SA needs its shale gale, launch fracking before the neighbours do

tim

This piece is a reminder of what South Africa loses every time a talented citizen seeks greener pastures abroad. Tim Wood, former head boy of Mooi River’s Treverton College and Employee Number One at Moneyweb, is as fine an online journalist as you’ll find anywhere on earth. His work is deeply researched, enriched with numerous links and reaches conclusions that are rational and logical. In this excellent contribution, Tim focuses his attention on the US’s shale gas boom and extrapolates how fracking could transform South Africa – provided those in the often lackadaisical State sector rapidly apply themselves to the opportunity. Simply superb. – AH 

By Tim Wood*

Free markets have a delightful sense of humour, and the laughter is mostly at the expense of planned economy ideologues. A repeat and willing victim is President Barack Obama and his ineptocracy that has beclowned itself with serial failed energy policies. South Africa should take a lesson.

During the 2008 Presidential Election, Obama relished mocking his opponents’ “drill, baby, drill” mantra that promoted exploration and development of American oil and gas assets. The President’s straw man opposition went roughly as follows: “If it takes longer than tomorrow to produce new oil then it’s not good enough.” His other favorite informal fallacy was to complain that America consumes a disproportionate share of the world’s energy.

Apparently long range planning is something to oppose in principle and fact. Not only did Obama state his opposition to increasing hydrocarbon output, but his administration also put millions of acres of federal land off limits to drillers, and layered on stifling regulations and permitting shackles.

Yet, just one decade after the “shale gale” kicked off in the U.S., oil and gas are flowing abundantly from formations once thought barren or inaccessible.  North Dakota has emerged from nowhere to overtake Oklahoma, Alaska and California as the second largest producer after Texas, which is also booming.

natgasThe japes opposing oil, gas, and coal are a bigger laughing stock for the billions of dollars (always other people’s money) burned up in failed and scandalous “clean energy” cozenages.

Heaping up the humiliation, the free market has destroyed “peak oil” hysterics, and provided a desperately needed balance to global energy supply amidst the chaos roiling major production regions. Likewise, soaring local production helped soften the Great Recession by lowering energy costs to consumers.

New technology, risk capital, and private mineral rights combined to ridicule the “can’t do it” mopes. Wherever the drill rigs are active economic activity has blossomed. Once mendicant rural communities boast new millionaires and attract droves of job seekers who cannot find employment in the utopian paradises along the Atlantic and Pacific coasts, and the shores of the Great Lakes.

Tim Wood Alaska shale

Which brings us to South Africa with its lagging growth, rampant unemployment, massive inequality, energy insecurity, and strategic decline.

How is it possible that South Africa, with its plentiful natural resources and strong infrastructure, has attracted so little direct foreign – or even local – investment to bring those minerals to account?

Billions of dollars have flowed to the D.R. Congo despite great insecurity. Billions more have been sunk into Mozambique’s coal and gas fields that have none of the infrastructure advantages enjoyed by South Africa. Mozambique’s Palma LNG project alone may need as much as $16 billion before it achieves commercial production.

Gas by the tens of trillions of cubic feet (tcf) has been mapped in Mozambique and Tanzania  – a trifle compared with South Africa’s estimated 400 tcf lying untapped below the Karoo.

The window to develop the Karoo’s gas is closing. Once Mozambique and Tanzania come on stream the extraction economics are likely to disfavour new projects in the region.  The consequences for South Africa of such a development are not trivial, and it will find its fortunes pegged back significantly on the regional and global stage.

SA’s leadership would do well to pencil in an “Arab Spring” for themselves if they do fritter away the opportunity. Another alternative is a spiral descent into Venezuelan populist autocracy, which “bolivarian revolution” Mr. Malema seems to have taken too many cues from.

A South African shale gale would catapult the country’s prospects with minimal risk to the environment or the climate. However, nothing will be accomplished until the nation’s crushingly stupid natural resources legislation is euthanized. Frack for liberty, freedom, prosperity, and clean air. Just do it quickly.

* Tim Wood has been involved with various media enterprises in South Africa and the US for two decades, much of it focused on mining. Tim and his family emigrated to the United States from SA in 2000, and became American citizens in 2010.

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