficit by 30%.

While the prospect of becoming self-sufficient is something worth celebrating, it is not going to happen overnight. Energy experts say exploration could take up to three years, while production could be six to nine years away. There could also be political delays to contend with.

According to an article published by the Daily Maverick, South Africa is working on a policy to govern the development of oil and gas resources after calls by potential investors to shield the industry from a long-running debate over laws that apply to mining exploration.

The finalising of oil legislation has become more urgent since Total SA’s announcement of the first significant deep-water oil find off the coast of South Africa in February.

Addressing parliament recently, Energy Minister Gwede Mantashe said his department had begun with the process of developing a Petroleum Resources Development Bill. He said there was need to speedily work to entrench regulatory and policy certainty.

Mining experts believe that developing a separate oil and gas policy will protect the industry from uncertainty that has held back the mining sector. The sector has been bogged down in debates over a new government charter aimed at redistributing the country’s mineral wealth.

South Africa currently imports about 60% of its oil-product needs in the form of crude, which is processed at local refineries. The rest is met by plants owned by Sasol Ltd which converts oil and gas into motor-fuel products and chemicals.

According to Mantashe, the bill will further provide regulatory certainty to the upstream petroleum industry and stimulate growth and development of this sector.

While most people are celebrating Total’s find, Professor Harro van Blottnitz, who teaches in the chemical engineering department at the University of Cape Town, is actually worried about this development. He says globally, hydrocarbon resources already discovered so far are enough to completely wreck the climate.

He believes South Africa can comfortably meet all its energy needs through renewable energy, including solar and wind power whose technologies are fast maturing and are readily available.

”I believe that it’s a relatively small find of unusual hydrocarbons, in difficult deep sea conditions. I hope we would rather deploy our scarce engineering skills to building infrastructure for people on land, than difficult structures in the Southern Oceans,” says Blottnitz.

Green Peace has also condemned Total’s exploration plans, saying discovering yet more oil and gas is not something to celebrate when burning fossil fuels is exacerbating potentially catastrophic climate change.

“This is essentially oil that we cannot afford to burn in the face of extreme weather conditions and recurrent droughts,” said a statement released by the organisation, also warning of potential oil spills in future.

There is also a number of safety hazards associated with oil and gas extraction which makes it highly undesirable to some. These include explosions and fires.

Workers in the oil and gas industries face the risk of fire and explosion due to ignition of flammable vapours or gases. Flammable gases such as hydrogen sulphide can be released from wells, trucks, production equipment or surface equipment such as tanks and shale shakers. Ignition sources can include static electricity, electrical energy sources, open flames, lightning, cigarettes, cutting and welding tools, hot surfaces, and frictional heat.

Wells are often located in remote areas from well sites, so workers and equipment have to be transported to and from well sites. As a result, highway vehicle crashes are the leading cause of oil and gas extraction worker fatalities. According to Census of Fatal Occupational Injuries, roughly four of every 10 workers killed on the job in this industry are killed as a result of highway vehicle accidents.

Eskom’s inability to provide enough electricity through its coal fuelled power stations means the government must do all it can to support the Total find. Although this new venture would supply fossil fuels, it would definitely make Eskom tick better because at present one of Eskom’s major burdens is the price of fuel to run its diesel-powered turbines.

Total’s discovery is a ‘catalytic find’ for the country, says Niall Kramer, CEO of the South African Oil & Gas Alliance, an industry lobby group. Total now plans to acquire 3D seismic data before drilling as many as four more exploration wells at the Brulpadda well, but it cautions that the operating environment offshore is tough. Huge waves and unfriendly weather make operations very difficult.

Kevin McLachlan, senior vice president of exploration at Total says the company is pleased about the Brulpadda discovery although they will be operating in a challenging deep water environment.

The Brulpadda well covers an area of 19,000 square kilometres, with water depths ranging from 200 to 1,800 meters, and is operated by Total with a 45% working interest, alongside Qatar Petroleum (25%), CNR International (20%) and Main Street, a South African consortium with 10%.

Kramer believes the Brulpadda find could have a massive boost to all kinds of businesses in South Africa. Apart from refining oil and other downstream activities, companies will provide helicopters, marine services, catering supplies and transport to get supplies to the deep-sea platforms.

He believes artisans, particularly welders and electricians, will be needed when they get to production both onshore and on the rigs. But to start with, highly skilled and experienced engineers and other extraction experts will have to come from overseas, he said.

In addition, if the gas is converted into power, it could provide an affordable and reliable source of energy that could boost manufacturing in the country. Kramer says that businesses have been hesitant to establish large smelters because of fears over electricity reliability.

While Sedgefield is closest to the find, Mossel Bay is the most obvious beneficiary – it’s the nearest hub to the find and it also hosts the PetroSA refinery.

According Leandro Basilio, founder and COO at Deep Seed Solutions, the advent of Industry 4.0 has resulted in subsea processing systems, intelligent wells technologies, real-time monitoring, data analysis and production management technologies.

Companies use subsea processing to access reserves located in remote areas or where environmental conditions are hostile to the traditional way of conducting business, such as the North Sea, the Arctic the North Slope of Alaska and in the deep waters of Brazil and the Gulf of Mexico.

Basilio says the advantages of placing processing equipment on the seabed are to maximise and accelerate the recovery of oil, increasing its yield, extending the life of fields and reducing the number of floating production units and surface processing plants.

Innovative technologies such as smart completion systems allow multiple production zones to be tapped by the same well, which reduces the need for investment in the exploration and production of an area consisting of several reservoirs or production sites, he says. 

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