By Devon Maylie and Alexis Flynn
JOHANNESBURG--South Africa has lifted a temporary halt on
shale-gas exploration in an isolated, nature-rich region, the
government said Friday.
South Africa, estimated to hold the world's fifth-largest
reserves of shale gas, imposed a moratorium on hydraulic
fracturing--a procedure known as fracking--while it took a closer
look at the repercussions of letting companies like Royal Dutch
Shell PLC (RDSB) use the controversial technique in the Karoo, an
arid region home to a variety of desert mammals and plant
species.
Strident opposition from environmental groups and the local
community led to South Africa stopping exploration activity in the
area. They fear that fracking, which involves blasting water mixed
with sand and chemicals underground to free hydrocarbons trapped in
rock, could damage aquifers in the Karoo, harming the fragile
ecosystem and threatening agriculture.
In a statement, the government said cabinet had endorsed the
Department of Mineral Resources's recommendation that the ban be
lifted.
South Africa's government is keen to develop the country's
nascent energy sector, which it believes will create jobs and
stimulate growth by cutting local fuel costs. Dependent on oil
imports to power its economy, South Africa suffers frequent
electricity shortages.
However, if estimates by the U.S. Energy Information
Administration are correct, the country holds around 485 trillion
cubic feet of shale gas resources, which would give it around 7% of
the global total.
Along with Shell, Falcon Oil & Gas Ltd. and Bundu Oil &
Gas (Pty.) Ltd., a South African company that teamed up with
Australia's Challenger Energy Ltd., (CEL.AU) also have applied for
exploration licenses.
Shell, which in 2011 applied to drill 24 wells in a 90,000
square kilometer area of the Karoo, welcomed the decision to lift
the ban.
"The Karoo Basin offers a potential exploration opportunity for
shale gas, which we believe will be instrumental in meeting South
Africa's growing energy demand, while creating sustainable and
permanent jobs for South Africans," said Shell South Africa
Chairman Bonang Mohale.
However, the main environmental group leading opposition to
Karoo gas exploration slammed the move, saying it was "nonsensical"
to lift the moratorium before a public consultation.
"South Africa has made a hasty and ill-informed decision about a
very unpopular technology," said Jonathan Deal, chairman of the
Cape Town-based Treasure Karoo Action Group. The organization said
it intends to oppose any issuing of drilling licenses and is
considering taking legal action to prevent hydraulic fracturing
from taking place.
Write to Devon Maylie at devon.maylie@dowjones.com