GENERATION IS LNG THE ANSWER TO CLEANER, MORE SUSTAINABLE POWER GENERATION? By Ashley Theron, ESI Africa The use of Liquefied Natural Gas (LNG) has been a topic of much discussion among energy stakeholders in South Africa in recent years. With the global population expected to double by 2050, it is imperative that strong measures be put in place now to secure a reliable and sustainable energy future, and along with that, a clean, sustainable fuel source. n an article published by the Guardian 1 , it was reported that global CO 2 emissions for 2014 stand at a record high of 40 billion tonnes, a 2.5% increase on 2013. With legislation in place in many parts of the world to reduce the global carbon footprint, South Africa is joining the global effort with the proposed implementation of a carbon tax set to come into effect in January 2016. As South Africa continues to develop more generation capacity, along with the impetus to be more carbon conscious, there is a need to explore options other than coal for baseload generation. And this is where LNG may well fill a critical gap. I THE LOCAL MARKET Southern Africa’s gas market was in the spotlight recently when the discovery of what is termed ‘the world’s largest natural-gas’ deposit just off the coast of Mozambique has led to increased interest in the Southern African country. Mozambique’s revenue may reach as much as $212 billion over the life of the project, based on 45 trillion cubic feet from Anadarko’s Area 1, Standard Bank said in a 31 July study. That’s less than half of the total estimated resource. If developed to the full, Mozambique may become the world’s third-largest exporter of LNG, behind Qatar and Australia. Globally, LNG is mainly used as a feedstock for power generation and is a cleaner, more efficient and less operationally intensive feedstock than coal. The discovery of a ‘local’ LNG market could significantly change perceptions and costs for LNG as a fuel source for power generation in Southern Africa, and South Africa in particular. 1 The Guardian, Fiona Harvey, 21 September 2014. 46 Graphic: Origin Energy, Australia COEGA: A POTENTIAL STAGING POINT FOR REGASIFICATION? There are three or four possible sites for regasification plants, which allow the reconversion of natural gas from a liquefied state back into gas form. It would take between three to four years to develop such a terminal locally, says John Shoobridge, senior executive of LNG for Shell, in a media briefing recently. Plans to develop a regasification terminal at Coega in the Eastern Cape have been in discussion for many years, with discussions being held with Eskom and PetroSA as early as 2007. Other potential development sites include Saldanha Bay on the West Coast and Richards Bay in KwaZulu-Natal. Shoobridge believes using more LNG in its energy mix would help South Africa to meet its carbon emission reduction commitments, and build the infrastructure needed for exploiting its own resources as well as growing market demand. Earlier this year, he said that the estimated costs of a regasification terminal would be anything between US$350 million and US$1 billion but that the development costs could be taken on by private concerns and need not directly impact public sector funding. THE SHALE GAS DEBATE: Untapped ‘unconventional gas’, trapped beneath shale rock, has been discovered in the Karoo basin in South Africa. The extent of the deposits can only truly be found once full-scale exploration commences, so current estimates of the total gas availability cannot be confirmed with any certainty. (See opinion piece on page 50) Natural gas availability in South Africa has been estimated at 40 trillion cubic feet in the Karoo basin and 140 trillion cubic feet off the coast of Mozambique. 2 LEGISLATION The South African Government’s Gas Utilisation Master Plan [GUMP] has been designed to drive the integration 2 http://www.financialmail.co.za/coverstory/2014/05/29/ waiting-to-extract-mozambique-s-oil-and-gas-reserves] ESI AFRICA ISSUE 4 2014