UNCONVENTIONAL ENERGY IN SOUTH AFRICA:

THE SEARCH FOR ANOTHER SHALE REVOLUTION*

Dr Stefan Andreasson

School of Politics, International Studies and Philosophy

Queen’s University Belfast

s.andreasson@qub.ac.uk

FIRST DRAFT – PLEASE DO NOT QUOTE WITHOUT PERMISSION

Abstract:

The potential for developing substantial shale gas deposits in South Africa’s

environmentally sensitive Karoo region, has attracted the interest of energy majors

like Shell, who lost out on the initial development of shale oil and gas in the USA,

and of the ANC government, which seeks to revive flagging economic growth,

resolve an unfolding energy crisis and relieving dangerous societal pressures

stemming from high unemployment. South Africa is a useful case study for

examining the economic and social interests that shape support for and opposition to

the exploration for shale gas and oil. While the government now seems determined to

proceed with shale gas exploration, the country’s powerful coal industry might be less

enthusiastic. The position taken by key actors in the energy-intensive industries

comprising South Africa’s powerful ‘minerals-energy complex’ will be crucial in

determining the nature of how a South African shale gas industry might be developed.

By considering the interests of key actors including the South African government,

international energy companies, domestic industry and civil society, this paper

examines South Africa’s road towards shale gas exploration and what it might teach

us about prospects for replicating the American ‘shale revolution’.

* Paper prepared for the International Studies Association annual convention,

New Orleans, 18-21 February 2015.

  1  

Introduction: impact and allure of the US shale revolution

It seems difficult to understate the initial scale and impact of, as well as excitement

surrounding, the rapid increase in production of US shale gas and oil that commenced

in the early 2000s and which became known as America’s ‘shale revolution’.1 A

major review by Wang et al. (2014: 2) of its consequences so far begins with the

assertion that ‘[t]he biggest energy story that has happened in the 21st century so far

is the extraction of natural gas from shale rock formations in the United States’. In

their recent paper on the rise (and ‘projected fall’) of the US shale industry, Neville

and Weinthal (2015: 3; citing Hart 2014) note that there was a ten-fold increase in US

shale gas production during the 2000s alone, from 48 billion cubic feet (bcf) per day

to 68 bcf per day, and consequently (citing Chonja et al. 2013) an increase of shale

gas as a percentage of total US natural gas production from 5% to 65%.

Representative of the excitement surrounding American shale, an article in the

influential journal Foreign Affairs (Blackwill and O’Sullivan 2014) highlights

America’s ‘energy edge’ and the ‘geopolitical consequences of the shale revolution’.

In projecting the US as the next ‘energy superpower’ it summarised the scale and

consequences of these developments in unambiguous terms:

The resulting uptick in energy production has been dramatic. Between 2007

and 2012, U.S. shale gas production rose by over 50 percent each year…

Terminals once intended to bring foreign liquefied natural gas (LNG) to U.S.

consumers are being reconfigured to export U.S. LNG [liquefied natural gas]

abroad. Between 2007 and 2012, fracking also generated an 18-fold increase

in U.S. production of what is known as light tight oil, high-quality petroleum

found in shale or sandstone that can be released by fracking. This boom has

succeeded in reversing the long decline in U.S. crude oil production, which

grew by 50 percent between 2008 and 2013. Thanks to these developments,

the United States is now poised to become an energy superpower. Last year, it

surpassed Russia as the world’s leading energy producer, and by next year,

according to projections by the International Energy Agency, it will overtake

Saudi Arabia as the top producer of crude oil (Blackwill and O’Sullivan

2014).

  2  

Similarly, in considering the question of Great Powers and the global security

implications of the energy revolution, Jones and Steven (2015) assume a greatly

enhanced agency in the international arena for a US superpower previously

considered on the wane in the face of Chinese ascent and the emergence of the Global

South generally. ‘What kind of globalization, and global order, does [the US] want to

be part of? Will it use energy to reinforce that order or to undermine it?’ (Jones and

Steven 2015: 1). These are Big Questions that, according to the authors, America’s

shale-fuelled power surge now makes it possible for its decision makers to ponder.

