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What To Expect in South Africa’s Coming Gas Master Plan

By Sully Manope, in Windhoek

South African Department of Energy’s Gas Utilisation Master Plan (GUMP), expected to be presented for public debate before the end of June 2014, will paint a picture of where the government wants investments to go in whatever emerges as a gas industry, according to the department.

The country is in sore need of increased electricity no doubt, but the GUMP, drafted with specialist support from Wood McKenzie and Mott MacDonald, envisages a broad based gas industry that is far more comprehensive than just gas to power services. It views the supply-demand dynamics between 2015 and 2050.

A sketchy outline of the GUMP, which has been seen by Africa Oil+Gas Report, indicates that the plan is broadly in sync with many of the views of Standard Bank analysts Paul Eardley -Taylor and Nicholas Green, notably that the country “has an opportunity over the next decade to undertake its own ‘dash for gas’, replicating the development success that the US and UK markets experienced with the development of their respective gas-related and gas to power industries”. The hope is that South Africa can discover significant gas reserves in country. Africa’s most advanced economy has the wherewithal to monetize large gas deposits. “Per the recent development of renewables in South Africa, for example, the South African gas sector development is probably able, to a large extent, to be funded privately”, say Eardley-Taylor and Nicholas Green. That’s what GUMP itself hopes could be. “This will remove a significant burden from SA fiscus (which has recently had to provide significant financial support to fund –the state power utility-Eskom)”.

 

GUMP hopes that South Africa’s so called gas to power plants, (Acacia, Ankerlig, Gourikwa and Port Rex power stations), which are currently fuelled by diesel, be fired by the resource they were largely designed to be fired by. The plan looks into the potential of converting the diesel-fuelled open-cycle gas turbines that are either operational or under development in Saldanha Bay, Mossel Bay, Coega in Port Elizabeth, Durban and Richards Bay to closed-cycle gas turbines, fuelled using gas.

 

As part of its several relationships with the Integrated Resource Plan(IRP), the country’s electricity masterplan, GUMP is to act as a helpful guide for any programme for the procurement of 2 652 MW of baseload or mid-merit natural gas capacity from independent power producers, as outlined in determinations published in 2012.

South Africa has very low proven reserves of natural gas: In 2012, it produced 39 Billion cubic feet (bcf) and consumed 166 Bcf; the difference of 127 Bcf was imported from Mozambique via pipeline.

GUMP explores the potential for more domestic production of natural and shale gas as well as coalbed methane. It looks at the importation of liquefied natural gas (LNG), as well as piped gas from Namibia and deepwater Mozambique. Eardley-Taylor  and  Green have been quoted here before as warning that the vast deposits in Mozambique’s deepwater Rovuma Basin are some 2,000 km from Pande (the northern terminus of the existing gas pipeline to South Africa, itself quite full) and as such there is a large geographical obstacle which must be addressed by new, expensive infrastructure or the gas has to be transported in the form of LNG (requiring new infrastructure to be built in South Africa).

Apart from its ties to the IRP, GUMP will be aligned with other proposed or extant energy plans in the country, including the Integrated Energy Plan (IEP), which is yet to be finalized and a Liquid Fuels Master Plan, which is still a broad sketch.

The timing of the release of the GUMP would have been more auspicious if there had been successful exploration drilling of the country’s shale gas resources, which the United States Energy Information Administration estimates could be as high as 395 Trillion cubic feet (tcf). A number of  companies have shown interest in this unconventional resource. Shell holds three Exploration Licence (EL) applications); Bundu holds one EL application; and a consortium of Falcon Oil & Gas and Chevron has one  EL application.

“If initial exploration activities are successful shale gas will likely play a significant role in future iterations of the IRP, IEP and GUMP”, Eardley Talor and Green say. “Our initial expectation is for well-head gas generators to play a major role in the route to market (say by 2016-17 for appraisal wells), with Combined Cycle Gas Turbine (CCGT) Plants, Gas To Liquids (GTL) and Gas to Transport likely to follow afterwards”. They say that “in-country gas infrastructure requirements include new CCGT plants and multiple gas pipelines” and the “coastal region may require multiple LNG receiving terminals (potentially floating), the repowering existing Open Cycle Gas Turbine (OCGT) plants to gas fed CCGT plants, new CCGT plants and new and extended gas pipelines”. Their views and the GUMP are so much aligned.

For a robust gas industry South Africa will need extension and modernization of the existing Gas To Liquids plant in Mossel Bay in the southwest and Sasolburg in the centre of the country. A significant discovery of shale gas in the Karoo basin will prompt the development of a new GTL plant in that arid environment. South Africa will benefit from a transportation system fuelled by compressed natural gas, a system that will require filling stations and repowering of truck and bus fleets.

A comprehensive gas system will also provide Liquefied Petroleum Gas for millions of rural dwellers in poor communities who currently depend on firewood.

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