South Africa Eyes Natural Gas Boom To Cure Rampant Poverty

From Value Walk

Africa is rich in resources. From vast oil deposits to gold and diamonds, the continent is literally brimming with the potential to support a large resource extraction industry. The most recent development has been the expanded hunt for natural gas shale’s in South Africa.

The U.S. Energy Information Administration believes that South Africa could hold as much as 485 trillion cubic feet of natural gas. South Africa has just lifted a temporary ban on natural gas exploitation, which it installed after caving to pressure from environmental protection groups. While the government is lifting outright bans, it is still heavily restricting who can drill and where. So far, Royal Dutch Shell plc (NYSE:RDS.A) (NYSE:RDS.B) and Chevron Corporation (NYSE:CVX) are the only two major MNC’s involved in the region. Smaller companies, such as Falcon Oil & Gas Ltd. (CVE:FO) from Canada, are now involved in the early rounds of exploration.

If vast deposits do exist, they will most likely be found in the Karoo Basin. The 400,000 square miles semi-desert basin is famed for both its natural beauty and the poverty of its local. Many environmental groups believe that if natural gas is exploited from the region the local people will see little benefit, while the environment could be greatly destroyed.

Much of the controversy centers around the use of fracking, or the creation of fractures in rock layers in order to release natural gas and oil. Usually hydraulic fluids are pumped into the ground to create the fractures. These methods could potentially lead to ground water contamination, increased seismic activity, and numerous other potential problems. The work itself is also dangerous to employees, with a risk of workplace accidents and exposures to harmful chemicals, such as silica dust.

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