The US shale revolution is not only reshaping geostrategic aspects of global

energy markets but comes also with the promise of economic benefits such as

substantial job creation. Kinnaman (2011) points out, however, that earlier impressive

claims about the ability of the shale industry to create and sustain jobs, as well as

boosting incomes and tax revenues, that were sponsored by the energy industry itself

with a view to influence public policy were not published in economics journals and

thus not subjected to the standard peer review process for validating such (very likely

overstated) claims. More recent research remains contentious and ambiguous as well

(Inman 2014). Wang et al. (2011: 14) demonstrate ‘profound economic impacts’ of

the US shale industry, including supporting some 600,000 jobs, likely to rise to

870,000 by 2015 (now less likely as the oil price crash is resulting in energy job

layoffs across America’s shale plays and in the energy industry more generally

worldwide?) and eventually to more than 1.6 million by 2035. A key reason for this is

the ‘employment multiplier’, which suggests that for every job created in the shale

industry another three ‘indirect and induced’ jobs are also created. This multiplier

effect is presumably a great attraction for developing countries with shale gas deposits

that are also burdened with high levels of poverty and unemployment. They further

estimate that whereas the shale industry contributed US$76.9 billion to the US

economy in 2010, this will have increased by 54%, to US$118.2 billion, in 2015 and

to a further estimated US$231.1 billion in 2025, a 300% increase on the 2010 figures

(Wang et al. 2014: 14). However, Paredes et al. (2015) examine the specific case of

economic effects of the shale industry in the Marcellus shale region in the eastern US

and while they do find significant employment effects they also find that economic

spillover effects to local communities are otherwise ‘minimal’.

There are other potential benefits as well. Lower natural gas prices have made

energy intensive industries in the US more competitive due to the substantial price

  3  

advantage they now enjoy as compared to international competitors in Asia and

Europe. The US natural gas price reached a ten-year low in 2012, at about US$2 per

British thermal unit (btu). At the same time, carbon emissions were reduced by about

430 million tonnes CO2 in the US between 2006 and 2011, more than in any other

country as industry shifts away from coal and oil towards cleaner gas (Wang et al.

2014: 1). Global companies in energy intensive industries are now investing in US

plants to take advantage of lower energy prices there. And whereas the EIA is

forecasting that energy-intensive exports from Japan and Europe will continue to

decline, they are expected to continue increasing in the US until 2035 when European

and Japanese energy prices are forecast to be twice as high as in the US (Makan and

Hume 2013). These price advantages are however contested. Levi (2015) argues that

the expectation of a ‘reshoring’ of US industry is exaggerated as energy costs, even in

the case of energy-intensive industries, constitutes a relatively small percentage of

their overall costs and are therefore ‘rarely pivotal’ in their investment decisions. In

any case, according to Securing America’s Future Energy (2013, 6), a Washington-

based energy policy research outfit, the US is ‘in the midst of the most important shift

in domestic energy production in a generation’. The International Energy Agency

(2013) describes these developments as a ‘supply shock … as transformative to the

[global energy] market over the next five years as was the rise of Chinese demands in

the last 15 years’.

The US as a model

Developments in the US are highly relevant for considering potential shale gas and oil

extraction elsewhere. Any country with the potential for exploiting shale reserves of

its own would look at the US experience in the anticipation that they too could reap

substantial economic and strategic benefits from replicating the American shale

boom.2 In examining such possibilities, this paper is not primarily concerned with the

environmental impact (locally and globally) of a continued reliance on fossil-fuelled

economic pathways that, inevitably, becomes further entrenched and locked into by

attempts to replicate the US shale revolution on a global scale. The assumption here is

that what DiMuzio (2012) terms the ‘petro-market civilisation’ will be with us for

some time yet, with all its uncertain implications for the sustainability of global

capitalism and the global environment. Indeed, Collier (2010) predicts that we are

only in the early stages of the era of natural resource extraction as developing regions

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of the world have substantial natural resources, including fossil fuels that remain to be

discovered and exploited.

