Bloomberg News

NuEnergy of Australia Optimistic on African Shale-Gas Finds (1)

June 20, 2013

NuEnergy Gas Ltd. (NGY), an Australian power-development company, said it’s optimistic of making significant shale-gas finds in eastern Africa, where it has begun exploration.

The company is starting to search for shale gas in Malawi, has applied for permits in Tanzania and is looking to explore in Zambia, Mozambique and other eastern African nations, Chairman Graeme Robertson said in a phone interview on June 18.

While there has been a boom in shale-gas production worldwide in nations including the U.S. and Australia, only a handful of countries in Africa are working to develop reserves. South Africa, which has the world’s fifth-biggest reserves, Morocco, Algeria, Tunisia, Libya and Egypt are among the countries on the continent with the most shale-gas potential, according to the U.S. Energy Information Administration.

“If you look at maps of shale gas resources in the world, there is a big blank south of the Sahara,” Robertson said. “We are quite optimistic that we will be able to find some good shale-gas resources.”

The industry standard for obtaining shale gas is through hydraulic fracturing or “fracking,” which is a drilling process where large volumes of water, mixed with chemicals and sand, are injected into the ground under high pressure to crack open shale and release the reserves, according to the International Energy Agency.

Malawi Survey

NuEnergy conducted an aeromagnetic survey of a 346 square kilometers (134 square miles) of land in southern Malawi in May to determine which sites are best to start exploratory drilling. The survey was the first of its kind in the country and results are expected in about three weeks, Robertson said. The company already has one drill rig operating in the country.

NuEnergy also applied for two exploration permits in southwestern Tanzania, where there may be “large potential shale resources,” he said. The country has 40 trillion cubic feet of natural-gas reserves, Energy Minister Sospeter Muhongo said in April.

The Tanzanian government has held off granting the permits because it is currently drafting a gas policy after recent discoveries of offshore gas reserves. The country plans to auction licenses for seven offshore blocks and one section in Lake Tanganyika in October.

NuEnergy envisions that East African shale reserves will be sent to micro-liquid-natural-gas plants to be used domestically as transport fuel rather than for export. Smaller LNG facilities cost about $20 million to $30 million, compared with several billion dollars for larger LNG facilities, Robertson said.

Shale-gas exploration has raised controversy globally over concerns that include water contamination from the chemicals used in the drilling process. In South Africa, environmental groups have opposed drilling in the semi-desert Karoo basin. The government lifted a moratorium on fracking in September 2012. Other countries, including France, have banned fracking.

To contact the reporter on this story: Sara Jerving in Dar es Salaam via Nairobi at pmrichardson@bloomberg.net.

To contact the editor responsible for this story: Paul Richardson at pmrichardson@bloomberg.net.


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