Tosaco Energy, part of the group that owns 25% of Total SA, has acquired three technical co-operation permits to explore for natural gas in Mpumalanga with an eye on SA’s future demand for gas for power.
Although public attention has focused on the possibility of fracking for shale gas in the Karoo, SA has other forms of onshore gas, which can be extracted without fracking. JSE-listed Renergen extracts natural gas near Virginia in the Free State, which is used in buses.
Tosaco Energy had been awarded a 2,900km² permit area near towns including Grootvlei, Amersfoort and Balfour, it said, where there were already natural gas pipelines and power stations that could be converted from coal to gas.
This is Tosaco’s first move into the energy sector. CEO Bradley Cerff said it would also look at upstream and midstream opportunities, energy infrastructure and tank storage.
Tosaco expects that demand for gas in SA will replace coal as a source of energy and cut the country’s carbon emissions.
According to the latest BP Statistical Review of World Energy, natural gas accounted for 32% of US energy consumption in 2016 as consumption of coal fell 9% to its lowest level since 1978.
As a result, the country’s total carbon emissions fell 2%, which was double the historical average decline.
Tosaco Energy chief geologist Bill McAloon said initial estimates suggested there could be trillions of cubic feet of gas in sandstone formations in this area. This is methane low in contaminants like sulphur. The resources are at maximum depths of about 1,200m, with good pressures, which would reduce costs of extraction.
There was little available data and the first steps would be to collate it. Tosaco Energy expects to be able to test the gas resource by 2019.
Initial exploration would use inexpensive, low-impact techniques, McAloon said.
Cerff said that although the licence area covered some environmentally sensitive sites, legislation prohibited certain activities from taking place there.
Tosaco Energy’s ultimate holding company, Tosaco Holdings, is owned by Kilimanjaro Capital and Sakhumnotho.