In this context, shale-rich countries that are eager to enhance energy security

and reap the economic benefits that may accrue from shale gas and oil production will

look to the US experience as one to replicate, or at least learn and proceed from, if at

all possible. It is furthermore US government policy to promote its shale gas industry

worldwide. The Unconventional Gas Technical Engagement Program run by the US

Department of State is dedicated to furthering the interests of the US shale industry

and its extension worldwide with partnerships in numerous countries worldwide

including South Africa. The US Ambassador to Germany, John B. Emerson, spoke

with ‘enthusiasm and optimism’ about the ‘safe’ and ‘amazing’ US shale industry in

2013:

No wonder, therefore, that we believe that the shale gas revolution is a “win-

win” for America. It is making it easier for the economy to grow, and perhaps

most importantly, it is having a dramatic effect on the environment and

climate change. That is of global significance and these new developments in

natural gas can also be win-win for the world (Emerson, quoted in Kennedy

2014: 22).

That said, the US experience remains the only ‘shale revolution’ to date. This

makes the US case a very important one as we have no other evidence of what

outcomes may be produced by the emergence of a significant shale industry. At the

same time, having only one example and model to consider limits our ability to

generalise and predict what the consequences of exploiting shale resources across a

variety of cases may be. However, recent hypotheses about the socio-economic

impact of a rapidly expanding shale industry developed by Neville and Weinthal

(2015) provide grounds for beginning such generalising beyond the US case.

Following Jones Luong and Weinthal (2010), they also suggest that the largely private

and decentralised ownership structures that prevail in the (US) shale industry make it

more likely that the common ills of the ‘resource curse’. Given the many problems

associated with the economic and political effects of extractive industries in resource-

abundant developing states (Ross 1999; 2012), this is another reason why developing

shale gas may seem a promising bet outside the US.

  5  

Ultimately there are many significant ways in which the potential for

exploiting shale in other countries with substantial reserves differ from that of the US.

The geology of shale formations, and supplies of the substantial water supplies

required to exploit them by means of hydraulic fracturing (‘fracking’), are not similar

or equally distributed across the shale gas and oil deposits worldwide. Likewise,

relevant technological expertise including the presence of a wide range of highly

skilled energy companies, financial institutions suited to and experienced in financing

this new and dynamic sector of energy industry, and even the required social

tolerance for and acceptance of large scale extractive industries activities, is not

equally present across these countries (Maugeri 2013).

Variations in other aspects of social and political context matter too. As but

one example, a recent report in the Houston Chronicle (McCumber 2015) notes the

untapped potential of the Burgos Basin shale formation in north-eastern Mexico and

adjacent Gulf of Mexico which is similar to that of the Eagle Ford shale formation

across the border in southern Texas. But while the Eagle Ford is actively exploited

and a core contributing region to the US shale revolution, having produced more than

1 billion barrels of oil since 2009, there has been no activity south of the border. The

industrial activity that produces oil and gas from the Eagle Ford shale formation is,

‘ablaze with light’, visible from space. While reflecting on ‘nothing but darkness’

across the border in Mexico, Antonio Ortiz-Mena, head of the Office of Economic

Affairs at the Mexican Embassy, muses that ‘[t]here’s no reason there should be that

contrast’ as Mexico too should be able to exploit these shale deposits. However,

Mexican finance secretary Luis Videgaray Caso acknowledges that bids by energy

companies to undertake unconventional and deep water exploration in the Burgos

Basin will be delayed due to the recent oil price crash (McCumber 2015). While shale

production may eventually become a reality in Mexico, in particular as the reforming

government of President Enrique Peña Nieto has recently and controversially

amended the Mexican constitution to allow for the operation of foreign energy

companies in exploring and exploiting Mexican energy deposits for the first time

since the country nationalised its oil in 1938 (Montes 2013), it is nevertheless a good

example of the fact that not all shales are made equal in terms of the likelihood that

they will be successfully exploited.

