Page 6 - AfrOil Week 27

AfrOil CommEntaRy AfrOil
South Africa ruling hits fracking
A court ruling has set back fracking hopes in South Africa
soutH afRiCa
WHat:
The sCA has thrown out the 2015 Petroleum Regulations, and with it hopes for fracking
WHy:
The court found the ministry did not have the authority to issue the rules.
WHat nExt:
Companies had talked
up hopes that progress might come soon, but this setback seems par for the slow course
SOUTh Africa’s Supreme Court of Appeal (SCA) has dismissed the appeal of the Minis- ter of Mineral Resources, in another blow to hydraulic fracturing in the country. e SCA, on July 4, found that fracking should not take place until it was lawfully regulated.
At the heart of the case, the SCA said the min- ister did not have the legal authority to establish petroleum regulations, which had been set out in the Regulations for Petroleum Exploration and Production, 2015.
e problems began in 2008, when the US shale boom drove interest in seeking similar resources elsewhere in the world. Between that year and 2010, three companies applied for the right to explore in the Karoo shale using frack- ing. This ran into legal challenges from local inhabitants, particularly farmers worried about the impact of competition for scarce water resources.
In 2012, the South African cabinet set out recommendations, which became the Ministry of Mineral Resources’ Petroleum Regulations of 2015.
e ministry struck a deal with the Minister of Environmental A airs and the Minister for Water Affairs, establishing the One Environ- mental System. is set out a plan to cover all environmental aspects of exploration and pro- duction. Essentially, norms and standards would be set by Environmental A airs, which would then be implemented and authorised by Mineral Resources.
In November 2015, these regulations faced challenges in Grahamstown’s high Court and Pretoria’s high Court. ese two courts came to di erent conclusions, with the Grahams- town court nding the minister did not have power to set such regulations, while the court in Pretoria found he did. Both courts gave the right to appeal to the SCA, where the two cases were combined.
The SCA came to the conclusion that the One Environmental System “divested the Min- ister of Mineral Resources of the power to make regulations regarding environmental matters”. Environmental questions should be regulated by the appropriate ministry, it found, not Min- eral Resources.
Given the di culty of separating the good from bad in the petroleum regulations, there- fore, the SCA found that these must be wholly discarded.
“South Africa simply does not have enough resources to handle this industry – water is a
resource that one simply cannot waste,” Jonathan Deal, CEO of Treasure the Karoo Action Group (TKAG), said as he welcomed the court decision. TKAG was one of the parties to the suit.
An o cial from AfriForum, which worked with TKAG on the case, Morné Mostert, said the ministries should take this ruling as demonstration that they should work with local organisations.
Opposition by various pressure groups to potential exploration in South Africa has been successful in preventing companies from operating. e Karoo resource is thought to be substantial, with the US Energy Information Administration (EIA) estimating in 2013 it to be 10.48tn cm.
Further slowing things has been the uncer- tainty over the Mineral Petroleum Resources Development Act (MPRDA). This bill had threatened to change a number of rules on the sector but was dropped in the second half of 2018.
Falcon Oil and Gas, for instance, has a tech- nical co-operation permit (TCP) covering 30,328 square km in the Karoo but the slow pace has seen it prioritise other areas. e TCP was granted in August 2010 and an environmental management plan submitted in 2011, which was updated in 2015. Otherwise, there has been lit- tle progress. During this time, Chevron arrived to work with Falcon in 2012 – with the idea of involvement in the resource – and le in 2017, little having changed over this time.
Falcon, in May, said it believed it could secure an exploration right in 2020. is seems unlikely.
impact
A farming pressure group, Agri SA, launched court proceedings in the Pretoria high Court in May against environmental authorisation for Rhino Oil & Gas to explore for shale gas. e company was approved in 2018 to begin explora- tion, with the Petroleum Agency of South Africa (PASA) granting its permission in January.
Rhino’s plans are focused on aerial explora- tion, at rst. Agri SA noted that it would be able to go ahead with drilling.
e group’s head of natural resources, Janse Rabie, said: “South Africa is already a highly water-stressed country. Agri SA is of the view that government is simply not nearly cautious enough when it comes to shale gas.”
Given the SCA ruling, though, it seems likely that Rhino too will have to wait for more clarity on petroleum regulations.™
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w w w . N E W S B A S E . c o m Week 27 09•July•2019