SA’s third big Jackpot: First Diamonds, then Gold, now it’s Oil from West Coast, Karoo – Lorimer

The DA’s James Lorimer believes South Africa is on the cusp of hitting a natural resources jackpot transformative as the discovery of diamonds in 1867 and the Witwatersrand gold basin twenty years later. In this uplifting interview, the Shadow Minister of Minerals and Energy explains how the offshore Orange Basin, which extends from southern Namibia to beyond Cape Town, has 10x the oil and gas potential of Total’s vaunted gas discovery off the southern Cape. Lorimer adds that after a tortuous process, revised legislation before Parliament will, finally, be aligned with global norms and thus acceptable to multinational oil majors. He reckons that given the prospective nature of the geography and this year’s rich strikes in Namibia, once the legislation is passed, the oil majors are likely to invest heavily in exploration. With each well costing around R500m and the nation pocketing roughly 60% of all revenue generated from oil and gas produced, Lorimer advocates making it possible to adopt an approach of “drill, baby, drill” by Shell, Total and their peers – not just off SA’s West Coast but also to exploit the Karoo’s shale gas potential. Lorimer shared the excellent news with Alec Hogg of BizNews.

Timestamps below

01:16 – James Lorimer on his op-ed

03:19 – on the oil bonanza in the west coast of SA

04:24 – On why it’s taken so long to discover

06:20 – On why he is feeling that this could change things

07:22 – On Namibia

08:01 – On the Orange Basin

09:11 – On why Namibia has stolen a march in the exploration site

11:42 – On how long it would take for legislation to run its course

12:25 – On what if the rainbow coalition takes over and how would he handle this differently if he was energy minister

13:50 – On 60%

14:48 – On the west

16:20 – If it’s similar to the discovery of old in a SA context

20:17 – On where he stands on the fracking in the Karoo

21:45 – End

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James Lorimer on the oil bonanza in the west coast of SA

Very much so and in greater quantities than they have thus far found in the Mossel Bay find.  Yeah. So at this stage it’s entirely speculative as to what’s down there. But given what they’ve found so far, there is informed speculation that whereas we have maybe up to a billion barrels of oil out of the Paddvissie Fairway of Mossel Bay, there could be ten times that off the West Coast. So that is a very significant piece of news.

On why he’s feeling that this could change things

Because the feedback that I’m getting from people in the oil and gas business is that it’s doable, that the legislation looks like it’s not quite there yet, but it’s certainly the best effort so far. And if you look at the kind of money that they’re spending on exploration, Total, for example, has spent a good few billion on its Mossel Bay developments. They have to be quite serious about it to spend that kind of money. Just as an indication, if you want to drill one deep sea offshore oil well, it’s going to cost you in the order of about 500 million rand. Now often these things come up dry. So it’s a big money game. And they have to have at least a reasonable idea that in the future they’ll be able to get some of that back.  

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On where he stands on the fracking in the Karoo

Look, you know, if the gas is down there and we’re told that it is. And just to back that up, the government has drilled a deep level test well, I think they went down about two and a half kilometres near Beaufort West, just to have a look at the geology. They say that there is shale gas there in commercially viable quantities. And just two weeks ago I asked how much that was and was told it was 8 trillion cubic feet around Beaufort West. They couldn’t define the area, which I think is possibly overoptimistic. But nevertheless, if you take the entire karoo, they are talking about several dozen trillion cubic feet of gas down there, which is significant and is something that we could not ignore. Now, fracking is controversial, as you know, and it was indeed stopped because of environmental concerns. However, since that all happened, which is nearly ten years ago now, fracking has, well, a ten year longer track record in the United States, which is where it was developed. and the government has told us, incidentally, that they’re about to issue, they have drawn up a report about the viability of shale gas. It’s gone to the government. They have now asked Gwede Mantashe to release it in public. And he is now considering that. But it’s not just shale gas that we’re sitting on. I mean, there are some tremendously exciting developments in Mpumalanga, for example, which I’m currently looking at. So I don’t know that much about them yet. But I can tell you that there’s a company called Kinetiko, which has found extensive gas in the area between Ermelo and Amersfoort and they have drilled, I think, 27 wells in that area. And now this is apparently a fairly unique geological feature. They’re getting  gas out of sandstone and coal. And at this stage, I think they’ve put down 27 wells, all of which have found significant gas. And they reckon that there’s another possibly up to 5 trillion cubic feet of gas in that area. Now that again, is incredibly good news. They are at the point of producing. They are looking at possibly powering or making electricity in the local area and pushing it into grids. The great thing about those discoveries, is that they’re very close to the whole industrial power infrastructure that South Africa has. 

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