  6  

Why frack South Africa?

In this context, consider South Africa. It is by now a flagging BRICS nation whose

economic growth rates have become stagnant as its competitiveness is hampered by

infrastructural bottlenecks and serious problems with corruption in government and

faltering educational provision, all of which is resulting in an increasing corrosion of

the social fabric. South Africa has become a de facto dominant party state and the

increasing blurring of the constitutional lines between party and state might ultimately

endanger the rule of law (Southall 2014). Consequently, its role as Africa’s economic

and diplomatic leader is increasingly being questioned (Alden and Le Pere 2009;

Andreasson 2011).

More importantly, from the point of view shale gas developments, South

Africa is also experiencing a crisis of energy supply (Baker et al. 2014; Scholvin

2014). So-called ‘load shedding’, or managed rolling blackouts across the country

according to schedule, to avoid a country-wide energy shutdown has become a regular

feature of contemporary South Africa as the state energy company Eskom, which

currently supplies some 95% of all electricity, fails to supply the energy demanded by

private and industry consumers alike. As load shedding has become increasingly

frequent, households as well as big companies are investing in alternate sources of

energy as they attempt to become less reliant on Eskom. And whereas South African

consumers enjoyed the world’s cheapest electricity prices prior to 2008, at R0.25 per

kWh, the price has been rising steadily since 2010 when the government announced

annual tax increases of 25% to be levied annually until 2013, and then by 8%

annually until 2018. By 2014, electricity prices had increased by 260% to R0.65 per

kWh. They are now predicted to rise as high as R1.10 per kWh by 2020, a staggering

440% increase on 2008 (Baker et al. 2014: 792). However, a study commissioned by

Eskom argues that South Africa’s electricity prices remain ‘low by international

standards and do not yet reflect the full economic cost of supplying power’ (Deloitte

2013: 10).

In any case, rising energy costs have taken a toll on the country’s important,

politically influential and notoriously energy-intensive mining industry, as well as

putting pressure on the South African Rand and its credit ratings (England 2014b).

Combined with recent periods of costly labour unrest on the mines (England 2014a),

the energy crisis has caused serious doubts about the future viability of South Africa’s

mining industry. Detrimental effects of the unfolding energy crisis are not limited to

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interruptions in the daily routines of South African citizens and to the operations of its

many energy intensive industries, serious as these are. The crisis also hampers the

country’s ability to portray itself to international investors as a good, cost effective

place to invest. Reporting from the recent Invest in African Mining Indaba in Cape

Town, the world’s premier gathering for the global mining companies seeking to

exploit opportunities in Africa, Geoffrey York (2015) notes that, ‘foreign investors

can’t avoid the electricity crisis. The shortage is obvious even in their swish Cape

Town hotels, where their rooms are often plunged into darkness from rolling

blackouts.’ Improving access to energy and reducing the spiralling cost of producing

it would, for the reasons noted above, be vital to reviving South Africa’s flagging

economic fortunes.

In addition, South Africa’s economy is heavily polluting with a detrimental

environmental impact that is severe even when compared to other major economies of

the Global South, such as China and India. This due to the energy intensive nature its

industries and their overwhelming reliance on ‘climate-devastating’ coal which

generates about 90% of the country’s energy in ageing coal plants that no longer can

supply this aspiring emerging market economy and leading African industrial nation

with sufficient energy (Scholvin 2014). In this context, Steyn (2015) reports that

South African energy experts consider that the economic rationale for investing in

South African shale gas remains favourable as the gas would be used to generate

electricity rather than fuel. Thus South Africa’s’ energy crisis will mitigate some of

the other concerns investors would have about an industry that in the US is currently

suffering from the big and sustained drop in profitability. The shale gas would address

a pressing problem in the South African market that is currently exacerbated by the

big increases in the country’s energy prices. This situation also makes the

environmental opposition to fracking, much of which focuses on concerns about

sparse water supplies and pollution of the ground water in the Karoo (Barber 2014), a

bit more complex than it might initially appear. An increase in electricity generation

from gas would certainly be a step in the right direction in a country with an energy-

intensive industrial profile that currently is almost entirely dependent on coal-

generated electricity – this irrespective of the previously noted problems with the

notion of natural gas extracted from shale as a ‘bridge fuel’. There are in any case

efficiencies to be gained by moving from coal to gas that would be attractive for

reasons beyond economic ones alone.

