Bloomberg News

Shell-Commissioned Report on South Africa Gas Flawed, Group Says

March 03, 2012

A study commissioned by Royal Dutch Shell Plc (RDSA) about the potential of shale gas in South Africa doesn’t consider the risks related to developing the deposits, according to an environmental group.

“The findings are lacking in balance to the extent that one must call the objectivity and credibility of the analysis into question,” Jonathan Deal, chairman of Treasure the Karoo Action Group, said in an e-mailed statement today. The study doesn’t include costs related to “damaged road infrastructure, health remediation costs, pollution remediation and environmental monitoring and enforcement of standards.”

The government has stopped shale licensing as it studies the impact of allowing companies including Shell, Falcon Oil & Gas Ltd. (FO) and Bundu Oil and Gas (Pty) Ltd. to drill in the area. Exploration companies pump chemically-treated water and sand underground to release oil or gas trapped in rock, a process known as hydraulic fracturing, or fracking.

Development of about 10 percent of South Africa’s shale gas reserves would add as much as 200 billion rand ($27 billion) annually to the economy, Johannesburg-based consultant Econometrix (Pty) Ltd. said in a report released yesterday.

Treasure Karoo Action Group and residents of the arid Karoo region of South Africa went to court to force the Department of Mineral Resources to release a report on the impact of fracking on the environment. The department will finish the report this month, according to court filings.

To contact the reporter on this story: Andres R. Martinez in Johannesburg at amartinez28@bloomberg.net

To contact the editor responsible for this story: Andrew J. Barden at barden@bloomberg.net


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