Navigant Research Blog

Southern Africa’s Natural Gas Rush

Kerry-Ann Adamson — August 21, 2012

With many headlines focusing on the energy and power markets in Africa, and with the announcements of the conference line-ups for Power-Gen Africa 2012 and Clean Power Africa, the attention of the smart energy world is once again firmly on Africa.  Meanwhile, the natural gas gold rush in America has driven a number of speculators to seek the next bonanza.  China, now Africa’s largest trading partner, already has a number of energy investments in Southern Africa, specifically in natural gas exploration and production.

Non-Chinese producers are also moving in.  Australia based Kinetiko Energy, for example, has increased its potential in-place resources at its Amersfoort coal-bed methane gas project in South Africa to 2.4 trillion cubic feet of gas. This is up a whopping 41% from previous estimates. In mid-August state oil company PetroSA signed an agreement with Indian oil and gas exploration company Cairn India Group for crude oil and natural gas exploration in the Orange Basin on the west coast of South Africa in Cape Town.

A large increase in natural gas production in Southern Africa would have far-reaching effects in the areas of demand for coal, nuclear power, and renewable energy.  At present, South Africa relies heavily on coal for its electricity and is increasingly looking at renewable energy projects, though those plans are still nascent.  Eskom, the South African monopoly utility, is also pushing forward plans for a nuclear resurgence in South Africa. Earlier in 2012 Eskom confirmed its plans to move forward with a program to add 1.2 gigawatts (GW) of new nuclear capacity, with initial tenders expected be announced around the end of 2012.

Of the three fuels (coal, nuclear, and renewables), coal would be the easiest to replace and would provide the largest gains in terms of carbon emissions reductions.  A new wave of natural gas could also help unlock a surge in renewable energy, with natural gas plants providing base load power and renewables the peak power – assuming that reliable energy storage was also in place.  The biggest winner, though, could be fuel cells.

Fuel cells are highly efficient natural gas conversion devices, and with South Africa’s increased interest in fuel cells having an abundant supply of cheap fuel would go a long way to removing market barriers for local adoption.

In the United States, the natural gas boom is simply providing an already powerful economy with increased access to cheaper fuel.  A natural gas boom in Africa, by contrast, could have truly revolutionary impacts in terms of rural electrification, grid stability, and decreased carbon emissions.

One Response to “Southern Africa’s Natural Gas Rush”

  1. David Flynn says:

    Dear Kerry-Ann:

    Any thoughts on the recent US Import/Export Bank guarantees for $2Billion in Clean Energy Projects slated for South Africa??

    In terms of Fuel Cells, specifically.

    With Regards,
    David Flynn

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