  8  

Uncertainties abound

But doubts have been raised about arguments emphasising the improvement in energy

security that could be gained by shifting the South African economy away from coal

towards gas. Fig and Scholvin (2015) note that gas been an insignificant contributor

to the country’s energy mix in the past. Nor is it likely to do so in the future either as

South Africa’s Integrated Resources Plan, which determines the national energy

strategy ahead to 2030, emphasises coal, nuclear and renewables, and not gas whether

conventional or unconventional. While South Africa could do more to harness the

southern African region’s ability to supply it with a range of energy sources, from

hydropower to natural gas (cf. Scholvin 2014), there is at present no clear strategy to

do so by for instance laying the (infrastructural) plans to import natural gas from

Mozambique and Tanzania once the vast gas reserves of those countries come on

stream. In other words, Eskom and the government ‘have already taken a path not

related to gas-fired power generation’ (Fig and Scholvin 2015: 139). These may be

issues that the proponents of shale gas in South Africa will downplay when making

their case to government and investors alike, but they are important issues that

discerning companies and investors will have to consider when making a decision on

whether or not a South African shale gas industry is a viable bet.

In the end, the potential outcomes of developing South Africa’s shale gas

deposits remain uncertain and contested. Hedden et al. (2013) outline three basic

scenarios for South Africa that arguably represent a fair range of the various

consequences that different interest groups are emphasising when making their case

for or against fracking. Their ‘Base Case’ scenario is that a shale gas industry is not

developed (what they term the ‘fracking-free status quo’). It is the most promising

scenario in terms of safeguarding the water and other natural resources of the fragile

Karoo environment but holds the least potential for providing additional solutions for

the country’s many economic problems. A ‘Shale Boom’ scenario suggests a boost

for economic growth, job creation and poverty reduction, including additional state

revenues to spend on a range of developmental programmes, along the lines of the

benefits that have been suggested in the US case. The downside to this scenario are

the potential environmental costs including contamination of water supply (a great

concern in the Karoo), other damage to the eco-system and, in the end, a failure to

reduce the country’s high carbon emissions over the long term. Finally, a ‘Blue

  9  

Bridge’ scenario offers some hope for an alternate, and more productive path, ahead.

In this scenario, a tax regime would be developed to specifically target the funding of

renewable sources of energy from the revenues generated by shale extraction, to

thereby reap both economic benefits of shale and over the longer term reducing its

role as compared to renewables and thereby produce environmental benefits as well.

However, uncertainties abound in this most optimistic case too as the ability of

natural gas to act as a ‘bridge fuel’ to a low-carbon economy remains contested given

the substantial amount of methane gas emissions in fracking operations (e.g.,

Argetsinger 2011; Howarth et al. 2011).

Moreover, a year is proving to be a long time in the shale industry. Since the

initial excitement about potentially vast reserves of recoverable shale gas in the

Karoo, it now seems that evidence points towards much less exciting prospects. Oil

prices are plummeting, putting many existing shale operations in the US under stress

due to their urgent need for financing (Crooks 2015), and despite their previously

impressive and rapid operational efficiency gains (Gold 2013). The American shale

revolution now looks less impressive which will impact perceptions of opportunities

and risk of shale exploration in South Africa. Fig and Scholvin (2015) note that there

may be also much less gas to recover in the Karoo than initially expected. Opposition

to fracking among South African civil society organisations and special interest

groups might prove resilient (although Fig and Scholvin are sceptical), and many of

the South African government’s optimistic prognostications about economic benefits

and job creation resulting from shale gas exploitation may prove unfounded or at the

very least elusive. At this time, it seems that there are more questions arising about

the prospects for a shale revolution in South Africa than there are answers. But

irrespective of whether or not shale gas will eventually be successfully extracted in

South Africa, we can learn more about the complex politics surrounding the search

for new shale gas revolutions beyond the US by examining the particular constellation

of interests lining up to support and oppose the shale industry in South Africa.

