South Africa pins hopes of economic boost on fracking

South Africa pins hopes of economic boost on fracking

Fracking in the Karoo region may offer a much-needed revitalisation of the South African economy, despite public protests against exploration and extraction. Benefits are likely to offset environmental and political risks.

Nearly a thousand protestors marched through Cape Town last Friday, carrying signs warning Shell South Africa to “Frack Off.” After lifting a moratorium on hydraulic fracturing – more popularly known as “fracking” – last year, the South African government published proposed fracking regulations on October 15th, drawing the ire of conservationist groups and residents of the shale-rich Karoo region.

The Karoo region, an 800-mile stretch of arid land between Cape Town and Johannesburg, may be the site of as much as 485 trillion cubic feet of shale gas reserves. If these estimates prove correct, South Africa, as home to the fifth-largest shale gas reserves in the world, could expect to reap the rewards of economic development and increased geopolitical importance should it access these reserves.

The controversial process of hydraulic fracturing is required to access these vast underground reserves. Shale gas extraction entails drilling several kilometers into the earth and pumping a mixture of water, sand and chemicals at high pressure into the rocks. The rocks then fracture, releasing gas to be captured and drawn back to the surface through pipelines.

During its two-year ban on fracking, the South African government commissioned studies to weigh the potential economic benefits of shale gas extraction against the environmental impact. The projections from the study have apparently replaced the government’s previous concerns with optimistic enthusiasm, as South Africa has granted four foreign oil companies exploration licenses. Mineral Resources Minister Susan Shubangu stated that such exploration “marks the beginning of the reindustrialization of the South African economy.”

The study, published by the South African think-tank Econometrix, projects that developing just one-tenth of the estimated shale resources could boost the economy by 200 billion rand ($19.56 billion), a whopping 5 percent of South Africa’s current GDP. Because foreign oil companies have promised to hire locals, development of shale reserves could create up to 700,000 jobs. As one in four South Africans are unemployed and nearly one in three live below the poverty line, fracking offers tempting rewards.

The main controversies surrounding fracking in South Africa, however, are its environmental impact and the competition it creates over water resources. The residents of the Karoo region rely on agriculture and herds of sheep or ostriches for their livelihoods. In addition to concerns that drilling through groundwater could pollute their main water source with gas or toxic chemicals, Karoo landowners fear losing access to much-needed water. The Karoo is the driest part of the country and relies on underground fresh water aquifers, as yearly rainfall is often insufficient to fill surface dams and reservoirs.

Fracking requires as much as 20 to 25 million liters of water to operate a single well. Shell plans to drill at least six exploratory wells over the next three years and at least 1,500 in the following years. However, the water manager for Shell’s Karoo project assured South Africans that there are regulations in place to prevent pollution of water sources. In addition, Shell plans to bring in water for fracking from other sources so as not to compete with Karoo residents.

Ironically, shale gas exploitation may in fact decrease South Africa’s potential environmental degradation while increasing its energy security. Currently, South Africa relies on imports to provide for 70 percent of its crude-oil needs and on coal-fueled plants to provide 90 percent of the country’s power supply. Even so, 20 percent of the population has no access to energy and are forced to cut down the nation’s forests for their cooking and heating needs. If accessing shale gas allows South Africa to provide for its own growing energy needs, it may in fact reduce pollution due to coal-burning. It is difficult to predict how the environmental risks of fracking compare against those of pollution from burning wood and fossil fuels, but the South African government may accept some degree of environmental risk to achieve their goals of industrial growth.

Despite the anger of environmental groups and wary Karoo residents, it is unlikely that their protests will result in any real instability. Since South Africa broke with its apartheid past, peaceful protests are allowed under its Constitution. The government is actively seeking feedback, as the proposed fracking regulations are open for comment over the next 30 days. It appears that some degree of consensus among the population is important to the South African government. Its ministers try to convince the public, through press statements and commissioned studies, how fracking will ultimately benefit the nation. Any action taken against the government will be through civil channels, as the CEO of the Treasure Karoo Action Group warned of “an expensive taxpayer-funded court case.”

A more realistic concern might be tensions or conflict in the Karoo region. Under current policy, landowners own surface rights, whereas the South African government owns the rights to any minerals or resources found underground. If Karoo residents do not receive any economic benefits of fracking but bear the brunt of air and water pollution, there is a greater possibility of frustrations erupting into conflict. Policy director of Pacific Environment, Doug Norlen, warns that for all the talk of employment and regional development, corporate energy projects can in fact worsen economic conditions for local communities. Projects can cause inflation in costs of local housing and services and conflict may arise between locals and foreign workers, if foreigners get the lion’s share of jobs.

However, the opportunities offered by fracking in the Karoo may outweigh the risks. If oil companies honor their pledge to employ local South Africans, energy development can put a real dent in the unemployment rate and enable the government to provide services for the country’s poor. As unemployment and poverty are two major factors driving the country’s rampant violence, economic development due to fracking may in fact make South Africa safer for doing business. It is essential, though, that the proceeds of fracking be shared.

Though fracking poses real environmental risks, leaving shale reserves undeveloped and forgoing their economic boons may indeed prove riskier for the South African government.

About Author

Marina Mellis

Marina currently works for an informations discovery company and was previously working as a research assistant at the Economics Department of Columbia University. She graduated with a BA First Class Honours in International Development Studies from McGill University.