In early February 2019, a massive gas reserve was discovered off the coast of South Africa by French energy conglomerate, Total. The gas field, called Brulpadda Block, covers an area of 19 000 square kilometres under the Indian Ocean between George and Jeffreys Bay. Total and its partners own the exploration rights to this area.
Total began drilling in December 2018 using a specialised rig that could withstand the strong currents found in that part of the sea. They struck a gas reserve over 3 600 metres deep. Total predicts that the gas field could yield up to one billion barrels of gas. With it comes opportunities for waste management companies like Averda, that specialise in oil and gas waste, to provide their services.
The reserve of gas condensate contains small traces of oil, meaning that it is a wet gas. It can be converted into petrol at a gas-to-fuel refinery in Mossel Bay. The gas could also be used as a coal alternative in the generation of electricity.
The gas discovery is one of the largest ever
In 2018, ExxonMobil discovered a total of 895-million barrels in wells across the globe, which is considered to be the most successful exploration in the world. If Total’s predictions are right and the gas reserve contains one billion barrels, this would make the discovery the largest ever.
The Brulpadda discovery is about four times bigger than all the gas finds in South Africa combined, according to the CEO of the South African Oil & Gas Alliance (SAOGA), Niall Kramer. Over 300 offshore wells have been drilled to date in South Africa, all of which were shallow explorations. This is the country’s first deep-sea discovery.
Total is now preparing for another four wells in the Brulpadda Block. Since the discovery, American oil conglomerate, ExxonMobil, and Italian gas group, Eni S.p.A., are considering exploring their blocks nearby.
South Africa will benefit from the gas find
Total and its partners will pay the South African taxman 28% corporate tax on all income from the Brulpadda gas well. If Total’s estimates are correct, the gas reserve could generate around R13-trillion, which means about R3,6-trillion will be paid in corporate tax to the South African treasury.
In addition to corporate tax, oil and gas companies operating in South Africa have to pay a 5% royalty on all gross sales. South Africa will also be entitled to participate in the production of oil and gas from the reserve. “The extent of the state’s entitlement will be determined by the licensing terms and the new legislation,” explains the director of Norton Rose Fulbright, Gregory Nott.
The South African Minister of Mineral Resources, Gwede Mantashe, is planning to remove oil and gas from the Mineral and Petroleum Resources Act. Instead, he wants to develop separate legislation for the oil and gas industry. “This legislation is much anticipated as it will determine all terms and conditions which apply to oil and gas licenses, over and above the existing tax regime,” says Nott.
“Drilling for oil and gas is highly capital-intensive and high-risk, with little certainty of success. In order for investment in this high-risk but vital industry, investors need certainty in legislation and in government policy,” explains Nott.
Currently, South Africa imports a lot of oil – 15% of all total imports. If the country can start to produce more of its own oil, the rand will strengthen against the dollar, bolstering the local currency across the globe.
Other industries will benefit
The gas discovery also has advantages for numerous other industries. Waste management, logistics, catering and engineering industries will all be able to get involved and support the gas companies.
New jobs will be created, especially for skilled artisans such as welders and electricians. Engineers and businesspeople will be needed to ensure the smooth running of such a large operation. Kramer admits that highly-skilled and experienced extraction employees will initially be brought in from overseas, but once production in South Africa starts, local workers will be required.
Industries stand to benefit if a portion of the gas is converted into electricity. It could become a reliable and affordable source of energy for South Africa. Manufacturing, waste management and other machine-dependant sectors will be able to expand operations with a more reliable source of power.
The gas find does pose a risk to the environment
Besides the economic and employment benefits of the Brulpadda gas find, it does raise alarm bells for environmentalists. Professor Harro van Blottnitz at the University of Cape Town’s chemical engineering department is concerned about the discovery.
“Globally, there’s already enough hydrocarbon resources discovered to completely wreck the climate. South Africa can very comfortably meet all its energy needs through solar power – all requisite technologies are fast maturing or readily available,” exclaims van Blottnitz.
Greenpeace has also expressed concern over the exploration plans. “Discovering yet more oil and gas is not something to celebrate when burning fossil fuels is driving potentially catastrophic climate change. This is, essentially, oil that we cannot afford to burn in the face of extreme weather conditions and recurrent droughts,” the environmental group argues.
As it stands, Total is ready to go ahead with three-dimensional mapping of the gas reserve. The exploration will continue within the next couple of years. “Production could be six to nine [years] away,” Kramer estimates.
Averda is a leading waste management provider with over 50 years of experience across three continents. Through growth, transformation and engagement, we strive to find new ways of managing waste while protecting the community and environment.
By pairing international expertise with local insights, we have secured our position as one of South Africa’s most respected providers of waste management and industrial cleaning services. We also operate in the recycling, pipe inspection, CCTV, infrastructure inspection, hydro-demolition, high-pressure water jetting and catalyst handling industries.
Follow us Facebook, Twitter and LinkedIn for the best tips on recycling and the latest industry news. See our Instagram and YouTube channels for more insights into environmental affairs and our work with local communities.