The main concern of this investigation is not primarily the intricacies of the

economic prospects of shale extraction in South Africa. The focus is rather on the

wider social and political issues that have been illuminated by the controversy

surrounding the possibility to create a shale gas industry in the country. The politics

around fracking – a term that is appropriately vague considering that public debate

about the merits and demerits of the industry often avoids specificity and detail in

  10  

making its most potent arguments both for and against it – in South Africa would

benefit from a broader comparative perspective by being compared and contrasted

with related processes elsewhere. Such comparison should include not only the

existing shale revolution as it has unfolded in the US, but also the more ambivalent

social and political responses to shale gas exploration that has emerged across Europe

(Kennedy 2014), and the by comparison with Europe much more enthusiastic

approach to shale gas in China, however modest the results of the country’s early

investments in exploration and production have been so far (Fensom 2014). A

comparative approach to the South African case provides a better means to illuminate

the various issues arising from and in turn shaping the quest to replicate the US shale

boom.

The current state of play and the politics of fracking

According to a recent report in Oil Review Africa (2015) it is anticipated that the

South African Department of Mineral Resources will publish long-awaited

regulations for shale gas exploration in the Government Gazette in February 2015.

These regulations would likely allow for exploration licenses to be granted from July

2015 with actual exploration of the country’s Karoo Basin commencing ‘immediately

thereafter’. South Africa therefore stands poised to finally begin the no doubt lengthy

process of exploring its shale gas potential after long delays and after having in 2011

declared a moratorium on shale gas exploration, only to rescind it in 2012 because of

concerns about losing economic opportunity (Fig and Scholvin 2015: 135). Shell

South Africa, along with smaller exploration outfits Bundu Oil & Gas based in

Johannesburg and Falcon Oil & Gas based in Dublin, are the three energy companies

who, having filed applications for exploration before the 2011 moratorium was

declared, look set to commence exploratory drilling later this year (Creamer 2014). If

exploration proceeds as anticipated, their quest to develop shale gas deposits in South

Africa will thus take place against the backdrop of a much less favourable

international climate for shale gas exploration than existed just a year or two ago.

The recent plunge of the global oil price, a fall of about 60% between July

2015 and January 2015, has placed US shale gas and oil operators under serious

pressure with the closely watch US drilling rig count falling steadily during that same

time, currently down 24% from a recent peak of 1,609 operating drills as recently as

October 2014 (Terazono 2015). This is a very different environment from the one in

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which the proponents of shale gas exploration in South Africa initially set out their

plans. The uncertainty of the current environment is moreover likely to make Shell,

the energy major most likely to lead on shale exploration in South Africa, cautious in

its approach. Shell along with other energy majors was considered a late entrant into

the rapidly developing US shale gas and oil market, and its huge investment of over

US$24 billion in US shale plays was widely considered a failure. In the words of then

Shell CEO Peter Voser, ‘[u]nconventionals did not exactly play out as planned’

(quoted in Chazan 2013).

To better understand, however, what forces shape decision on energy policy in

South Africa we need a historical perspective on the political economy of energy in

the country. The end of apartheid sanctions in the early 1990s, and the subsequent

internationalisation of South Africa’s major companies, ‘led to a rapid growth of

energy-intensive industries and hence hardened the country’s entrenchment in the

path of energy-intense industrialisation’ (Scholvin 2014: 194). Indeed, the long-

established and close ties between mining, energy, finance and manufacturing sectors

remain in place. The emergence in the post-WWII decades of rapid industrialisation,

what Fine and Rustomjee (1996) in a seminal study describe as the ‘minerals-energy

complex’ (MEC), is crucial to any understanding of the link between politics, industry

and energy in South Africa. The MEC has acted as a conduit, ‘[providing] domestic

and foreign capital with cheap and plentiful coal-generated electricity [that] is no

longer economically or environmentally sustainable’ (Baker et al. 2014: 791).

