North-south divide hinders Africa’s shale-gas potential
Sub-Sahara lags behind northern neighbours
AFRICA could host large unconventional reserves of shale gas, tight gas and coal-bed methane, but the continent’s lack of infrastructure and the scarcity of water may hinder an unconventionals boom.
Menno Koch, a consultant at Lambert Energy Advisory, described Algeria as the continent’s “most promising” country for shale-gas production, adding that Libya could also have “huge” potential, alongside Morocco and Egypt.
In March, Algerian energy minister Youcef Yousfi said his country could have up to 1,000 trillion cubic feet (cf) of shale gas in addition to its estimated 150 trillion cf of conventional gas reserves. Yousfi outlined plans to launch a shale gas-pilot project which would see Algeria’s national oil company Sonatrach working with a foreign partner to develop the gas. This week, Italy’s Eni flagged up its interest in developing the country’s shale-gas resource.
But sub-Saharan Africa faces greater obstacles to development than the north, said Koch, because most of Africa’s energy infrastructure is in the north. A lack of available equipment could also push operating costs up to around $6/m British thermal units (Btu), he said, compared with around $3/m Btu in the US. Consequently, fiscal incentives will be needed to encourage investors.
“We’re very bullish on North African unconventional gas because of the existing infrastructure in place,” he added. “The lack of it in the south, however, could cause problems.”
Most of the focus on Africa’s unconventional-gas potential has so far been in central South Africa’s Karoo basin, where Shell has applied for licences to explore for natural gas in three areas covering around 30,000 square km each. A host of other operators, including South Africa’s Sasol, Statoil and Chesapeake, also have technical co-operation permits to carry out studies on resource potential.
South Africa’s mineral resources minister, Susan Shabangu, issued a ban on issuing new licences in the Karoo basin in February, but Koch said the ban will not stay in place for long because of the continent’s growing need for natural gas.
Africa’s oil and gas demand is increasing “extremely fast”, said Anne-Sophie Corbeau, a senior gas expert at the International Energy Agency (IEA). According to IEA figures, the continent’s population is expected to increase by 1.9% a year between 2008 and 2035, from just under 1 billion to 1.6 billion. This will push African energy demand up to 0.9bn tonnes of oil equivalent (toe) in 2035, compared with 0.655m toe in 2008.
Natural gas provides around a third of Africa’s electricity and Corbeau claimed unconventional gas could help extend electricity supplies to the 0.587 billion people on the continent still without access to power.
Unconventional gas could play a “significant” role, said Lambert Energy’s Koch, in the development of liquefied natural gas export facilities on the continent. Europe could benefit from unconventional gas development in Africa, with North Africa’s proximity to European markets and the Canary Islands providing a clear supply advantage for the continent, analysts said. However, a lack of available infrastructure and access to water could hinder development.
Three quarters of Africa’s gas production is exported to Europe – accounting for around a third of European supply. With that continent’s gas consumption predicted to reach 22 trillion cf/y in 2035, compared with 19.5 trillion cf/y in 2008, African exports could play a leading role in meeting European demand.