The MEC is a regime of accumulation based on low-cost state-owned

electricity production (via Eskom) and cheap labour, the incorporation of

Afrikaner political power into the mining sector under apartheid [now also

black political power in the context of Black Economic Empowerment] and

the rationalisation of the finance houses, since converted into large-scale

national and international corporate capital, tightly bound to energy and

mining capital (Baker et al. 2014: 797; cf. Swilling and Annecke 2012).

According to Freund (2010, cited in Baker et al. 2014: 797), the MEC provides a

vivid picture of key networks of power in the South African political economy,

notably the links between finance, parastatals, government, the private sector and the

International Development Corporation.

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The Energy Intensive Users Group of Southern Africa (EIUG) is a central

manifestation of the MEC and represents businesses that together account for about

44% of South Africa’s total energy usage (Scholvin 2014: 188). The EIUG is made up

of South Africa’s industrial giants – including among others Anglo Platinum,

AngloGold Ashanti, Arcelor Mittal, BHP Billiton, Glencore, Lonmin Platinum,

SABMiller, SASOL and Transnet – and is closely connected to the ANC government,

just as it was to the National Party government in the apartheid era. Leading ANC

government officials have played various roles on the boards of the EIUG’s

constituent companies or are otherwise closely involved with them, including the

country’s Deputy President Cyril Ramaphosa who has held numerous executive

chairmanships across the South African business landscape and is one of the

country’s richest men. The EIUG thus remains a ‘highly influential lobbying

organisation’ (Scholvin 2014: 188), primarily the result of its ‘enormous collective

bargaining power’ (Nakhooda 2011: 21).

South Africa’s coal industry is a key actor in the powerful MEC. Its current

difficulties in providing South Africa with sufficient energy supplies would certainly

find the industry in direct competition with the shale industry should any substantial

development of shale gas come on stream. In the US, the recent shift from coal to gas

in power generation resulted in a 10% reduction in CO2 emissions between 2007 and

2012, while in that same period of time lower gas prices as a result of increasing

production led to an 11% decline in coal production (Aguilera and Radetzki 2014:

79). As the South African government pledged at the 2009 Copenhagen Summit a

32% reduction in its carbon emissions by 2020 in return for receiving financial

support and technical support to accomplish such substantial reductions (Fig and

Scholvin 2015: 137), developing a shale industry becomes an increasingly attractive

proposition. However, the situation remains complicated. And because the MEC, and

the coal-generated economy it has produced and sustained, ‘has been able to resist

pressures for more profound change [in energy policy] and to apply the brakes on

more radical notions about how to advance a low-carbon economy’ (Baker et al.

2014: 809), it is not difficult to see how it would play a very influential role in

shaping the possibilities for the development of a shale industry as well.

It is not entirely clear how the coal industry will ultimately position itself on

the issue of developing a shale gas industry in South Africa, although any gradual

replacement of coal generated energy with that of natural gas runs counter to its own

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business interests. The industry clearly enjoys a strong backing in the South African

government, which released a direct statement on the future role of South African

coal just days before the Invest in Africa Mining Indaba took place in February 2015.

The media statement released by the Department of Mineral Resources states that:

[The development of a national Coal Policy will] reposition South Africa’s

coal sector back on the global map, and ensure that coal infrastructure

requirements are sufficiently considered in the national infrastructure

programme in order to achieve world-class efficiencies and promote

competitive local supply (Department of Mineral Resources 2015).

The statement also quotes Minerals and Energy Minister Ngoako Ramatlhodi, stating

that ‘[c]oal will remain a significant strategic input to energy security and power

generation’. Whatever the merits of a shale industry in South Africa, it will have to

make its case in the face of a strongly positioned coal industry.

Conclusion: a stacked deck?

In the end, Fig and Scholvin (2015) see shale gas as a rather tenuous proposition for

South Africa as they consider it likely to disappoint across all key dimensions of

government assumptions about its outcomes including economic benefits, job creation

and environmental impact. They are however sceptical about the ability of anti-

fracking organisations in civil society to prevent the development of a shale gas

industry from moving ahead as public participation in environmental affairs has

deteriorated in South Africa as consultative bodies such as The National

Environmental Advisory Forum have been abolished. Debates on these matters are

now largely confined to business and government, with civil society left out.

Describing the proceedings of a technical advisory group tasked with providing inputs

into the modelling process for the Integrated Resource Plan for electricity (2010-

2030), Baker et al. (2014: 802) notes some obvious shortcomings in the supposedly

participatory nature of the consultative process. The advisory group

was heavily criticised for consisting largely of representatives from coal

miners, the EIUG, Eskom and government… a Who’s Who of the coal-mining

and energy-intensive users in South Africa [failing] to include representatives

  14  

from the renewables industry, civil society or experts from the fields of social

impacts and environmental quality (Baker et al. 2014: 802).

This certainly seems like an environment in which the shale gas industry can

expect to receive a generous hearing and that government will not place any undue

obstacles in its way when considering how best to allow for shale exploration and

exploitation. The extractive industries have long dominated South Africa’s economic

and, by extension, its political landscape. Like Texas, South Africa is a country that

sees itself as being built on and defined by natural resource exploitation. As Houston

was built tall and brash on the fortunes of the Texas oilmen, so did Johannesburg

emerge vertically out of the empty veld on the backs of the African miners that dug

the profitable mines of the Randlords. Thus it is not surprising that Fig and Scholvin

(2015: 147) end their analysis of fracking in the Karoo on a sombre note:

The only means by which South African civil society can influence policy

appear to be petition, protest or litigation, usually only after it has become too

late to influence the course of events (Fig and Scholvin 2015: 147).

A confluence of power at the intersection of government, energy industry and

high finance has determined South Africa’s energy path and seems destined to

continue doing so. In that context shale gas may be a safe bet for its key proponents in

government and industry, whatever the ultimate social and environmental

consequences may be.

  15  

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                                                                                                               1 As these impressive gains were made possible by means of an economic

environment in which high oil prices made techniques such as hydraulic fracturing of,

and horizontal drilling into, shale rock containing gas or oil profitable the term

‘fracking’ was popularized as a description of the entire process, in particular by its

opponents (Zimmer 2014).

2 According to the US Energy Information Agency’s (EIA 2013: 10) 2013 estimates,

the countries with the largest recoverable shale gas reserves, measured in trillions of

cubic feet (tcf) are: 1. China (1,115 tcf) 2. Argentina (802) 3. Algeria (707) 4. United

States (665) 5. Canada (573) 6. Mexico (545) 7. Australia (437) 8. South Africa (390)

9. Russia (285) 10. Brazil (245). The number of countries with recoverable shale

industries has increased by 28% (from 32 to 41) between 2011 and 2013, and the

  20  

                                                                                                                                                                                                                                                                                                                             world’s estimated total reserves of shale gas increased by 10% (from 6,622 to 7,299

tcf) during that same time (EIA 2013: 2). While these figures are rough estimates and

have in several instances been subject to revision, they nevertheless provide a good

picture of the global distribution of significant shale gas deposits, including South

Africa among the major locations. However, in locations outside the US where

exploration has been much less extensive there is even greater uncertainty about the

actual amounts of recoverable shale gas. The agency which regulates South Africa’s

exploration and production activities, Petroleum Agency SA (Pasa), notes that the

shale gas in the Karoo Basin is merely a ‘prospective resource at present’ and that

‘possible scenarios’ indicate that there is between 30 and 500 tcf of recoverable shale

(http://www.petroleumagencysa.com/index.php/home-14/shale-gas). In other words,

it is a rather cautious assessment.